As filed with the Securities and Exchange Commission on December 30, 1997
Registration No. 33-90888
811-9010
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 6 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 8 |X|
TRANSAMERICA INVESTORS, INC.
(Exact Name of Registrant)
1150 South Olive, Los Angeles, CA 90015
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(213) 742-2111
Name and Address of Agent for Service:
Reid A. Evers, Esquire
Second Vice President, Assistant General Counsel
Transamerica Occidental Life Insurance Company
1150 South Olive
Los Angeles, CA 90015
Approximate date of proposed sale to the
public: As soon as practicable after effectiveness of the
Registration Statement.
The Registrant has previously filed a declaration of indefinite registration of
its hsares pursuant to Rule 24F-2 under the Investment Company Act of 1940. The
Form 24F-2 for the year ended December 31, 1996 was filed on February 25, 1997.
It is proposed that this filing will become effective:
|X| immediately upon filing pursuant to paragraph (b)
|_| on April 29, 1996 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| on ________________ pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on ______ pursuant to paragraph (a)(2) of Rule 485
If appropropriate, check the following box:
|_| this Post-Effective Amendment
designates a new effective date
for a previously filed
Post-Effective Amendment.
<PAGE>
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TRANSAMERICA INVESTOR, INC.
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 481(b)
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PART A INFORMATION REQUIRED IN A PROSPECTUS
N-1A Item No. Caption
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Cover Page
Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page
A General Discussion About Risk
The Fund in Detail
Organization and Management
General Information
5. Management of the Fund The Management Team
Organization and Management
General Information
5.A. Management's Discussion of Performance Financial Highlights
6. Capital Stock and Other Securities The Management Team
Dividends and Capital Gains
What About Taxes?
General Information
7. Purchase of Securities Being Offered Shareholder Services
Opening Your Account
How to Buy Shares
Other Investor Requirements and
Services
8. Redemption or Repurchase Shareholder Services
How to Sell Shares
How to Exchange Shares
N-1A Item No. Caption
8. Redemption or Repurchase (continued) Other Investor Requirements and
Services
Share Price
9. Pending Legal Proceedings General Information
PART B INFORMATION REQUIRED IN THE STATEMENT OF ADDITIONAL INFORMATION
N-1A Item No. Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History [Not Applicable]
13. Investment Objectives and Policies Investment Objectives and Policies
Investment Restrictions
14. Management of the Registrant Management of the Company
Investment Advisory and Other
Services
15. Control Persons and Principal Management of the Company
Holder of Securities
16. Investment Advisory and Other Practices Investment Advisory and Other
Services
17. Brokerage Allocation and Other Practices Brokerage Allocation
18. Capital Stock and Other Securities Purchase and Redemption of Shares
19. Purchase, Redemption and Pricing of Purchase and Redemption of Shares
Pricing of Securities Being Offered
20. Tax Status Taxes
21. Underwriters Management of the Company
N-1A Item No. Caption
22. Calculation of Performance Data Performance Information
23. Financial Statements [Not Applicable]
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PART C OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
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Transamerica Premier Aggressive Growth Fund
Supplement Dated December 31, 1997 to Prospectus Dated August 27, 1997
The following information supplements, and should be read in conjunction with,
the Prospectus to which this supplement is attached. The following information
is added to the Prospectus.
Financial Highlights --- Transamerica Premier Aggressive Growth Fund
The following is the unaudited financial data for the investor shares of the
Transamerica Premier Aggressive Growth Fund for the period from June 30, 1997 to
November 30, 1997.
Net Asset Value
Beginning of period $ 10.00
Investment Operations
Net investment income (loss) 1 (0.03)
Net realized and unrealized gain (loss) 2.13
Total from investment operations 2.10
Distributions To Shareholders From:
Net investment income -
Net realized gains -
Total distributions -
Net asset value
End of period $ 12.10
Total Return2 21.00%
Ratios And Supplemental Data Expenses to average net assets3,4 1.40% Net
investment income (loss)4 (0.73)% Portfolio turnover rate 5.35% Average
commission rate5 $0.0666 Net assets, end of period $12,149,000
1 Net investment income is after waiver of fees by the Investment Adviser and
reimbursement of certain expenses by the Administrator. If the Investment
Adviser had not waived fees and the Administrator had not reimbursed expenses,
net investment income (loss) per share would have been $(0.06). 2 Total return
represents aggregate total return for the period indicated and is not
annualized. 3 If the Investment Adviser had not waived fees and the
Administrator had not reimbursed expenses, the ratio of operating expenses to
average net assets would have been 2.14%. 4 Annualized 5 Represents the average
commission rate paid on equity security transactions on which commissions are
charged.
TPF-194
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1
Transamerica Premier Aggressive Growth Fund -- Investor Class
Prospectus: August 27, 1997
Your Guide
This guide (the "Prospectus") will provide you with helpful information and
details about the Investor Class of shares of the Transamerica Premier
Aggressive Growth Fund (the "Fund"). It is intended to give you what you need to
know before investing. Please read it carefully and save it for future
reference.
The Fund at a Glance
The Transamerica Premier Aggressive Growth Fund seeks to maximize long-term
capital appreciation. The Fund primarily invests in common stocks selected by
the Investment Adviser for their growth potential resulting from growing
franchises protected by high barriers to competition. Under normal market
conditions, the Fund will invest at least 90% of its total assets in a
non-diversified portfolio of domestic equity securities of any size, which may
include securities of larger more established companies and/or smaller emerging
companies selected for their growth potential. The remainder may be invested in
a variety of debt and equity securities, including high-yield ("junk") bonds and
derivatives. There can be no assurance that the Fund will achieve its investment
objective.
Availability
Investor Shares are available on a no-load basis directly to individuals,
companies, Pension and Retirement Savings Programs, and other institutional
investors from Transamerica Securities Sales Corporation ("TSSC"), the
Distributor. For a listing of applicable Pension and Retirement Savings
Programs, see "Pension and Retirement Savings Programs" on page 20.
Transamerica Investors
Transamerica Investors, Inc. (also referred to as the "Company" or "we," "us,"
or "our") is an open-end
management investment company. We are a mutual fund company that offers a number
of portfolios, known
collectively as the Transamerica Premier Funds. In addition to the Transamerica
Premier Aggressive Growth Fund,
the Transamerica Premier Funds include:
The Transamerica Premier Small Company Fund The Transamerica Premier
Equity Fund The Transamerica Premier Index Fund The Transamerica
Premier Bond Fund The Transamerica Premier Balanced Fund The
Transamerica Premier Cash Reserve Fund
Each of these Funds is described in a separate prospectus. The minimum
investment is $1,000 per Fund, or $250 for an IRA account. See "Minimum
Investments" on page 12 for more details.
For additional details about any of the Transamerica Premier Funds (including
ordering a prospectus), you can call 1-800-89-ASK-US (1-800-892-7587), or write
to Transamerica Investors, P.O. Box 9232, Boston, Massachusetts 02205-9232. A
Statement of Additional Information (the "SAI"), which has been filed with the
Securities and Exchange Commission, is available at no charge by calling the
above number. The SAI is a part of this Prospectus by reference.
LIKE ALL MUTUAL FUND SHARES, THIS SECURITY HAS NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Contents
All of the fees and expenses are spelled out here.
Fund Expenses 3
The Management Team 4
The Fund In Detail 4
A General Discussion About Risk 5
Investment Procedures and Risk Considerations for the Fund 6
Shareholder Services 11
Opening Your Account 11
How to Buy Shares 12
How to Sell Shares 13
How to Exchange Shares 15
Other Investor Requirements and Services 16
Dividends and Capital Gains 17
What About Taxes? 17
Share Price 18
Organization and Management 19
General Information 21
We offer a number of services that make investing in the Funds simple and
efficient, like our Automatic Investment Plan. This section lists and describes
these special services.
One of the advantages of investing in mutual funds is the potential to receive
dividends and/or capital gains. You choose how you want to receive these.
This prospectus does not constitute an offer to sell securities in any state or
other jurisdiction to any person to whom it is unlawful to make such an offer in
such state or other jurisdiction.
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Fund Expenses
Shareholder Transaction Expenses
(as a percentage of offering price)
Transaction Expenses
Sales Charge on Purchases1 None
Redemption Fee None
Sales Charge on Reinvested Dividends None
Exchange Fee None
Contingent Deferred Sales Charge None
Estimated Annual Fund Operating Expenses (as a percent of average net assets)
Adviser Fee2 0.85%
12b-1 Fee3 0.25%
Other Expenses After Waiver and Reimbursement5 0.30%
Total Operating Expenses After Waiver and Reimbursement5 1.40%
The preceding tables summarize actual transaction expenses and Adviser Fees and
anticipated operating expenses for 1997. The purpose of the tables is to assist
you in understanding the varying costs and expenses you will bear directly or
indirectly.
Example
Using the previous tables of transaction expenses and operating expenses,6 you
would pay the following expenses based on a $1,000 investment. The expenses
shown assume a 5% annual return. The expenses are the same whether or not you
redeem your shares at the end of each time period. We may assess an annual fee
against accounts used as IRAs or SEPs. For more information on this fee, see
"IRA Accounts" on page 11.
Premier Fund 1 Year 3 Years 5 Years 10 Years
Aggressive Growth $14 $44 $77 $168
The information contained in the above examples should not be considered a
representation of future expenses. The actual expenses may be more or less than
those shown.
1 Although there is no sales charge, there is a 12b-1 fee. Over a long period of
time, the total amount of 12b-1 fees paid may exceed the maximum amount
permitted as front-end sales charges under NASD regulations.
2 See "Adviser Fee" on page 19.
3 12b-1 fees cover costs of advertising and marketing the Fund. For more
information on 12b-1 fees, see "Distribution Plan" on page 20. 4 "Other
Expenses" are those incurred after any reimbursements to the Fund by the
Administrator. See "The Management Team" on page 4. Other expenses include
expenses not covered by the Adviser Fee or the 12b-1 fee. See "Distribution
Plan" on page 20. Expenses are based on estimated expenses and estimated net
assets for the first fiscal year. 5 "Total Operating Expenses" include adviser
fees, 12b-1 fees, and other expenses that the Fund incurs. The Investment
Adviser has agreed to waive that part of its Adviser Fee and the Administrator
has agreed to assume any other operating expenses to ensure that annualized
expenses for the Fund (other than interest, taxes, brokerage commissions and
extraordinary expenses) will not exceed 1.40%. The Administrator may, from time
to time, assume additional expenses. Fee waivers and expense assumption
arrangements, which may be terminated at any time without notice, will increase
the Fund's yield. Without any fee waiver or expense reimbursement, the estimated
total operating expenses for the first year would be 1.73% based on $50 million
of assets. 6 The expenses in the example assume no fees for IRA or SEP accounts.
The Management Team
Responsibility for the management and supervision of the Company and the
Transamerica Premier Funds rests with the Board of Directors of the Company (the
"Board"). The Investment Adviser and the Administrator are subject to the
direction of the Board.
The Fund's Investment Adviser is Transamerica Investment Services, Inc.
(the "Investment Adviser"), 1150 South Olive Street, Los Angeles, California
90015. The Investment Adviser's duties include, but are not limited to: (1)
supervising and managing the investments of the Fund and directing the purchase
and sale of its investments; and (2) ensuring that investments follow the Fund's
investment objective, strategies, and policies and comply with government
regulations.
The Investment Adviser has been in the investment advisory business
since 1967 and currently manages approximately $32 billion of discretionary
assets for various clients including corporations, pension plans, 401(k) plans,
and other institutional investors.
The Fund's Administrator is Transamerica Occidental Life Insurance
Company (the "Administrator"), 1150 South Olive Street, Los Angeles, California
90015. The Administrator's duties include, but are not limited to: (1) providing
the Fund with administrative and clerical services, including the maintenance of
the Fund's books and records; (2) registering the Fund shares with the
Securities and Exchange Commission (the "SEC") and with those states and other
jurisdictions where its shares are offered or sold and arranging periodic
updating of the Funds' prospectuses; (3) providing proxy materials and reports
to Fund shareholders and the SEC; and (4) providing the Fund with adequate
office space and all necessary office equipment and services.
Transamerica Occidental Life Insurance Company is a wholly-owned
subsidiary of Transamerica Insurance Corporation of California. Both
Transamerica Insurance Corporation of California and Transamerica Investment
Services, Inc. are wholly-owned subsidiaries of Transamerica Corporation, 600
Montgomery Street, San Francisco, California 94111, one of the nation's largest
financial services companies. For more information on Fund management, see
"Organization and Management" on page 19
The Fund in Detail
Fund Objective
The Transamerica Premier Aggressive Growth Fund seeks to maximize long-term
capital appreciation. The Fund primarily invests in common stocks selected by
the Investment Adviser for their growth potential resulting from growing
franchises protected by high barriers to competition. There can be no assurance
that the Fund will achieve its investment objective.
Fund Policies
Under normal conditions, the Fund will normally invest at least 90% of its total
assets in a non-diversified portfolio of domestic equity securities of any size,
which may include securities of larger more established companies and/or smaller
emerging companies selected by the Investment Adviser for their growth
potential.
Fund Strategy and Types of Securities
The Fund primarily invests in domestic common stocks selected by the Investment
Adviser for their growth potential resulting from growing franchises protected
by high barriers to competition. The Fund may invest to a lesser degree in other
types of domestic and foreign securities, including preferred stock, warrants,
convertible securities and debt securities. Debt securities that the Fund may
purchase include investment grade and non-investment grade corporate bonds and
debentures, government securities, mortgage and asset-backed securities, zero
coupon bonds, indexed/structured notes, high-grade commercial paper,
certificates of deposit, and repurchase agreements. Such securities may offer
growth potential because of anticipated changes in interest rates, credit
standing, currency relationships or other factors. The Fund may use a variety of
investment techniques, including derivatives and short sales.
For additional information on specific types of securities, investment
techniques, and their risks, see "Investment Procedures and Risk Considerations"
on page 6.
Investment Process
The Fund is constructed one stock at a time. Although themes may emerge in the
Fund, securities are generally selected without regard to any defined industry
sector or other similarly defined selection procedure. Each company passes
through a research process and stands on its own merits as a viable investment
in the Investment Adviser's opinion. The Investment Adviser's research is
designed to identify companies with growing franchises protected by high
barriers to competition with potential for improvement in profitability and
acceleration of growth.
The Investment Adviser tries to keep the Fund fully invested under
normal market conditions. When the Investment Adviser determines that market
conditions warrant, the Fund may invest without limit in cash and cash
equivalents
General Investment Policies
In investing its portfolio assets, the Fund will follow the general policies
listed below. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if the Fund exceeds a limit as a result of market fluctuations or the
sale of other securities, it will not be required to dispose of any securities.
Some Points To Consider When Investing
Since the Fund invests primarily in common stocks, its investments are subject
to stock market price volatility. Price volatility means that stock prices can
go up or down due to a variety of economic and market conditions.
Since the Fund, as a non-diversified investment company portfolio,
could invest in a smaller number of individual issuers than a diversified
investment company, the value of the Fund's investments could be more affected
by any single adverse occurrence than would the value of the investments of a
diversified investment company. However, it is the policy of the Fund to attempt
to reduce its overall exposure to risk from declines in individual securities by
spreading its investments over a number of different companies and a variety of
industries.
The Fund has adopted certain investment restrictions, which are
described fully in the Statement of Additional Information. Like the Fund's
investment objective, certain of these restrictions are fundamental and may be
changed only by a majority vote of the Fund's outstanding shares.
The Fund is intended for investors who have the perspective, patience,
and financial ability to take on above-average stock market volatility in a
focused pursuit of long-term capital growth. Because of the uncertainty
associated with common stock investments, the Fund is intended to be a long-term
investment.
What is Fundamental?
The investment objectives given for the Fund are fundamental. This means they
can be changed only with the approval of the majority of shareholders. We can
give you no assurance that these objectives will be met. Many of the strategies
and policies are not fundamental. This means strategies and policies can be
changed by the Board without your approval.
If any investment objectives of the Fund change, you should decide if
the Fund still meets your financial needs. More information about this is in the
Statement of Additional Information.
A General Discussion About Risk
It's important for you to understand the risks inherent in investing in
different kinds of funds. All investments are subject to risk. The Fund is
subject to the following risks:
Market or Price Volatility Risk
For stocks, this refers to the up and down price fluctuations, or volatility,
caused by changing conditions in the financial markets. Stock funds are more
subject to this risk than money market and bond funds.
Financial or Credit Risk
For stocks and other equity securities, financial risk comes from the
possibility that current earnings of the stock company will fall or that overall
financial circumstances will decline. Either of these could cause the security
to lose its value. Stock funds are more subject to this risk than funds with
government or high quality bonds. For more information, see "High-Yield (`Junk')
Bonds" on page 9.
Current Income Risk
The Fund receives income, either as interest or dividends, from the securities
in which it has invested. The Fund pays out substantially all of this income to
its shareholders as dividends. See the footnote for "What About Taxes?" on page
17. The dividends paid out to shareholders are called current income. Current
income risk means how much and how quickly overall interest rate or dividend
rate changes on income received by the Fund affects its ability to maintain the
current level of income paid to shareholders.
Inflation or Purchasing Power Risk
Inflation risk is the uncertainty that your invested dollars may not buy as much
in the future as they do today. Stocks are less subject to this risk than
longer-maturity bonds.
Sovereign Risk
Sovereign risk is the potential loss of assets or earning power due to
government actions, such as taxation, expropriation, or regulation. Funds with
large investments overseas or funds with tax-advantaged investments are more
subject to this risk.
More in-depth information about risk is provided in the following
section and in the Statement of Additional Information.
Buying and Selling Securities
In general, we purchase and hold securities for the Fund for capital growth.
However, we ordinarily buy and sell securities whenever we think it is
appropriate in order to achieve the Fund's investment objective. Fund changes
can result from liquidity needs, securities reaching a price objective,
anticipated changes in interest rates, a change in the creditworthiness of an
issuer, or from general financial or market developments. Because investment
changes usually are not tied to the length of time a security has been held, a
significant number of short-term transactions may result.
We may sell one security and simultaneously purchase another of
comparable quality. We may simultaneously purchase and sell the same security to
take advantage of short-term differentials in bond yields. Or we may purchase
individual securities in anticipation of relatively short-term price gains. The
rate of portfolio turnover will not be a determining factor in these decisions.
However, certain tax considerations can restrict our ability to sell securities
in some circumstances when the security has been held for less than three
months. Increased turnover results in higher costs. These costs result from
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities. This can result in the
acceleration of taxable gains.
Turnover will not be a consideration in the management of the Fund. The
Investment Adviser buys and sells securities for the Fund whenever it believes
it is appropriate to do so.
We cannot predict precisely the turnover rate for the Fund, but we
expect that the annual turnover rate will not exceed 50%. A 100% annual turnover
rate would occur if all of the Fund's securities were replaced one time during a
one year period. Short-term gains realized from turnover are taxable to
shareholders as ordinary income, except for shares held in special tax-qualified
accounts (such as IRA's or employer sponsored pension plans). In addition,
higher turnover rates can result in corresponding increases in brokerage
commissions and other transaction costs. We generally will not consider turnover
rates in making investment decisions on behalf of the Fund consistent with the
Fund's investment objective and policies.
For more information, see "What About Taxes?", on page 17, and the
Statement of Additional Information.
Securities Lending
As a way to earn additional income, we may lend Fund securities to creditworthy
persons not affiliated with the Fund. Such loans must be secured by cash
collateral or by irrevocable letters of credit maintained on a current basis in
an amount at least equal to the market value of the securities loaned. During
the existence of the loan, we must continue to receive the equivalent of the
interest and dividends paid by the issuer on the securities loaned and interest
on the investment of the collateral. We must have the right to call the loan and
obtain the securities loaned at any time on three days notice. This includes the
right to call the loan to enable us to execute shareholder voting rights. Such
loans cannot exceed one-third of the Fund's net assets taken at market value.
Interest on loaned securities cannot exceed 10% of the annual gross income of
the Fund (without offset for realized capital gains). The lending policy
described in this paragraph is a fundamental policy that can be changed only by
a vote of a majority of shareholders.
Lending securities to broker-dealers and institutions could result in a
loss or a delay in recovering the Fund's securities.
Borrowing
We can borrow money from banks or engage in reverse repurchase agreements, for
temporary or emergency purposes. We can borrow up to one-third of the Fund's
total assets. To secure borrowings, we can mortgage or pledge securities in an
amount up to one-third of the Fund's net assets. If we borrow money, the Fund's
share price may be subject to greater fluctuation until the borrowing is paid
off. The Fund will not make any additional investments, other than through
reverse repurchase agreements, while the level of borrowing exceeds 5% of the
Fund's total assets. For more information on reverse repurchase agreements see
the "Reverse Repurchase Agreements and Leverage" section on this page.
Capitalization Stocks
We can purchase securities of small companies. The securities of smaller
companies are usually less actively followed by analysts and may be undervalued
by the market, which can provide significant opportunities for Capital
appreciation; however, the securities of such smaller companies may also involve
greater risks and may be subject to more volatile market movements than
securities of larger, more established companies. The securities of small
companies are often traded in the over-the counter market, and might not be
traded in volumes typical of securities traded on a national securities
exchange. Thus, the securities of small companies are likely to be subject to
more abrupt or erratic market movements than securities of larger, more
established companies.
Over-The-Counter-Market
The Fund may invest in over-the-counter stocks. Generally, the volume of trading
in an unlisted or over-the-counter common stock is less than the volume of
trading in a listed stock. Low trading volumes may make it difficult to find a
buyer or seller for the securities of some companies. This will have an effect
on the purchase or selling price of a stock.
Special Situations
The Fund may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Fund's portfolio manager, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating a
special situation might include, among others, a merger proposal or buyout, a
leveraged recapitalization, a new product or process, a technological
breakthrough, a management change or other extraordinary corporate event, or
differences in market supply of and demand for the security. Investment in
special situations may carry an additional risk of loss in the event that the
anticipated development does not occur or does not attract the expected
attention.
Repurchase Agreements
We may enter into repurchase agreements with Federal Reserve System member banks
or U.S. securities dealers. A repurchase agreement occurs when, at the time we
purchase an interest-bearing debt obligation, the seller agrees to repurchase
the debt obligation on a specified date in the future at an agreed-upon price.
The repurchase price reflects an agreed-upon interest rate during the time the
Fund's money is invested in the security. Since the security constitutes
collateral for the repurchase obligation, a repurchase agreement can be
considered a collateralized loan. Our risk is the ability of the seller to pay
the agreed-upon price on the delivery date. If the seller is unable to make a
timely repurchase, our expected proceeds could be delayed, or we could suffer a
loss in principal or current interest, or incur costs in liquidating the
collateral. We have established procedures to evaluate the creditworthiness of
parties making repurchase agreements.
We will not invest in repurchase agreements maturing in more than seven
days, if that would result in more than 10% of the Fund's net assets being so
invested when taking into account the remaining days to maturity of our existing
repurchase agreements.
Reverse Repurchase Agreements and Leverage
We may enter into reverse repurchase agreements with Federal Reserve member
banks and U.S. securities dealers from time to time. In a reverse repurchase
transaction we sell securities and simultaneously agree to repurchase them at a
price which reflects an agreed-upon rate of interest. We will use the proceeds
of reverse repurchase agreements to make other investments which either mature
or are under an agreement to resell at a date simultaneous with or prior to the
expiration of the reverse repurchase agreement. The Fund may utilize reverse
repurchase agreements only if the interest income to be earned from the
investment proceeds of the transaction is greater than the interest expense of
the reverse repurchase transaction.
Reverse repurchase agreements are a form of leverage which increases
the opportunity for gain and the risk of loss for a given change in market
value. In addition, the gains or losses will cause the net asset value of the
Fund's shares to rise or fall faster than would otherwise be the case. There may
also be a risk of delay in the recovery of the underlying securities, if the
opposite party has financial difficulties.
The Fund's obligations under all borrowings, including reverse
repurchase agreements, will not exceed one-third of the Fund's net assets.
When-Issued Securities
We may sometimes purchase new issues of securities on a when-issued basis. The
price of when-issued securities is established at the time the commitment to
purchase is made. Delivery of and payment for these securities typically occur
15 to 45 days after the commitment to purchase. The market price of the
securities at the time of delivery may be higher or lower than those contracted
for on the when-issued security, and there is some risk the transaction may not
be consummated. We maintain a segregated account for the Fund consisting of cash
or high-quality liquid debt securities in an amount at least equal to the
when-issued commitments.
Short Sales
We may sell securities which we do not own, or intend to deliver to the buyer if
we do own ("sell short") if, at the time of the short sale, we own or have the
right to acquire an equal amount of the security being sold short at no
additional cost. These transactions allow us to hedge against price fluctuations
by locking in a sale price for securities we do not wish to sell immediately.
We may make a short sale when we want to sell a security we own at a
current attractive price. This allows us to postpone a gain or loss for federal
income tax purposes and to satisfy certain tests applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended, (the
"Code"). We will make short sales only if the total amount of all short sales
does not exceed 10% of the Fund. This limitation can be changed at any time.
Municipal Obligations
We may invest in municipal obligations for the Fund. In addition to the usual
risks associated with investing for income, the value of municipal obligations
can be affected by changes in the actual or perceived credit quality. The credit
quality of a municipal obligation can be affected by, among other factors: a)
the financial condition of the issuer or guarantor; b) the issuer's future
borrowing plans and sources of revenue; c) the economic feasibility of the
revenue bond project or general borrowing purpose; d) political or economic
developments in the region or jurisdiction where the security is issued; and e)
the liquidity of the security. Because municipal obligations are generally
traded over the counter, the liquidity of a particular issue often depends on
the willingness of dealers to make a market in the security. The liquidity of
some municipal issues can be enhanced by demand features which enable us to
demand payment from the issuer or a financial intermediary on short notice.
High-Yield ("Junk") Bonds
High-yield bonds (commonly called "junk" bonds) are lower-rated bonds that
involve higher current income but are predominantly speculative because they
present a higher degree of credit risk. Credit risk is the risk that the issuer
of the bonds will not be able to make interest or principal payment on time. If
this happens, we would lose some of our income, and we could expect a decline in
the market value of the securities affected. We need to carefully analyze the
financial condition of companies issuing junk bonds. The prices of junk bonds
tend to be more reflective of prevailing economic and industry conditions, the
issuers' unique financial situations, and the bonds' coupon than to small
changes in the level of interest rates. But during an economic downturn or a
period of rising interest rates, highly leveraged companies can have trouble
making principal and interest payments, meeting projected business goals, and
obtaining additional financing.
We may also invest in unrated debt securities. Unrated debt, while not
necessarily of lower quality than rated securities, may not have as broad a
market. Because of the size and perceived demand for the issue, among other
factors, certain municipalities may decide not to pay the cost of getting a
rating for their bonds. We analyze the creditworthiness of the issuer, as well
as any financial institution or other party responsible for payments on the
security, to determine whether to purchase unrated municipal bonds.
Unrated debt securities will be included in the 35% limit on
non-investment grade debt of the applicable Funds, unless we deem such
securities to be the equivalent of investment grade securities. See "Summary of
Bond Ratings" on page 21 and in the Statement of Additional Information for a
description of bond rating categories.
Foreign Securities
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks and considerations include differences in accounting, auditing and
financial reporting standards, generally higher commission rates on foreign Fund
transactions, the possibility of expropriation or confiscatory taxation, adverse
changes in investment or exchange control regulations, political instability
which could affect U.S. investment in foreign countries and potential
restrictions on the flow of international capital and currencies. Foreign
issuers may also be subject to less government regulation than U.S. companies.
Moreover, the dividends and interest payable on foreign securities may be
subject to foreign withholding taxes, thus reducing the net amount of income
available for distribution to the Fund's shareholders. Further, foreign
securities often trade with less frequency and volume than domestic securities
and, therefore, may exhibit greater price volatility. Changes in foreign
exchange rates will affect, favorably or unfavorably, the value of those
securities which are denominated or quoted in currencies other than the U.S.
dollar.
Options, Futures, and Other Derivatives
We may use options, futures, forward contracts, and swap transactions
("derivatives") for the Fund. We may seek to protect the Fund against potential
unfavorable movements in interest rates or securities' prices by investing in
derivatives. If those markets do not move in the direction we anticipate, we
could suffer investment losses.
We may purchase, or we may write, call or put options on securities or
on indexes ("options"). We may also enter into interest rate or index futures
contracts for the purchase or sale of instruments based on financial indexes
("futures contracts"), options on futures contracts, forward contracts, and
interest rate swaps and swap-related products. We use these instruments
primarily to adjust the Fund's exposure to changing securities prices, interest
rates, or other factors that affect securities values. This is an attempt to
reduce the overall investment risk.
Risks in the use of these derivatives include, in addition to those
referred to above: a) the risk that interest rates and securities prices do not
move in the directions being hedged against, in which case the Fund has incurred
the cost of the derivative (either its purchase price or, by writing an option,
losing the opportunity to profit from increases in the value of the securities
covered) with no tangible benefit; b) imperfect correlation between the price of
derivatives and the movements of the securities' prices or interest rates being
hedged; c) the possible absence of a liquid secondary market for any particular
derivative at any time; d) the potential loss if the counterparty to the
transaction does not perform as promised; and e) the possible need to defer
closing out certain positions to avoid adverse tax consequences.
More information on derivatives is contained in the Statement of
Additional Information.
Mortgage-Backed and Asset-Backed Securities
We may invest in mortgage-backed and asset-backed securities. Mortgage-backed
and asset-backed securities are generally pools of many individual mortgages or
other loans. Part of the cash flow of these securities is from the early payoff
of some of the underlying loans. The specific amount and timing of such
prepayments is difficult to predict, creating "prepayment risk." For example,
prepayments on Government National Mortgage Association ("GNMAs") are more
likely to increase during periods of declining long-term interest rates because
borrowers tend to refinance when interest rates drop. In the event of very high
prepayments, we may be required to invest these proceeds at a lower interest
rate, causing us to earn less than if the prepayments had not occurred.
Prepayments are more likely to decrease during periods of rising interest rates,
causing the expected average life to become longer. This variability of
prepayments will tend to limit price gains when interest rates drop and to
exaggerate price declines when interest rates rise.
Zero Coupon Bonds
We may invest in zero coupon bonds and strips. Zero coupon bonds do not make
regular interest payments. Instead, they are sold at a discount from face value.
A single lump sum which represents both principal and interest is paid at
maturity. Strips are debt securities whose interest coupons are taken out and
traded separately after the securities are issued, but otherwise are comparable
to zero coupon bonds. The market value of zero coupon bonds and strips generally
is more sensitive to interest rate fluctuations than interest-paying securities
of comparable term and quality.
Illiquid Securities
We may invest up to 15% of the Fund's net assets in securities that are
illiquid. Securities are considered illiquid when there is no readily available
market or when they have legal or contractual restrictions. Repurchase
agreements which mature in more than seven days are included as illiquid
securities. It may be difficult for us to sell these investments quickly for
their fair market value.
Certain restricted securities that are not registered for sale to the
general public but that can be resold to institutional investors under Rule 144A
may not be considered illiquid. This is provided that a dealer or institutional
trading market exists. The institutional trading market is relatively new.
Liquidity of the Fund's investments could be impaired if trading for these
securities does not further develop or declines. The Investment Adviser
determines the liquidity of Rule 144A securities under guidelines approved by
the Board.
Variable Rate, Floating Rate, or Variable Amount Securities
We may invest in variable rate, floating rate, or variable amount securities for
the Fund. These are short-term unsecured promissory notes issued by corporations
to finance short-term credit needs. They are interest-bearing notes on which the
interest rate generally fluctuates on a scheduled basis.
Investments in Other Investment Companies
We may invest up to 10% of the Fund's total assets in the shares of other
investment companies, but only up to 5% of its assets in any one other
investment company. In addition, we cannot purchase more than 3% of the
securities of any one investment company for the Fund. We intend to keep these
investments to a minimum.
Shareholder Services
Our goal is to make your investment in the Fund, and the ongoing account
servicing, as simple as possible by offering the following shareholder services:
Simple application form with service representatives to assist you.
Purchases, exchanges and redemptions by phone.
Purchases and redemptions by wire.
Automatic Investment Plan - you designate an amount of $50 or more to
be automatically withdrawn from your checking, savings or other bank
account and deposited into the Fund you select.
Automatic Exchange Plan - allows you to specify an amount to be
automatically withdrawn from one Fund and deposited into another Fund
on a regular basis, once or twice a month.
Automatic Income Plan - you can receive automatic monthly payments
from your Fund account to your checking or savings account.
Automatic investment of dividends. Uniform Gifts to Minors (UGMA or
UTMA).
Transmission of redemption proceeds by electronic funds transfer.
Individual Retirement Account (IRA) - we will administer your IRA.
Opening Your Account
To open an account, complete the application and send it to us with a check,
money order, or wire for the amount you want to invest. Mail the application to:
Transamerica Premier Funds
P.O. Box 9232
Boston, MA 02205-9232
If you need help in filling out your application, call one of our customer
service representatives at 1-800-89-ASK-US (1-800-892-7587). We will walk you
through the application and help you understand everything.
IRA Accounts
You can establish an Individual Retirement Account ("IRA"), for yourself or
under your employer's Simplified Employee Pension ("SEP"), or other comparable
program allowed by the Internal Revenue Service with us. Contributions to an IRA
may be deductible from your taxable income, depending on your personal tax
situation. Please call 1-800-89-ASK-US (1-800-892-7587) for your IRA application
kit, or for additional information. The kit has information on whether you
qualify for deductible contributions to an IRA.
If you are receiving a distribution from your pension plan, or you
would like to transfer your IRA account from another financial institution, you
can continue to get tax-deferred growth by transferring these proceeds to your
Transamerica Premier Fund IRA. If you want to rollover distributions from your
pension plan to an IRA in one or more of the Funds, the money must be paid
directly by your pension plan administrator to Transamerica Premier Funds to
avoid a 20% federal withholding tax. See "What About Taxes?" on page 17.
There is an annual fee of $10 per Fund in which you own shares for
administering your IRA. This is limited to a maximum annual fee of $36 per
taxpayer identification number. We will waive this fee if the combined value of
all shares in your IRA accounts is $5,000 or more when the fee is due.
Alternatively, you can pay a one-time, non-refundable fee of $100 for all IRA
accounts that are maintained under the same taxpayer identification number. You
may pay the fee to us, otherwise we will deduct the annual fee ordinarily during
December of each year or at the time you fully redeem your shares in a Fund, if
before then. The Company reserves the right to change the fee, but we will
notify you at least 30 days in advance of any change.
Uniform Gifts to Minors
A Uniform Gifts/Transfers to Minors Act (UGMA/UTMA) account allows an adult to
put assets in the name of a minor child. The adult maintains control over these
assets until the child reaches the age of majority, which is generally 18 or 21.
State laws dictate which type of account can be used and the age of majority. An
adult must be appointed as custodian for the account and will be legally
responsible for administering the account, but the child's Social Security
number must be used. Generally, the person selected as custodian is one of the
parents or grandparents, but may be some other adult relative or friend. By
shifting assets to a custodial account, you may benefit if the child's tax rate
is lower.
How to Buy Shares
You May Buy Shares in One of Four Ways:
1. By Mail
Fill out an investment coupon from a previous confirmation statement, or
indicate on your check or a separate piece of paper your name, address and
account number, and mail it to:
Transamerica Premier Funds
P.O. Box 9232
Boston, MA 02205-9232
All investments made by check should be in U.S. dollars and made
payable to Transamerica Premier Funds, or in the case of a retirement account,
the custodian. We will not accept third party checks, except those payable to an
existing shareholder who is a natural person (as opposed to a corporation or
partnership), and we will not accept checks drawn on credit card accounts. When
you make purchases by check or Automatic Investment Plan, redemptions will not
be allowed until the investment being redeemed has been in the account for 15
business days.
2. By Automatic Investment Plan
You can make investments automatically by electing this service in your
application. It will authorize us to take regular, automatic withdrawals from
your bank account. These periodic investments must be at least $50 for each Fund
in which you are automatically investing. You can change the date or amount of
your monthly investment, or terminate the Automatic Investment Plan, at any time
by letter or telephone call (with prior authorization). Give us your request at
least 20 business days before the change is to become effective. You may also be
able to have investments automatically deducted from:
your paycheck at work;
your savings account;
your annuity from Transamerica;
your social security payments; or
other sources of your choice.
Call 1-800-89-ASK-US (1-800-892-7587) for more information.
3. By Telephone
If you elect the telephone purchasing service on your application, you can make
occasional electronic withdrawals from your designated bank account by calling
1-800-89-ASK-US (1-800-892-7587).
We take reasonable precautions to make sure that telephone instructions
are genuine. Precautions include requiring you to positively identify yourself,
tape recording the telephone instructions, and providing written confirmations.
We accept all telephone instructions we reasonably believe to be accurate and
genuine. Any losses arising from communication errors are your responsibility.
If reasonable procedures are not used to confirm that instructions communicated
by telephone are genuine, the Company may be liable for any losses due to
unauthorized or fraudulent transactions.
4. By Wire
You can make your initial or subsequent investments in the Funds by wire.
Here's what you need to do:
1. send us your application form (initial investment only);
2. call 1-800-89-ASK-US (1-800-892-7587) for a wire number;
3. instruct your bank to wire money to State Street Bank, ABA number 011000028,
DDA number 9905-134-4; and
4. specify on the wire:
a. "Transamerica Premier Funds";
b. your Fund's account number, if you have one;
c. identify the Funds in which you would like to purchase shares,
and the amount to be allocated to each Fund (e.g., $5,000 in
the Transamerica Premier Equity Fund and $4,000 in the
Transamerica Premier Bond Fund);
d. your name, your city and state; and
e. your wire number.
Wired money is considered received by us when we receive the wire and
all the required information listed above. If we receive your telephone call and
wire before the New York Stock Exchange closes, usually 4:00 p.m. Eastern
Standard Time, the money is credited that same day if you have supplied us with
all other needed information.
Minimum Investments
Minimum Minimum
Initial Subsequent
Type of Account Investment Investment
Regular Accounts $1,000 $100
Pension or Retirement Saving Programs $250 None
Uniform Gift to Minors (UGMA) or
Transfer to Minors (UTMA) $250 $100
Automatic Investment Plans $50 $50
Your investment must be a specified dollar amount. We cannot accept purchase
requests specifying a certain price, date, or number of shares; these
investments will be returned. The price you pay for your shares will be the next
determined net asset value after your purchase order is received. See "Share
Price" on page 18. The Company reserves the right to reject any application or
investment. There may be circumstances when the Company will not accept new
investments in one or more of the Funds. If you have a securities dealer, bank,
or other financial institution handle your transactions with us you may be
charged a fee by them.
How to Sell Shares
You can sell your shares (called "redeeming") at any time. You'll receive the
net asset value next determined after we receive your redemption request,
assuming all requirements have been met. Before redeeming, please read "When
Share Price Is Determined" on page 18, "Minimum Account Balances" on page 13,
and "Points to Remember When Redeeming" on page 14. You have several options for
receiving your redemption:
By check;
By electronic transfer to your bank; or
By wire transfer
If your wire transfer is $2,500 or less, we will charge a $10 fee. Also, some
banks may charge a fee to receive the wire transfer. If you call us before the
close of the New York Stock Exchange, usually 4:00 p.m. Eastern Standard Time,
you will receive the price determined as of the close of that business day. See
"Share Price" on page 18.
You May Sell Shares in One of Three Ways:
1. By Mail
Your written instructions to us to redeem shares can be in any one of the
following forms: By redemption form, available by calling
1-800-89-ASK-US (1-800-892-7587); By letter; or By assignment form or
other authorization granting power with respect to your shares in one
of the
Funds.
Once mailed to us, your redemption request is irrevocable and cannot be
modified or canceled. If the amount redeemed is over $50,000, all
signatures must be guaranteed. See "Signature Guarantee" on
page 16. The request must be signed by each registered owner. All owners must
sign the request exactly as their
names appear in the registration. For example, if the owner's name appears in
the registration as John Michael
Smith, he must sign that way and not as John M. Smith.
2. By Telephone
If you have previously authorized telephone directions in writing (e.g., in your
application), you can redeem your shares by calling 1-800-89-ASK-US
(1-800-892-7587). Be careful in calling, since once made, your telephone request
cannot be modified or canceled.
We take reasonable precautions to make sure that telephone instructions
are genuine. Precautions include requiring you to positively identify yourself,
tape recording the telephone instructions, and providing written confirmations.
We accept all telephone instructions we reasonably believe to be accurate and
genuine. Any losses arising from communication errors are your responsibility.
If reasonable procedures are not used to confirm that instructions communicated
by telephone are genuine, the Company may be liable for any losses due to
unauthorized or fraudulent transactions. For detailed information on how
telephone transactions will operate, see the Statement of Additional
Information.
3. By Automatic Income Plan
Under the Automatic Income Plan we automatically redeem enough shares each month
to provide you with a check or automatic deposit to your bank account. The
minimum is $50 per Fund. Please tell us:
a) when you want to be paid each month;
b) how much you want to be paid; and
c) from which Fund(s).
To set up an Automatic Income Plan, call us at 1-800-89-ASK-US (1-800-892-7587).
If your monthly income payments exceed the dividends, interest, and
capital appreciation on your shares, the payments will deplete your investment.
You can specify the Automatic Income Plan when you make your first
investment. If you sign up for the plan later, the request for the Automatic
Income Plan or any increase in payment amount must be signed by all owners of
your account.
You can request us to send payments to an address other than the
address of record at the time of your first investment. After that, a request to
send payments to an address other than the address of record must be signed by
all owners of your account, with their signatures guaranteed.
The Automatic Income Plan option can be terminated at any time. If it
is, we will notify you. You can terminate the Plan or change the amount of the
payments by writing or calling us. Termination or change will become effective
within 15 days after we receive your instructions.
How Long Will It Take?
We will usually send your redemption payment to you on the second business day
after we receive your request, but not later than seven days afterwards,
assuming we have all the information we need. If the information you provide us
is incomplete, we will contact you, but this may delay the redemption.
The Company may postpone such payment if: (a) the New York Stock
Exchange is closed for other than usual weekends or holidays, or trading on the
New York Stock Exchange is restricted; (b) an emergency exists as defined by the
U.S. Securities and Exchange Commission (the "Commission"), or the Commission
requires that trading be restricted; or (c) the Commission permits a delay for
the protection of investors.
When a redemption occurs shortly after a recent check purchase, the
redemption proceeds may be held beyond seven days but only until the purchase
check clears, which may take up to 15 days. If you anticipate redemptions soon
after you purchase your shares by check, you can avoid this delay by wiring your
purchase payment.
Points to Remember When Redeeming
All redemptions are made and the price is determined on the day we
receive all necessary documentation. See "When Share Price Is
Determined" on page 18.
We cannot accept redemptions specifying a certain date or dollar
price. It must be an amount. We will return these requests.
If you request a redemption check within 30 days of your address
change, you must send us your request in writing with a signature
guarantee. Keep your address current by writing or calling in your new
address to us as soon as possible.
Except for a transfer of redemption proceeds to the custodian of a
tax-qualified plan, we will make all payments to the registered owner
of the shares, unless you tell us otherwise.
We will mail all checks to the address of record, unless you tell us
otherwise. If the redemption request is made by a corporation,
partnership, trust, fiduciary, agent, or
unincorporated association, the individual signing the request must be
authorized. If the redemption is from an account under a qualified
pension plan, spousal consent may be required.
A request to redeem shares in an IRA or 403(b) plan must be
accompanied by an IRS Form W4-P (pension income tax withholding form,
which we will provide) and a reason for withdrawal. This is required by
the IRS.
For redemptions greater than $250,000 the Company reserves the right
to give you marketable securities instead of cash. See the Statement of
Additional Information, or call us at 1-800-ASK-US (1-800-892-7587).
Please call us at 1-800-89-ASK-US (1-800-892-7587) or write to Transamerica
Premier Funds, P.O. Box 9232, Boston, MA 02205-9232 for further information.
How to Exchange Shares Between Funds
If your investment needs change, you can exchange shares in any Fund for shares
of any other Fund within the same class. You can exchange shares by any of the
following methods:
By mail;
By telephone; or
By the Automatic Exchange Plan
By Mail or Telephone
The procedures relating to exchanges in writing and by telephone are the same as
for purchases. Exchanges are available to any resident of any state in which
shares of the Fund are legally sold.
By Automatic Exchange Plan
You can make automatic share exchanges either once or twice a month. You can
request this service in writing to us. Your request must be signed by all
registered owners of the account. Call 1-800-89-ASK-US (1-800-892-7587) for
information.
Points to Remember When Making Exchanges
Make sure you understand the investment objective of the Fund into
which you are exchanging shares. The exchange service is not designed
to give shareholders the opportunity to "time the market." It gives you
a convenient way to change the balance between the accounts so that it
more closely matches your overall investment objectives and risk
tolerance level.
You can make an unlimited number of exchanges between the Funds.
However, unless you are using the Automatic Exchange Plan, further
exchanges may be suspended for the remainder of any calendar year
during which you make more than four exchanges involving a single Fund.
This limitation is designed to keep each Fund's asset base
stable and to reduce its administrative expenses.
An exchange is treated as a sale of shares from one Fund and the
purchase of shares in another Fund. Exchanges are taxable events. See
"What About Taxes?" on page 17.
Exchanges into or out of the Funds are made at the next determined net
asset value per share after we receive all necessary information for
the exchange.
Exchanges are accepted only if the ownership registrations of both
accounts are identical. The Company reserves the right to reject any
exchange request and to modify or terminate the exchange
option at any time.
Other Investor Requirements and Services
Tax Identification Number
You must furnish your taxpayer identification number and state whether or not
you are subject to backup withholding for prior under-reporting. If you don't
furnish your tax I.D. number, redemptions or exchanges of shares, as well as
dividends and capital gains distributions, will be subject to federal
withholding tax.
Changing Your Address
To change the address on your account, please call us at 1-800-89-ASK-US
(1-800-892-7587), or send us a written notification signed by all registered
owners of your account. Include the name of your Fund(s), the account number(s),
the name(s) on the account and both the old and new addresses. Within the first
30 days after an address change, telephone redemptions are permissible only if
the redemption proceeds are wired or electronically transferred. See "How to
Sell Shares" on page 13.
Signature Guarantee
When a signature guarantee is required, e.g., when the redemption amount is more
than $50,000, the signature of each owner of record must be guaranteed by a bank
or trust company (or savings bank, savings and loan association, or a member of
a national stock exchange). This is required to comply with general stock
transfer rules. You must obtain a written guarantee that states "Signature(s)
Guaranteed" and is signed in the name of the guarantor by an authorized person.
If you have any questions, call 1-800-89-ASK-US (1-800-892-7587).
Our policy to waive the signature guarantee for amounts of $50,000 or
less can be amended or discontinued at any time. A signature guarantee may be
required with regard to any particular redemption transaction.
Minimum Account Balances
You must maintain a minimum balance of $500 in each Fund in which you own
shares. If a Fund's value falls below $500 as a result of your action, we will
notify you. You will have 30 days to increase your balance to or above the
minimum. If you do not increase your balance, we will redeem your shares and pay
the value to you.
This minimum does not apply if you are actively contributing to that
Fund through an Automatic Investment Plan or if your Fund is for a Pension or
Retirement Savings Program (including IRAs), or for an UGMA/UTMA.
How You Will Get Ongoing Information About the Funds
We will send you a consolidated quarterly statement of your account showing all
transactions since the beginning of the current quarter. You can request a
statement of your account activity at any time. Also, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction.
We will send you an annual report that includes audited financial
statements for the fiscal year. It will include a list of securities in each
Fund on that date. We will also send you a semi-annual report that includes
unaudited financial statements for the previous six months. It will also include
a list of securities in each Fund on that date.
We will send you a new Prospectus each year. The Statement of
Additional Information is also revised each year. We will send this to you only
if you request it.
How to Transfer Your Shares to Another Person
You can transfer ownership of your shares to another person or organization, or
change the name on an account, by sending us written instructions. The request
must be signed by all registered owners of your account. To change the name on
an account, the shares must be transferred to a new account. The request must
include a signature guarantee. See "Signature Guarantee" on page 16. This option
is not available for Pension or Retirement Savings Programs. Please call us at
1-800-89-ASK-US (1-800-892-7587) for additional information.
The Company reserves the right to amend, suspend, or discontinue
offering any of these options at any time without prior notice.
Dividends and Capital Gains
We intend to distribute substantially all of the Fund's net investment income in
the form of dividends to you. We distribute dividends and net capital gains, if
any, on all of the Funds annually.
You can select from among the following distribution options:
Reinvested You can have all of your dividends and capital gains distributions
reinvested in additional shares of the same or any other Fund. Unless you choose
one of the other options, we will select this option for you automatically;
Cash and You can choose to have either your dividends or
Reinvested your capital gains paid in cash and the other will be
reinvested in additional shares in the same or any
other Fund; or
All Cash You can choose to have your dividends and capital gains
distributions paid in cash.
We make distributions for each Fund on a per share basis to the
shareholders of record as of the distribution date of that Fund. We do this
regardless of how long the shares have been held. That means if you buy shares
just before or on a record date, you will pay the full price for the shares and
then you may receive a portion of the price back as a taxable distribution.
What About Taxes
Federal Taxes*
Dividends paid by the Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss, and original issue
discount or certain market discount income will be taxable to shareholders as
ordinary income. Distributions paid by the Fund from the excess of net long-term
capital gain over net short-term capital loss will be taxable as long-term
capital gains regardless of how long the shareholders have held their shares.
These tax consequences will apply regardless of whether distributions are
received in cash or reinvested in shares. A portion of the dividends paid to
corporate shareholders may qualify for the corporate dividends-received
deduction to the extent the Fund earns qualifying dividends. We will notify you
after each calendar year of the amount and character of distributions you
received from the Fund for federal tax purposes.
For IRAs and pension plans, dividends and capital gains are reinvested
and not taxed until you receive a qualified distribution from your IRA or
pension plan.
You need to consider the tax implications of buying shares immediately
prior to a dividend or capital gain distribution. Investors who purchase shares
shortly before the record date for a distribution will pay a per share price
that includes the value of the anticipated distribution. You will be taxed when
you receive the distribution even though the distribution represents a return of
a portion of the purchase price. You may want to call us at 1-800-89-ASK-US
(1-800-892-7587) before your purchase. We will tell you if a distribution is
due.
Redemptions and exchanges of shares are taxable events which may
represent a gain or a loss for the shareholder.
Individuals and certain other classes of shareholders may be subject to
backup withholding of federal income tax on distributions, redemptions and
exchanges if they fail to furnish their correct taxpayer identification number.
Individuals, corporations and other shareholders that are not U.S. persons under
the Code are subject to different tax rules. They may be subject to nonresident
alien withholding on amounts considered ordinary dividends from the Fund.
When you sign your account application, you will be asked to certify
that your social security or taxpayer identification number is correct. You will
also be asked to certify that you are not subject to backup withholding for
failure to report income to the Internal Revenue Service.
Pension and Retirement Savings Programs
The tax rules applicable to participants and beneficiaries in Pension and
Retirement Savings Programs vary according to the type of plan and the terms and
conditions of the plan. In general, distributions from these plans are taxed as
ordinary income. Special favorable tax treatment may be available for certain
types of contributions and distributions. Adverse tax consequences may result
from contributions in excess of specified limits: 1. distributions prior to age
591/2 (subject to certain exceptions); 2. distributions that do not conform to
specified commencement and minimum distribution rules; 3. aggregate
distributions in excess of a specified annual amount; and 4. in other specified
circumstances.
You should consult a qualified tax adviser for more information.
Other Taxes
In addition to federal taxes, you may be subject to state and local taxes on
payments received from us. Depending on the state tax rules pertaining to a
shareholder, a portion of the dividends paid by a Fund that come from direct
obligations of the U.S. Treasury and certain agencies may be exempt from state
and local taxes. Check with your own tax adviser regarding specific questions as
to federal, state and local taxes.
*For each taxable year, we intend to qualify the Fund as a regulated investment
company under Subchapter M of the Code. Qualifying regulated investment
companies distributing substantially all of their ordinary income and capital
gains are not subject to federal income or excise tax on any net investment
income and net realized capital gains distributed to shareholders. However, the
shareholders (you) are subject to tax on these distributions.
Share Price
How Share Price Is Determined
We value Fund securities, primarily traded on a domestic securities exchange or
NASDAQ, at the last sale price on that exchange on the day the valuation is
made. We take price information on listed securities from the exchange where the
security is primarily traded. If no sale is reported, we use the mean of the
latest bid and asked prices. We generally price securities traded
over-the-counter the same way. When market quotations are not readily available,
we value securities and other assets at fair value as determined in good faith
by the Board.
We will value all securities with maturities of 60 days or less at the
time of purchase, on the basis of amortized cost when the Board determines that
amortized cost is fair value. Amortized cost involves valuing an investment at
its cost and a constant amortization to maturity of any discount or premium,
regardless of the effect of assuming movements in interest rates. For more
information, see the Statement of Additional Information. When Share Price Is
Determined The price of your shares is their net asset value. We determine the
net asset value by calculating the total value of the Fund's assets, deducting
total liabilities, and dividing the result by the number of shares outstanding.
We determine the net asset value only on days that the New York Stock Exchange
(the "Exchange") is open.
If we receive your investment or redemption request before the close of
business on the Exchange, usually 4:00 p.m. Eastern Standard Time, your share
price for that transaction will be the price we determine at the close of the
Exchange that day. When investment and redemption requests are received after
the Exchange is closed, we use the share price at the close of the Exchange the
next day the Exchange is open. We consider investment and redemption requests by
telephone to be received at the time of your telephone call, assuming you've
given us all required information.
We consider purchase payments to be received only when your check, wire, or
automatic investment funds are received by us along with all required
information. We consider wired funds to be received on the day they are
deposited in the Company's bank account. If you call us with wire instructions
before the Exchange closes, we usually deposit the money that day.
Where To Find Information About Share Price
You can get the current net asset values of the Fund by calling us at
1-800-89-ASK-US (1-800-892-7587). The net asset value of the Fund may also be
published in leading newspapers daily, once its net assets reach a certain
amount. Weekly updates of the Fund's net asset value are available on the
Transamerica Premier Funds Web site at http://funds.transamerica.com.
Organization and Management
Transamerica Investors, Inc.
Transamerica Investors, Inc. was organized as a Maryland corporation on February
22, 1995. The Company is registered with the Securities and Exchange Commission
under the 1940 Act as an open-end management investment company of the series
type. The Fund constitutes a separate series, and is part of a family of series
known as the Transamerica Premier Funds. The fiscal year-end of the Fund is
December 31.
There are currently no other classes of shares; however, the Company is
authorized to issue and sell multiple classes of shares for each of the Funds.
This Prospectus describes the Investor Class of Shares for the Funds. The
Company reserves the right to issue additional classes of shares in the future
without the consent of shareholders, and can allocate any remaining unclassified
shares or reallocate any unissued classified shares.
Except for the differences noted below and elsewhere in this
Prospectus, each share of the Fund has equal dividend, redemption and
liquidation rights with other shares of the Fund and when issued, is fully paid
and nonassessable. Each share of each class represents an identical legal
interest in the same investments of the Fund. Should several classes be offered,
each class has certain other expenses related solely to that class. Each class
will have exclusive voting rights under the 12b-1 distribution plan. In the
event that a special meeting of shareholders is called, separate votes are taken
by each class only if a matter affects, or requires the vote of, just that
class. Although the legal rights of holders of each class of shares are
identical, it is likely that the difference in expenses will result in different
net asset values and dividends. The classes may have different exchange
privileges.
As a Maryland corporation, the Company is not required to hold regular
annual meetings of shareholders. Ordinarily there will be no shareholder
meetings, unless requested by shareholders holding 10% or more of the
outstanding shares, or unless required by the 1940 Act or Maryland law. You are
entitled to cast one vote for each share you own of each Transamerica Premier
Fund. At a special shareholders meeting, if one is called, issues that affect
all the Transamerica Premier Funds in substantially the same way will be voted
on by all shareholders. Issues that do not affect a Transamerica Premier Fund
will not be voted on by that Transamerica Premier Fund. Issues that affect all
Funds, but in which their interests are not substantially the same, will be
voted on separately by each Transamerica Premier Fund. Investment Adviser
Services The Investment Adviser is responsible for making investment decisions
for the Fund. The Investment Adviser is also responsible for the selection of
brokers and dealers to execute transactions for the Fund. Some of these brokers
or dealers may be affiliated persons of the Company, the Investment Adviser,
Administrator, or the Distributor. Since it is our policy to seek the best price
and execution for each transaction, the Investment Adviser may give
consideration to brokers and dealers who provide us with statistical information
and other services in addition to transaction services. Additional information
about the selection of brokers and dealers is provided in the Statement of
Additional Information.
Trading decisions for the Fund described in this Prospectus are made by
a team of expert managers and analysts headed by a team leader. The team leader
is primarily responsible for the day-to-day decisions related to the Fund. He is
supported by the entire group of managers and analysts. The team leader of the
Fund may be on another Transamerica Premier Fund team. The transactions and
performance of the Transamerica Premier Funds are reviewed continuously by the
Investment Adviser's senior officers.
The team leader for the Fund is Philip Treick, Vice President and Fund
Manager, Transamerica Investment
Services. B.S., University of South Florida, 1987. Financial Analyst, Raymond
James Financial Corporation, 1987 -
1988. Joined Transamerica in 1988.
Adviser Fee
For its services to the Fund, the Investment Adviser receives an Adviser Fee.
This fee is based on an annual percentage of the average daily net assets of the
Fund. It is accrued daily, and paid monthly.
The annual fee percentages for the Fund is .85% on the first $1 billion
of assets. This reduces to .82% on the next $1 billion, and finally .80% on
assets over $2 billion. The Investment Adviser may waive some or all of these
fees from time to time at its discretion. See "Fund Expenses" on page 3 for
further details.
Administrator Services
The Investment Adviser pays part of the Adviser Fee to the Administrator. The
Administrator provides office space for the Company and pays the salaries, fees
and expenses of all Company officers and those directors affiliated with
Transamerica Corporation and not already paid by the Investment Adviser. The
Fund pays all of its expenses not assumed by the Administrator. This includes
transfer agent and custodian fees and expenses, legal and auditing fees,
printing costs of reports to shareholders, registration fees and expenses, 12b-1
fees, and fees and expenses of directors unaffiliated with Transamerica
Corporation.
The Administrator may from time to time reimburse the Fund for some or
all of its operating expenses, including 12b-1 fees. Such reimbursements will
increase the Fund's return. This is intended to make the Fund more competitive.
This practice may be terminated at any time.
Custodian and Transfer Agent
Under a Custodian Agreement, State Street Bank and Trust Company ("State
Street"), 225 Franklin Street, Boston, Massachusetts 02110, holds all securities
and cash assets of the Fund, provides recordkeeping services, and serves as the
Fund's custodian. State Street is authorized to deposit securities in securities
depositories or to use services of sub-custodians.
Under a Transfer Agency Agreement, State Street Bank also serves as the
Fund's transfer agent. The
transfer agent is responsible for: a) opening and maintaining your account; b)
reporting information to you about
your account; c) paying you dividends and capital gains; and d) handling your
requests for exchanges, transfers
and redemptions.
Distributor
Transamerica Securities Sales Corporation ("TSSC") is the principal underwriter
and distributor of the shares of the Fund.
TSSC is a wholly-owned subsidiary of Transamerica Insurance Corporation
of California, which is a wholly-owned subsidiary of Transamerica Corporation.
TSSC is registered with the Securities and Exchange Commission as a
broker-dealer. TSSC is also a member of the National Association of Securities
Dealers, Inc.
Distribution Plan
The Fund makes payments to TSSC according to a plan adopted to meet the
requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended.
These fees accrue daily and are based on an annual percentage of the daily
average net assets.
The 12b-1 plan of distribution and related distribution contracts
require the Fund to pay distribution and service fees to TSSC as compensation
for its activities, not as reimbursement for specific expenses. If TSSC's
expenses are more than its fees for the Fund, the Fund will not have to pay more
than those fees. If TSSC's expenses are less than the fees, it will keep the
excess. The Company will pay the distribution and service fees to TSSC until the
distribution contracts are terminated or not renewed. In that event, TSSC's
expenses over and above any fees through the termination date will be TSSC's
sole responsibility and not the obligation of the Company. The Board will review
and approve the distribution plan, contracts and TSSC's expenses quarterly.
There is an annual 12b-1 distribution fee of .25% of the average daily
net assets of the Fund. This fee covers such expenses as preparation, printing
and mailing of the Prospectus and Statement of Additional Information, as well
as sales literature and other media advertising, and related expenses. It can
also be used to compensate sales personnel involved with selling the Fund.
From time to time, the Distributor may waive all or any portion of
these fees at its discretion.
General Information
Performance Information
The Company may publish performance information about the Fund. Fund performance
usually will be shown either as cumulative total return or average periodic
total return compared with other mutual funds by public ranking services, such
as Lipper Analytical Services, Inc. Cumulative total return is the actual
performance over a stated period of time. Average annual total return is the
hypothetical return, compounded annually, that would have produced the same
cumulative return if the Fund's performance had been constant over the entire
period. The Fund's total return shows its overall dollar or percentage change in
value. This includes changes in the share price and reinvestment of dividends
and capital gains.
The performance of the Fund can also be measured in terms of yield. The
Fund's yield shows the rate of income the Fund earns on its investments as a
percentage of the Fund's share price.
The Fund can also separate its cumulative and average annual total
returns into income results and capital gains or losses. The Fund can quote its
total returns on a before-tax or after-tax basis.
The performance information which may be published for the Fund is
historical. It is not intended to represent or guarantee future results. The
value of your Fund shares can be more or less than their original cost when they
are redeemed.
Summary of Bond Ratings
Following is a summary of the grade indicators used by two of the most
prominent, independent rating agencies (Moody's Investors Service, Inc. and
Standard & Poor's Corporation) to rate the quality of bonds. The first four
categories are generally considered investment quality bonds. Those below that
level are of lower quality, commonly referred to as "junk bonds."
Standard
Investment Grade Moody's & Poor's
Highest quality Aaa AAA
High quality Aa AA
Upper medium A A
Medium, speculative features Baa BBB
Lower Quality
Moderately speculative Ba BB
Speculative B B
Very speculative Caa CCC
Very high risk Ca CC
Highest risk, may
not be paying interest C C
In arrears or default C D
For more detailed information on bond ratings, including gradations within each
category of quality, see the Statement of Additional Information.
Pension and Retirement Savings Programs
Following is a listing of Pension and Retirement Savings Programs. Provided you
have the necessary plan documents, you can use the Transamerica Premier Funds as
investment options for:
401(a), 401(k), profit sharing, or money purchase pension plans (including
KEOGH/HR 10 Plans) designed to benefit employees of corporations,
partnerships, and sole proprietors.
Section 403(b)(7) (Tax-Sheltered Annuity) Plans** for employees of
educational organizations or other qualifying, tax exempt organizations.
Individual Retirement Account ("IRA"), or comparable program,
for individuals and Simplified Employee Pension ("SEP") Plans for
employers (including sole proprietors) and their employees.
Section 457 deferred compensation plans for employees of state governments
and tax-exempt organizations. Employers' non-qualified plans or savings
programs, that do not qualify for federal tax advantages.
Other retirement plans or savings programs allowed by the Board.
**You may be required to have your own custodian for this plan.
<PAGE>
Transamerica Premier Small Company Fund
Supplement Dated December 31, 1997 to Prospectus Dated June 30, 1997
The following information supplements, and should be read in conjunction with,
the Prospectus to which this supplement is attached. The following information
is added to the Prospectus.
Financial Highlights --- Transamerica Premier Small Company Fund
The following is the unaudited financial data for the investor shares of the
Transamerica Premier Small Company Fund for the period from June 30, 1997 to
November 30, 1997.
Net Asset Value
Beginning of period $ 10.00
Investment Operations
Net investment income (loss) 1 (0.02)
Net realized and unrealized gain (loss) 2.68
Total from investment operations 2.66
Distributions To Shareholders From:
Net investment income -
Net realized gains -
Total distributions -
Net asset value
End of period $ 12.66
Total Return2 26.60%
Ratios And Supplemental Data Expenses to average net assets3,4 1.40% Net
investment income (loss)4 (0.57)% Portfolio turnover rate 69.86% Average
commission rate5 $0.0562
Net assets, end of period $11,195,000
1 Net investment income is after waiver of fees by the Investment Adviser and
reimbursement of certain expenses by the Administrator. If the Investment
Adviser had not waived fees and the Administrator had not reimbursed expenses,
net investment income (loss) per share would have been $(0.06). 2 Total return
represents aggregate total return for the period indicated and is not
annualized. 3 If the Investment Adviser had not waived fees and the
Administrator had not reimbursed expenses, the ratio of operating expenses to
average net assets would have been 2.21%. 4 Annualized 5 Represents the average
commission rate paid on equity security transactions on which commissions are
charged.
TPF-195
<PAGE>
1
Transamerica Premier Small Company Fund - Investor Class
Prospectus: June 30, 1997
Your Guide
This guide (the "Prospectus") will provide you with helpful information and
details about the Investor Class of shares of the Transamerica Premier Small
Company Fund (the "Fund"). It is intended to give you what you need to know
before investing. Please read it carefully and save it for future reference.
The Fund at a Glance
The Transamerica Premier Small Company Fund seeks to maximize long-term growth.
The Fund invests primarily in a diversified portfolio of domestic common stocks.
Under normal conditions, at least 65% of the Fund will be invested in companies
that have smaller market capitalizations (between $300 million and $1 billion)
or annual revenues of no more than $1 billion. The companies in which the Fund
invests are believed by Transamerica Investment Services, Inc. (the "Adviser")
to have the potential for significant long-term capital appreciation. The
remainder of the Fund's assets may be invested in a variety of debt and equity
securities, including high-yield ("junk") bonds and derivatives. There can be no
assurance that the Fund will achieve its investment objective.
Availability
Investor Shares are available on a no-load basis directly to individuals,
companies, Pension and Retirement Savings Programs, and other institutional
investors from Transamerica Securities Sales Corporation ("TSSC"), the
Distributor. For a listing of applicable Pension and Retirement Savings
Programs, see "Pension and Retirement Savings Programs" on page 22.
Transamerica Investors
Transamerica Investors, Inc. (also referred to as the "Company" or "we," "us,"
or "our") is an open-end, management investment company. We are a mutual fund
company that offers a number of portfolios, known collectively as the
Transamerica Premier Funds. In addition to the Transamerica Premier Small
Company Fund, the Transamerica Premier Fund family includes:
The Transamerica Premier Aggressive Growth Fund The Transamerica
Premier Equity Fund The Transamerica Premier Index Fund The
Transamerica Premier Bond Fund The Transamerica Premier Balanced Fund
The Transamerica Premier Cash Reserve Fund
Each of these Funds is described in a separate prospectus. The minimum
investment is $1,000 per Fund, or $250 for an IRA account. See "Minimum
Investments" on page 13 for more details.
For additional details about any of the Transamerica Premier Funds (including
ordering a prospectus), you can call 1-800-89-ASK-US (1-800-892-7587), or write
to Transamerica Investors, P.O. Box 9232, Boston, Massachusetts 02205-9232. A
Statement of Additional Information (the "SAI"), which has been filed with the
Securities and Exchange Commission, is available at no charge by calling the
above number. The SAI is a part of this Prospectus by reference.
LIKE ALL MUTUAL FUND SHARES, THIS SECURITY HAS NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Contents
All of the fees and expenses are spelled out here.
Fund Expenses 3
The Management Team 4
The Fund In Detail 4
A General Discussion About Risk 5
Investment Procedures and Risk Considerations for the Fund 6
Shareholder Services 11
Opening Your Account 11
How to Buy Shares 12
How to Sell Shares 13
How to Exchange Shares 15
Other Investor Requirements and Services 16
Dividends and Capital Gains 17
What About Taxes? 17
Share Price 18
Organization and Management 19
General Information 21
We offer a number of services that make investing in the Funds simple and
efficient, like our Automatic Investment Plan. This section lists and describes
these special services
One of the advantages of investing in mutual funds is the potential to receive
dividends and/or capital gains. You choose how you want to receive these.
This prospectus does not constitute an offer to sell securities in any state or
other jurisdiction to any person to whom it is unlawful to make such an offer in
such state or other jurisdiction.
<PAGE>
Fund Expenses
Shareholder Transaction Expenses
(as a percentage of offering price)
Transaction Expenses
Sales Charge on Purchases1 None
Redemption Fee None
Sales Charge on Reinvested Dividends None
Exchange Fee None
Contingent Deferred Sales Charge None
Annual Fund Operating Expenses
(as a percent of average net assets)
Adviser Fee2 0.85%
12b-1 Fee3 0.25%
Other Expenses After Waiver and Reimbursement5 0.30%
Total Operating Expenses After Waiver and Reimbursement5 1.40%
The preceding tables summarize actual transaction expenses and Adviser Fees and
anticipated operating expenses for 1997. The purpose of the tables is to assist
you in understanding the varying costs and expenses you will bear directly or
indirectly.
Example
Using the previous tables of transaction expenses and operating expenses,6 you
would pay the following expenses based on a $1,000 investment. The expenses
shown assume a 5% annual return. The expenses are the same whether or not you
redeem your shares at the end of each time period. We may assess an annual fee
against accounts used as IRAs or SEPs. For more information on this fee, see
"IRA Accounts" on page 11.
Premier Fund 1 Year 3 Years5 Years 10 Years
Small Company $14 $44 $77 $168
The information contained in the above examples should not be considered a
representation of future expenses. The actual expenses may be more or less than
those shown.
1 Although there is no sales charge, there is a 12b-1 fee. Over a long period of
time, the total amount of 12b-1 fees paid may exceed the maximum amount
permitted as front-end sales charges under NASD regulations.
2 See "Adviser Fee" on page 19.
3 12b-1 fees cover costs of advertising and marketing the Fund. For more
information on 12b-1 fees, see "Distribution Plan" on page 20. 4 "Other
Expenses" are those incurred after any reimbursements to the Fund by the
Administrator. See "The Management Team" below. Other expenses include expenses
not covered by the Adviser Fee or the 12b-1 fee. See "Distribution Plan" on page
20. Expenses are based on estimated expenses and estimated net assets for the
first fiscal year. 5 "Total Operating Expenses" include adviser fees, 12b-1
fees, and other expenses that the Fund incurs. The Investment Adviser has agreed
to waive that part of its Adviser Fee and the Administrator has agreed to assume
any other operating expenses to ensure that annualized expenses for the Fund
(other than interest, taxes, brokerage commissions and extraordinary expenses)
will not exceed 1.40%. The Administrator may, from time to time, assume
additional expenses. Fee waivers and expense assumption arrangements, which may
be terminated at any time without notice, will increase the Fund's yield.
Without any fee waiver or expense reimbursement, the estimated total operating
expenses for the first year would be 1.73% based on $50 million of assets. 6 The
expenses in the example assume no fees for IRA or SEP accounts.
The Management Team
Responsibility for the management and supervision of the Company and the
Transamerica Premier Funds rests with the Board of Directors of the Company (the
"Board"). The Investment Adviser and the Administrator are subject to the
direction of the Board.
The Fund's Investment Adviser is Transamerica Investment Services, Inc.
(the "Investment Adviser"), 1150 South Olive Street, Los Angeles, California
90015. The Investment Adviser's duties include, but are not limited to: (1)
supervising and managing the investments of the Fund and directing the purchase
and sale of its investments; and (2) ensuring that investments follow the Fund's
investment objective, strategies, and policies and comply with government
regulations.
The Investment Adviser has been in the investment advisory business
since 1967 and currently manages approximately $32 billion of discretionary
assets for various clients including corporations, pension plans, 401(k) plans,
and other institutional investors.
The Fund's Administrator is Transamerica Occidental Life Insurance
Company (the "Administrator"), 1150 South Olive Street, Los Angeles, California
90015. The Administrator's duties include, but are not limited to: (1) providing
the Fund with administrative and clerical services, including the maintenance of
the Fund's books and records; (2) registering the Fund shares with the
Securities and Exchange Commission (the "SEC") and with those states and other
jurisdictions where its shares are offered or sold and arranging periodic
updating of the Funds' prospectus; (3) providing proxy materials and reports to
Fund shareholders and the SEC; and (4) providing the Fund with adequate office
space and all necessary office equipment and services.
Transamerica Occidental Life Insurance Company is a wholly-owned
subsidiary of Transamerica Insurance Corporation of California. Both
Transamerica Insurance Corporation of California and Transamerica Investment
Services, Inc. are wholly-owned subsidiaries of Transamerica Corporation, 600
Montgomery Street, San Francisco, California 94111, one of the nation's largest
financial services companies. For more information on Fund management, see
"Organization and Management" on page 19.
The Fund in Detail
Fund Objective
The Transamerica Premier Small Company Fund seeks to maximize long-term growth.
There can be no assurance that the Fund will achieve its investment objective.
Fund Policies
Under normal conditions, at least 65% of the Fund will be invested in a
diversified portfolio of domestic equity securities (i.e., common stocks,
preferred stocks, rights, warrants and securities convertible into or
exchangeable for common stocks) of companies smaller market capitalizations
(between $300 million and $1 billion) or annual revenues of no more than $1
billion. The companies in which the Fund invests are those that the Adviser
believes to have the potential for significant long-term capital appreciation.
The average and median market capitalization of holdings in the Fund may,
however, fluctuate over time as a result of changes in stock prices and the
companies held by the Fund. In addition, the Fund may continue to hold
securities of companies whose market capitalization or revenues grow above $1
billion while they are in the portfolio, if these companies continue to meet the
other investment policies of the Fund.
The securities of smaller companies are usually less actively followed
by analysts than those of larger companies and may be undervalued by the market.
This can provide significant opportunities for capital appreciation. However,
the securities of such smaller companies may also involve greater risks and may
be subject to more volatile market movements than securities of larger, more
established companies. See "Risk Factors" for further information about smaller
company securities.
Fund Strategy and Types of Securities
The Fund primarily invests in domestic common stocks of small companies selected
by the Adviser for their growth potential resulting from growing franchises
protected by high barriers to competition. The Fund may invest to a lesser
degree in other types of domestic and foreign securities, including preferred
stock, warrants, convertible securities and debt securities. Debt securities
that the Fund may purchase include investment grade and non-investment grade
corporate bonds and debentures, government securities, mortgage and asset-backed
securities, zero coupon bonds, indexed/structured notes, high-grade commercial
paper, certificates of deposit, and repurchase agreements. Such securities may
offer growth potential because of anticipated changes in interest rates, credit
standing, currency relationships or other factors. The Fund may use a variety of
investment techniques, including derivatives and short sales.
The Fund may invest, without limit, in foreign equity and debt
securities, however, the Investment Adviser currently does not intend to do so.
For additional information on specific types of securities, investment
techniques, and their risks, see "Investment Procedures and Risk Considerations"
on page 6.
Investment Process
The Fund is constructed one stock at a time. Each company passes through a
research process and stands on its own merits as a viable investment in the
Investment Adviser's opinion. The Investment Adviser's research is designed to
identify companies with potential for improvement in profitability and
acceleration of growth.
The Investment Adviser tries to keep the Fund fully invested under
normal market conditions. When the Investment Adviser determines that market
conditions warrant, the Fund may invest without limit in cash and cash
equivalents.
General Investment Policies
In investing its portfolio assets, the Fund will follow the general policies
listed below. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if the Fund exceeds a limit as a result of market fluctuations or the
sale of other securities, it will not be required to dispose of any securities.
Some Points To Consider When Investing
Since the Fund invests primarily in common stocks, its investments are subject
to stock market price volatility. Price volatility means that stock prices can
go up or down due to a variety of economic and market conditions.
The Fund is intended for investors who have the perspective, patience,
and financial ability to take on above-average stock market volatility in a
focused pursuit of long-term capital growth. Because of the uncertainty
associated with common stock investments, the Fund is intended to be a long-term
investment.
What is Fundamental?
The investment objectives given for the Fund are fundamental. This means they
can be changed only with the approval of the majority of shareholders. We can
give you no assurance that these objectives will be met. Many of the strategies
and policies are not fundamental. This means strategies and policies can be
changed by the Board without your approval.
If any investment objectives of the Fund change, you should decide if
the Fund still meets your financial needs. More information about this is in the
Statement of Additional Information.
General Discussion About Risk
It's important for you to understand the risks inherent in investing in
different kinds of funds. All investments are subject to risk. The Fund is
subject to the following risks:
Market or Price Volatility Risk
For stocks, this refers to the up and down price fluctuations, or volatility,
caused by changing conditions in the financial markets. Stock funds are more
subject to this risk than money market and bond funds.
Financial or Credit Risk
For stocks and other equity securities, financial risk comes from the
possibility that current earnings of the stock company will fall or that overall
financial circumstances will decline. Either of these could cause the security
to lose its value. For bonds and other debt securities, financial risk comes
from the possibility that the issuer will not be able to pay principal and
interest on time. Funds with low quality bonds and speculative stock funds are
more subject to this risk than funds with government or high quality bonds. For
more information, see "High-Yield (`Junk') Bonds" on page 9.
Current Income Risk
The Fund receives income, either as interest or dividends, from the securities
in which it has invested. The Fund pays out substantially all of this income to
its shareholders as dividends. See the footnote for "What About Taxes?" on page
17. The dividends paid out to shareholders are called current income. Current
income risk means how much and how quickly overall interest rate or dividend
rate changes on income received by the Fund affects its ability to maintain the
current level of income paid to shareholders.
Inflation or Purchasing Power Risk
Inflation risk is the uncertainty that your invested dollars may not buy as much
in the future as they do today. Longer-maturity bonds are more subject to this
risk than stocks or money market securities.
Sovereign Risk
Sovereign risk is the potential loss of assets or earning power due to
government actions, such as taxation, expropriation, or regulation. Funds with
large investments overseas or funds with tax-advantaged investments are more
subject to this risk.
More in-depth information about risk is provided in the following
section and in the Statement of Additional Information.
Investment Procedures and Risk Considerations
Buying and Selling Securities
In general, we purchase and hold securities for the Fund for capital growth.
However, we ordinarily buy and sell securities whenever we think it is
appropriate in order to achieve the Fund's investment objective. Fund changes
can result from liquidity needs, securities reaching a price objective,
anticipated changes in interest rates, a change in the creditworthiness of an
issuer, or from general financial or market developments. Because investment
changes usually are not tied to the length of time a security has been held, a
significant number of short-term transactions may result.
We may sell one security and simultaneously purchase another of
comparable quality. We may simultaneously purchase and sell the same security to
take advantage of short-term differentials in bond yields. Or we may purchase
individual securities in anticipation of relatively short-term price gains. The
rate of portfolio turnover will not be a determining factor in these decisions.
However, certain tax considerations can restrict our ability to sell securities
in some circumstances when the security has been held for less than three
months. Increased turnover results in higher costs. These costs result from
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities. This can result in the
acceleration of taxable gains.
Turnover will not be a consideration in the management of the Fund. The
Investment Adviser buys and sells securities for the Fund whenever it believes
it is appropriate to do so.
We cannot predict precisely the turnover rate for the Fund, but we
expect that the annual turnover rate will not exceed 50%. A 100% annual turnover
rate would occur if all of the Fund's securities were replaced one time during a
one year period. Short-term gains realized from turnover are taxable to
shareholders as ordinary income, except for shares held in special tax-qualified
accounts (such as IRA's or employer sponsored pension plans). In addition,
higher turnover rates can result in corresponding increases in brokerage
commissions and other transaction costs. We generally will not consider turnover
rates in making investment decisions on behalf of the Fund consistent with the
Fund's investment objective and policies.
For more information, see "What About Taxes?, on page 17, and the
Statement of Additional Information.
Securities Lending
As a way to earn additional income, we may lend Fund securities to creditworthy
persons not affiliated with the Fund. Such loans must be secured by cash
collateral or by irrevocable letters of credit maintained on a current basis in
an amount at least equal to the market value of the securities loaned. During
the existence of the loan, we must continue to receive the equivalent of the
interest and dividends paid by the issuer on the securities loaned and interest
on the investment of the collateral. We must have the right to call the loan and
obtain the securities loaned at any time on three days notice. This includes the
right to call the loan to enable us to execute shareholder voting rights. Such
loans cannot exceed one-third of the Fund's net assets taken at market value.
Interest on loaned securities cannot exceed 10% of the annual gross income of
the Fund (without offset for realized capital gains). The lending policy
described in this paragraph is a fundamental policy that can be changed only by
a vote of a majority of shareholders.
Lending securities to broker-dealers and institutions could result in a
loss or a delay in recovering the Fund's securities.
Borrowing
We can borrow money from banks or engage in reverse repurchase agreements, for
temporary or emergency purposes. We can borrow up to one-third of the Fund's
total assets. To secure borrowings, we can mortgage or pledge securities in an
amount up to one-third of the Fund's net assets. If we borrow money, the Fund's
share price may be subject to greater fluctuation until the borrowing is paid
off. The Fund will not make any additional investments, other than through
reverse repurchase agreements, while the level of borrowing exceeds 5% of the
Fund's total assets. For more information on reverse repurchase agreements see
the "Reverse Repurchase Agreements and Leverage" on this page.
Small Capitalization Stocks
We can purchase securities of small companies. The securities of smaller
companies are usually less actively followed by analysts and may be undervalued
by the market, which can provide significant opportunities for Capital
appreciation; however, the securities of such smaller companies may also involve
greater risks and may be subject to more volatile market movements than
securities of larger, more established companies. The securities of small
companies are often traded in the over-the counter market, and might not be
traded in volumes typical of securities traded on a national securities
exchange. Thus, the securities of small companies are likely to be subject to
more abrupt or erratic market movements than securities of larger, more
established companies.
Over-The-Counter-Market
The Fund may invest in over-the-counter stocks. Generally, the volume of trading
in an unlisted or over-the-counter common stock is less than the volume of
trading in a listed stock. Low trading volumes may make it difficult to find a
buyer or seller for the securities of some companies. This will have an effect
on the purchase or selling price of a stock.
Special Situations
The Fund may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Fund's portfolio manager, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating a
special situation might include, among others, a merger proposal or buyout, a
leveraged recapitalization, a new product or process, a technological
breakthrough, a management change or other extraordinary corporate event, or
differences in market supply of and demand for the security. Investment in
special situations may carry an additional risk of loss in the event that the
anticipated development does not occur or does not attract the expected
attention.
Repurchase Agreements
We may enter into repurchase agreements with Federal Reserve System member banks
or U.S. securities dealers. A repurchase agreement occurs when, at the time we
purchase an interest-bearing debt obligation, the seller agrees to repurchase
the debt obligation on a specified date in the future at an agreed-upon price.
The repurchase price reflects an agreed-upon interest rate during the time the
Fund's money is invested in the security. Since the security constitutes
collateral for the repurchase obligation, a repurchase agreement can be
considered a collateralized loan. Our risk is the ability of the seller to pay
the agreed-upon price on the delivery date. If the seller is unable to make a
timely repurchase, our expected proceeds could be delayed, or we could suffer a
loss in principal or current interest, or incur costs in liquidating the
collateral. We have established procedures to evaluate the creditworthiness of
parties making repurchase agreements.
We will not invest in repurchase agreements maturing in more than seven
days, if that would result in more than 10% of the Fund's net assets being so
invested when taking into account the remaining days to maturity of our existing
repurchase agreements.
Reverse Repurchase Agreements and Leverage
We may enter into reverse repurchase agreements with Federal Reserve member
banks and U.S. securities dealers from time to time. In a reverse repurchase
transaction we sell securities and simultaneously agree to repurchase them at a
price which reflects an agreed-upon rate of interest. We will use the proceeds
of reverse repurchase agreements to make other investments which either mature
or are under an agreement to resell at a date simultaneous with or prior to the
expiration of the reverse repurchase agreement. The Fund may utilize reverse
repurchase agreements only if the interest income to be earned from the
investment proceeds of the transaction is greater than the interest expense of
the reverse repurchase transaction.
Reverse repurchase agreements are a form of leverage which increases
the opportunity for gain and the risk of loss for a given change in market
value. In addition, the gains or losses will cause the net asset value of the
Fund's shares to rise or fall faster than would otherwise be the case. There may
also be a risk of delay in the recovery of the underlying securities, if the
opposite party has financial difficulties.
The Fund's obligations under all borrowings, including reverse
repurchase agreements, will not exceed one-third of the Fund's net assets.
When-Issued Securities
We may sometimes purchase new issues of securities on a when-issued basis. The
price of when-issued securities is established at the time the commitment to
purchase is made. Delivery of and payment for these securities typically occur
15 to 45 days after the commitment to purchase. The market price of the
securities at the time of delivery may be higher or lower than those contracted
for on the when-issued security, and there is some risk the transaction may not
be consummated. We maintain a segregated account for the Fund consisting of cash
or high-quality liquid debt securities in an amount at least equal to the
when-issued commitments.
Short Sales
We may sell securities which we do not own, or intend to deliver to the buyer if
we do own ("sell short") if, at the time of the short sale, we own or have the
right to acquire an equal amount of the security being sold short at no
additional cost. These transactions allow us to hedge against price fluctuations
by locking in a sale price for securities we do not wish to sell immediately.
We may make a short sale when we want to sell a security we own at a
current attractive price. This allows us to postpone a gain or loss for federal
income tax purposes and to satisfy certain tests applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended, (the
"Code"). We will make short sales only if the total amount of all short sales
does not exceed 10% of the Fund. This limitation can be changed at any time.
Municipal Obligations
We may invest in municipal obligations for the Fund. In addition to the usual
risks associated with investing for income, the value of municipal obligations
can be affected by changes in the actual or perceived credit quality. The credit
quality of a municipal obligation can be affected by, among other factors: a)
the financial condition of the issuer or guarantor; b) the issuer's future
borrowing plans and sources of revenue; c) the economic feasibility of the
revenue bond project or general borrowing purpose; d) political or economic
developments in the region or jurisdiction where the security is issued; and e)
the liquidity of the security. Because municipal obligations are generally
traded over the counter, the liquidity of a particular issue often depends on
the willingness of dealers to make a market in the security. The liquidity of
some municipal issues can be enhanced by demand features which enable us to
demand payment from the issuer or a financial intermediary on short notice.
High-Yield ("Junk") Bonds
High-yield bonds (commonly called "junk" bonds) are lower-rated bonds that
involve higher current income but are predominantly speculative because they
present a higher degree of credit risk. Credit risk is the risk that the issuer
of the bonds will not be able to make interest or principal payment on time. If
this happens, we would lose some of our income, and we could expect a decline in
the market value of the securities affected. We need to carefully analyze the
financial condition of companies issuing junk bonds. The prices of junk bonds
tend to be more reflective of prevailing economic and industry conditions, the
issuers' unique financial situations, and the bonds' coupon than to small
changes in the level of interest rates. But during an economic downturn or a
period of rising interest rates, highly leveraged companies can have trouble
making principal and interest payments, meeting projected business goals, and
obtaining additional financing.
We may also invest in unrated debt securities. Unrated debt, while not
necessarily of lower quality than rated securities, may not have as broad a
market. Because of the size and perceived demand for the issue, among other
factors, certain municipalities may decide not to pay the cost of getting a
rating for their bonds. We analyze the creditworthiness of the issuer, as well
as any financial institution or other party responsible for payments on the
security, to determine whether to purchase unrated municipal bonds.
Unrated debt securities will be included in the 35% limit on
non-investment grade debt of the applicable Funds, unless we deem such
securities to be the equivalent of investment grade securities. See "Summary of
Bond Ratings" on page 21 and in the Statement of Additional Information for a
description of bond rating categories.
Foreign Securities
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks and considerations include differences in accounting, auditing and
financial reporting standards, generally higher commission rates on foreign Fund
transactions, the possibility of expropriation or confiscatory taxation, adverse
changes in investment or exchange control regulations, political instability
which could affect U.S. investment in foreign countries and potential
restrictions on the flow of international capital and currencies. Foreign
issuers may also be subject to less government regulation than U.S. companies.
Moreover, the dividends and interest payable on foreign securities may be
subject to foreign withholding taxes, thus reducing the net amount of income
available for distribution to the Fund's shareholders. Further, foreign
securities often trade with less frequency and volume than domestic securities
and, therefore, may exhibit greater price volatility. Changes in foreign
exchange rates will affect, favorably or unfavorably, the value of those
securities which are denominated or quoted in currencies other than the U.S.
dollar.
Options, Futures, and Other Derivatives
We may use options, futures, forward contracts, and swap transactions
("derivatives") for the Fund. We may seek to protect the Fund against potential
unfavorable movements in interest rates or securities' prices by investing in
derivatives. If those markets do not move in the direction we anticipate, we
could suffer investment losses.
We may purchase, or we may write, call or put options on securities or
on indexes ("options"). We may also enter into interest rate or index futures
contracts for the purchase or sale of instruments based on financial indexes
("futures contracts"), options on futures contracts, forward contracts, and
interest rate swaps and swap-related products. We use these instruments
primarily to adjust the Fund's exposure to changing securities prices, interest
rates, or other factors that affect securities values. This is an attempt to
reduce the overall investment risk.
Risks in the use of these derivatives include, in addition to those
referred to above: a) the risk that interest rates and securities prices do not
move in the directions being hedged against, in which case the Fund has incurred
the cost of the derivative (either its purchase price or, by writing an option,
losing the opportunity to profit from increases in the value of the securities
covered) with no tangible benefit; b) imperfect correlation between the price of
derivatives and the movements of the securities' prices or interest rates being
hedged; c) the possible absence of a liquid secondary market for any particular
derivative at any time; d) the potential loss if the counterparty to the
transaction does not perform as promised; and e) the possible need to defer
closing out certain positions to avoid adverse tax consequences.
More information on derivatives is contained in the Statement of
Additional Information.
Mortgage-Backed and Asset-Backed Securities
We may invest in mortgage-backed and asset-backed securities. Mortgage-backed
and asset-backed securities are generally pools of many individual mortgages or
other loans. Part of the cash flow of these securities is from the early payoff
of some of the underlying loans. The specific amount and timing of such
prepayments is difficult to predict, creating "prepayment risk." For example,
prepayments on Government National Mortgage Association ("GNMAs") are more
likely to increase during periods of declining long-term interest rates because
borrowers tend to refinance when interest rates drop. In the event of very high
prepayments, we may be required to invest these proceeds at a lower interest
rate, causing us to earn less than if the prepayments had not occurred.
Prepayments are more likely to decrease during periods of rising interest rates,
causing the expected average life to become longer. This variability of
prepayments will tend to limit price gains when interest rates drop and to
exaggerate price declines when interest rates rise.
Zero Coupon Bonds
We may invest in zero coupon bonds and strips. Zero coupon bonds do not make
regular interest payments. Instead, they are sold at a discount from face value.
A single lump sum which represents both principal and interest is paid at
maturity. Strips are debt securities whose interest coupons are taken out and
traded separately after the securities are issued, but otherwise are comparable
to zero coupon bonds. The market value of zero coupon bonds and strips generally
is more sensitive to interest rate fluctuations than interest-paying securities
of comparable term and quality.
Illiquid Securities
We may invest up to 15% of the Fund's net assets in securities that are
illiquid. Securities are considered illiquid when there is no readily available
market or when they have legal or contractual restrictions. Repurchase
agreements which mature in more than seven days are included as illiquid
securities. It may be difficult for us to sell these investments quickly for
their fair market value.
Certain restricted securities that are not registered for sale to the
general public but that can be resold to institutional investors under Rule 144A
may not be considered illiquid. This is provided that a dealer or institutional
trading market exists. The institutional trading market is relatively new.
Liquidity of the Fund's investments could be impaired if trading for these
securities does not further develop or declines. The Investment Adviser
determines the liquidity of Rule 144A securities under guidelines approved by
the Board.
Variable Rate, Floating Rate, or Variable Amount Securities
We may invest in variable rate, floating rate, or variable amount securities for
the Fund. These are short-term unsecured promissory notes issued by corporations
to finance short-term credit needs. They are interest-bearing notes on which the
interest rate generally fluctuates on a scheduled basis.
Investments in Other Investment Companies
We may invest up to 10% of the Fund's total assets in the shares of other
investment companies, but only up to 5% of its assets in any one other
investment company. In addition, we cannot purchase more than 3% of the
securities of any one investment company for the Fund. We intend to keep these
investments to a minimum.
Shareholder Services
Our goal is to make your investment in the Fund, and the ongoing account
servicing, as simple as possible by offering the following shareholder services:
Simple application form with service representatives to assist you.
Purchases, exchanges and redemptions by phone.
Purchases and redemptions by wire.
Automatic Investment Plan - you designate an amount of $50 or more to
be automatically withdrawn from your checking, savings or other bank
account and deposited into the Fund you select.
Automatic Exchange Plan - allows you to specify an amount to be
automatically withdrawn from one Fund and deposited into another Fund
on a regular basis, once or twice a month.
Automatic Income Plan - you can receive automatic monthly payments
from your Fund account to your checking or savings account.
Automatic investment of dividends. Uniform Gifts to Minors (UGMA or
UTMA).
Transmission of redemption proceeds by electronic funds transfer.
Individual Retirement Account (IRA) - we will administer your IRA.
Opening Your Account
To open an account, complete the application and send it to us with a check,
money order, or wire for the amount you want to invest. Mail the application to:
Transamerica Premier Funds
P.O. Box 9232
Boston, MA 02205-9232
If you need help in filling out your application, call one of our customer
service representatives at 1-800-89-ASK-US (1-800-892-7587). We will walk you
through the application and help you understand everything.
IRA Accounts
You can establish an Individual Retirement Account ("IRA"), for yourself or
under your employer's Simplified Employee Pension ("SEP"), or other comparable
program allowed by the Internal Revenue Service with us. Contributions to an IRA
may be deductible from your taxable income, depending on your personal tax
situation. Please call 1-800-89-ASK-US (1-800-892-7587) for your IRA application
kit, or for additional information. The kit has information on whether you
qualify for deductible contributions to an IRA.
If you are receiving a distribution from your pension plan, or you
would like to transfer your IRA account from another financial institution, you
can continue to get tax-deferred growth by transferring these proceeds to your
Transamerica Premier Fund IRA. If you want to rollover distributions from your
pension plan to an IRA in one or more of the Funds, the money must be paid
directly by your pension plan administrator to Transamerica Premier Funds to
avoid a 20% federal withholding tax. See "What About Taxes?" on page 17.
There is an annual fee of $10 per Fund in which you own shares for
administering your IRA. This is limited to a maximum annual fee of $36 per
taxpayer identification number. We will waive this fee if the combined value of
all shares in your IRA accounts is $5,000 or more when the fee is due.
Alternatively, you can pay a one-time, non-refundable fee of $100 for all IRA
accounts that are maintained under the same taxpayer identification number. You
may pay the fee to us, otherwise we will deduct the annual fee ordinarily during
December of each year or at the time you fully redeem your shares in a Fund, if
before then. The Company reserves the right to change the fee, but we will
notify you at least 30 days in advance of any change.
Uniform Gifts to Minors
A Uniform Gifts/Transfers to Minors Act (UGMA/UTMA) account allows an adult to
put assets in the name of a minor child. The adult maintains control over these
assets until the child reaches the age of majority, which is generally 18 or 21.
State laws dictate which type of account can be used and the age of majority. An
adult must be appointed as custodian for the account and will be legally
responsible for administering the account, but the child's Social Security
number must be used. Generally, the person selected as custodian is one of the
parents or grandparents, but may be some other adult relative or friend. By
shifting assets to a custodial account, you may benefit if the child's tax rate
is lower.
How to Buy Shares
You May Buy Shares in One of Four Ways:
1. By Mail
Fill out an investment coupon from a previous confirmation statement, or
indicate on your check or a separate piece of paper your name, address and
account number, and mail it to:
Transamerica Premier Funds
P.O. Box 9232
Boston, MA 02205-9232
All investments made by check should be in U.S. dollars and made
payable to Transamerica Premier Funds, or in the case of a retirement account,
the custodian. We will not accept third party checks, except those payable to an
existing shareholder who is a natural person (as opposed to a corporation or
partnership), and we will not accept checks drawn on credit card accounts. When
you make purchases by check or Automatic Investment Plan, redemptions will not
be allowed until the investment being redeemed has been in the account for 15
business days.
2. By Automatic Investment Plan
You can make investments automatically by electing this service in your
application. It will authorize us to take regular, automatic withdrawals from
your bank account. These periodic investments must be at least $50 for each Fund
in which you are automatically investing. You can change the date or amount of
your monthly investment, or terminate the Automatic Investment Plan, at any time
by letter or telephone call (with prior authorization). Give us your request at
least 20 business days before the change is to become effective. You may also be
able to have investments automatically deducted from:
your paycheck at work;
your savings account;
your annuity from Transamerica;
your social security payments; or
other sources of your choice.
Call 1-800-89-ASK-US (1-800-892-7587) for more information.
3. By Telephone
If you elect the telephone purchasing service on your application, you can make
occasional electronic withdrawals from your designated bank account by calling
1-800-89-ASK-US (1-800-892-7587).
We take reasonable precautions to make sure that telephone instructions
are genuine. Precautions include requiring you to positively identify yourself,
tape recording the telephone instructions, and providing written confirmations.
We accept all telephone instructions we reasonably believe to be accurate and
genuine. Any losses arising from communication errors are your responsibility.
If reasonable procedures are not used to confirm that instructions communicated
by telephone are genuine, the Company may be liable for any losses due to
unauthorized or fraudulent transactions.
4. By Wire
You can make your initial or subsequent investments in the Funds by wire.
Here's what you need to do:
1. send us your application form (initial investment only);
2. call 1-800-89-ASK-US (1-800-892-7587) for a wire number;
3. instruct your bank to wire money to State Street Bank, ABA number
011000028, DDA number 9905-134-4;
and
4. specify on the wire:
a. "Transamerica Premier Funds;"
b. your Fund's account number, if you have one;
c. identify the Funds in which you would like to purchase shares, and
the amount to be allocated to each Fund (e.g., $5,000 in the
Transamerica Premier Equity Fund and $4,000 in the Transamerica Premier
Bond Fund); d. your name, your city and state; and e. your wire number.
Wired money is considered received by us when we receive the wire and
all the required information
listed above. If we receive your telephone call and wire before the New York
Stock Exchange closes, usually 4:00 p.m. Eastern Standard Time, the money is
credited that same day if you have supplied us with all other needed
information.
Minimum Investments
Minimum Minimum
Initial Subsequent
Type of Account Investment Investment
Regular Accounts $1,000 $100
Pension or Retirement Saving Programs $250 None
Uniform Gift to Minors (UGMA) or
Transfer to Minors (UTMA) $250 $100
Automatic Investment Plans $50 $50
Your investment must be a specified dollar amount. We cannot accept purchase
requests specifying a certain price, date, or number of shares; these
investments will be returned. The price you pay for your shares will be the next
determined net asset value after your purchase order is received. See "Share
Price" on page 18. The Company reserves the right to reject any application or
investment. There may be circumstances when the Company will not accept new
investments in one or more of the Funds. If you have a securities dealer, bank,
or other financial institution handle your transactions with us you may be
charged a fee by them.
How to Sell Shares
You can sell your shares (called "redeeming") at any time. You'll receive the
net asset value next determined after we receive your redemption request,
assuming all requirements have been met. Before redeeming, please read "When
Share Price Is Determined" on page 18, "Minimum Account Balances" on page 13,
and "Points to Remember When Redeeming" on page 14. You have several options for
receiving your redemption:
By check;
By electronic transfer to your bank; or
By wire transfer
If your wire transfer is $2,500 or less, we will charge a $10 fee.
Also, some banks may charge a fee to receive the wire transfer.
If you call us before the close of the New York Stock Exchange, usually
4:00 p.m. Eastern Standard Time, you will receive the price determined as of the
close of that business day. See "Share Price" on page 18.
You May Sell Shares in One of Three Ways:
1. By Mail
Your written instructions to us to redeem shares can be in any one of the
following forms: By redemption form, available by calling
1-800-89-ASK-US (1-800-892-7587); By letter; or By assignment form or
other authorization granting power with respect to your shares in one
of the
Funds.
Once mailed to us, your redemption request is irrevocable and cannot be
modified or canceled. If the amount redeemed is over $50,000, all
signatures must be guaranteed. See "Signature Guarantee" on
page 13. The request must be signed by each registered owner. All owners must
sign the request exactly as their
names appear in the registration. For example, if the owner's name appears in
the registration as John Michael
Smith, he must sign that way and not as John M. Smith.
2. By Telephone
If you have previously authorized telephone directions in writing (e.g., in your
application), you can redeem your shares by calling 1-800-89-ASK-US
(1-800-892-7587). Be careful in calling, since once made, your telephone request
cannot be modified or canceled.
We take reasonable precautions to make sure that telephone instructions
are genuine. Precautions include requiring you to positively identify yourself,
tape recording the telephone instructions, and providing written confirmations.
We accept all telephone instructions we reasonably believe to be accurate and
genuine. Any losses arising from communication errors are your responsibility.
If reasonable procedures are not used to confirm that instructions communicated
by telephone are genuine, the Company may be liable for any losses due to
unauthorized or fraudulent transactions. For detailed information on how
telephone transactions will operate, see the Statement of Additional
Information.
3. By Automatic Income Plan
Under the Automatic Income Plan we automatically redeem enough shares each month
to provide you with a check or automatic deposit to your bank account. The
minimum is $50 per Fund. Please tell us:
a) when you want to be paid each month;
b) how much you want to be paid; and
c) from which Fund(s).
To set up an Automatic Income Plan, call us at 1-800-89-ASK-US (1-800-892-7587).
If your monthly income payments exceed the dividends, interest, and
capital appreciation on your shares, the payments will deplete your investment.
You can specify the Automatic Income Plan when you make your first
investment. If you sign up for the plan later, the request for the Automatic
Income Plan or any increase in payment amount must be signed by all owners of
your account.
You can request us to send payments to an address other than the
address of record at the time of your first investment. After that, a request to
send payments to an address other than the address of record must be signed by
all owners of your account, with their signatures guaranteed.
The Automatic Income Plan option can be terminated at any time. If it
is, we will notify you. You can terminate the Plan or change the amount of the
payments by writing or calling us. Termination or change will become effective
within 15 days after we receive your instructions.
How Long Will It Take?
We will usually send your redemption payment to you on the second business day
after we receive your request, but not later than seven days afterwards,
assuming we have all the information we need. If the information you provide us
is incomplete, we will contact you, but this may delay the redemption.
The Company may postpone such payment if: (a) the New York Stock
Exchange is closed for other than usual weekends or holidays, or trading on the
New York Stock Exchange is restricted; (b) an emergency exists as defined by the
U.S. Securities and Exchange Commission (the "Commission"), or the Commission
requires that trading be restricted; or (c) the Commission permits a delay for
the protection of investors.
When a redemption occurs shortly after a recent check purchase, the
redemption proceeds may be held beyond seven days but only until the purchase
check clears, which may take up to 15 days. If you anticipate redemptions soon
after you purchase your shares by check, you can avoid this delay by wiring your
purchase payment.
Points to Remember When Redeeming
All redemptions are made and the price is determined on the day we
receive all necessary documentation. See "When Share Price Is
Determined" on page 18.
We cannot accept redemptions specifying a certain date or dollar
price. It must be an amount. We will return these requests.
If you request a redemption check within 30 days of your address
change, you must send us your request in writing with a signature
guarantee. Keep your address current by writing or calling in your new
address to us as soon as possible.
Except for a transfer of redemption proceeds to the custodian of a
tax-qualified plan, we will make all payments to the registered owner
of the shares, unless you tell us otherwise.
We will mail all checks to the address of record, unless you tell us
otherwise.
If the redemption request is made by a corporation, partnership,
trust, fiduciary, agent, or unincorporated association, the individual
signing the request must be authorized. If the redemption is from an
account under a qualified pension plan, spousal consent may be
required.
A request to redeem shares in an IRA or 403(b) plan must be
accompanied by an IRS Form W4-P (pension income tax withholding form,
which we will provide) and a reason for withdrawal. This is required by
the IRS.
For redemptions greater than $250,000 the Company reserves the right
to give you marketable securities instead of cash. See the Statement of
Additional Information, or call us at 1-800-ASK-US (1-800-892-7587).
Please call us at 1-800-89-ASK-US (1-800-892-7587) or write to Transamerica
Premier Funds, P.O. Box 9232, Boston, MA 02205-9232 for further information.
How to Exchange Shares Between Funds
If your investment needs change, you can exchange shares in any Fund for shares
of any other Fund within the same class. You can exchange shares by any of the
following methods:
By mail;
By telephone; or
By the Automatic Exchange Plan
By Mail or Telephone
The procedures relating to exchanges in writing and by telephone are the same as
for purchases. Exchanges are available to any resident of any state in which
shares of the Fund are legally sold.
By Automatic Exchange Plan
You can make automatic share exchanges either once or twice a month. You can
request this service in writing to us. Your request must be signed by all
registered owners of the account. Call 1-800-89-ASK-US (1-800-892-7587) for
information.
Points to Remember When Making Exchanges
Make sure you understand the investment objective of the Fund into
which you are exchanging shares. The exchange service is not designed
to give shareholders the opportunity to "time the market." It gives you
a convenient way to change the balance between the accounts so that it
more closely matches your overall investment objectives and risk
tolerance level.
You can make an unlimited number of exchanges between the Funds.
However, unless you are using the Automatic Exchange Plan, further
exchanges may be suspended for the remainder of any calendar year
during which you make more than four exchanges involving a single Fund.
This limitation is designed to keep each Fund's asset base stable and
to reduce its administrative expenses.
An exchange is treated as a sale of shares from one Fund and the
purchase of shares in another Fund. Exchanges are taxable events. See
"What About Taxes?" on page 17.
Exchanges into or out of the Funds are made at the next determined net
asset value per share after we receive all necessary information for
the exchange.
Exchanges are accepted only if the ownership registrations of both
accounts are identical. The Company reserves the right to reject any exchange
request and to modify or terminate the exchange option at any time.
Other Investor Requirements and Services
Tax Identification Number
You must furnish your taxpayer identification number and state whether or not
you are subject to backup withholding for prior under-reporting. If you don't
furnish your tax I.D. number, redemptions or exchanges of shares, as well as
dividends and capital gains distributions, will be subject to federal
withholding tax.
Changing Your Address
To change the address on your account, please call us at 1-800-89-ASK-US
(1-800-892-7587), or send us a written notification signed by all registered
owners of your account. Include the name of your Fund(s), the account number(s),
the name(s) on the account and both the old and new addresses. Within the first
30 days after an address change, telephone redemptions are permissible only if
the redemption proceeds are wired or electronically transferred. See "How to
Sell Shares" on page 13.
Signature Guarantee
When a signature guarantee is required, e.g., when the redemption amount is more
than $50,000, the signature of each owner of record must be guaranteed by a bank
or trust company (or savings bank, savings and loan association, or a member of
a national stock exchange). This is required to comply with general stock
transfer rules. You must obtain a written guarantee that states "Signature(s)
Guaranteed" and is signed in the name of the guarantor by an authorized person.
If you have any questions, call 1-800-89-ASK-US (1-800-892-7587).
Our policy to waive the signature guarantee for amounts of $50,000 or
less can be amended or discontinued at any time. A signature guarantee may be
required with regard to any particular redemption transaction.
Minimum Account Balances
You must maintain a minimum balance of $500 in each Fund in which you own
shares. If a Fund's value falls below $500 as a result of your action, we will
notify you. You will have 30 days to increase your balance to or above the
minimum. If you do not increase your balance, we will redeem your shares and pay
the value to you.
This minimum does not apply if you are actively contributing to that
Fund through an Automatic Investment Plan or if your Fund is for a Pension or
Retirement Savings Program (including IRAs), or for an UGMA/UTMA.
How You Will Get Ongoing Information About the Funds
We will send you a consolidated quarterly statement of your account showing all
transactions since the beginning of the current quarter. You can request a
statement of your account activity at any time. Also, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction.
We will send you an annual report that includes audited financial
statements for the fiscal year. It will include a list of securities in each
Fund on that date. We will also send you a semi-annual report that includes
unaudited financial statements for the previous six months. It will also include
a list of securities in each Fund on that date.
We will send you a new Prospectus each year. The Statement of
Additional Information is also revised each year. We will send this to you only
if you request it.
How to Transfer Your Shares to Another Person
You can transfer ownership of your shares to another person or organization, or
change the name on an account, by sending us written instructions. The request
must be signed by all registered owners of your account. To change the name on
an account, the shares must be transferred to a new account. The request must
include a signature guarantee. See "Signature Guarantee" on page 13. This option
is not available for Pension or Retirement Savings Programs. Please call us at
1-800-89-ASK-US (1-800-892-7587) for additional information.
The Company reserves the right to amend, suspend, or discontinue
offering any of these options at any time without prior notice.
Dividends and Capital Gains
We intend to distribute substantially all of the Fund's net investment income in
the form of dividends to you. We distribute dividends and net capital gains, if
any, on all of the Funds annually.
You can select from among the following distribution options:
Reinvested You can have all of your dividends and capital gains
distributions reinvested in additional shares of the same or
any other Fund. Unless you choose one of the other options, we
will select this option for you automatically;
Cash and You can choose to have either your dividends or
Reinvested your capital gains paid in cash and the other will be
reinvested in additional shares in the
same or any other Fund; or
All Cash You can choose to have your dividends and capital gains
distributions paid in cash.
We make distributions for each Fund on a per share basis to the
shareholders of record as of the distribution date of that Fund. We do this
regardless of how long the shares have been held. That means if you buy shares
just before or on a record date, you will pay the full price for the shares and
then you may receive a portion of the price back as a taxable distribution.
What About Taxes
Federal Taxes*
Dividends paid by the Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss, and original issue
discount or certain market discount income will be taxable to shareholders as
ordinary income. Distributions paid by the Fund from the excess of net long-term
capital gain over net short-term capital loss will be taxable as long-term
capital gains regardless of how long the shareholders have held their shares.
These tax consequences will apply regardless of whether distributions are
received in cash or reinvested in shares. A portion of the dividends paid to
corporate shareholders may qualify for the corporate dividends-received
deduction to the extent the Fund earns qualifying dividends. We will notify you
after each calendar year of the amount and character of distributions you
received from the Fund for federal tax purposes.
For IRAs and pension plans, dividends and capital gains are reinvested
and not taxed until you receive a qualified distribution from your IRA or
pension plan.
You need to consider the tax implications of buying shares immediately
prior to a dividend or capital gain distribution. Investors who purchase shares
shortly before the record date for a distribution will pay a per share price
that includes the value of the anticipated distribution. You will be taxed when
you receive the distribution even though the distribution represents a return of
a portion of the purchase price. You may want to call us at 1-800-89-ASK-US
(1-800-892-7587) before your purchase. We will tell you if a distribution is
due.
Redemptions and exchanges of shares are taxable events which may
represent a gain or a loss for the shareholder.
Individuals and certain other classes of shareholders may be subject to
backup withholding of federal income tax on distributions, redemptions and
exchanges if they fail to furnish their correct taxpayer identification number.
Individuals, corporations and other shareholders that are not U.S. persons under
the Code are subject to different tax rules. They may be subject to nonresident
alien withholding on amounts considered ordinary dividends from the Fund.
When you sign your account application, you will be asked to certify
that your social security or taxpayer identification number is correct. You will
also be asked to certify that you are not subject to backup withholding for
failure to report income to the Internal Revenue Service.
Pension and Retirement Savings Programs
The tax rules applicable to participants and beneficiaries in Pension and
Retirement Savings Programs vary according to the type of plan and the terms and
conditions of the plan. In general, distributions from these plans are taxed as
ordinary income. Special favorable tax treatment may be available for certain
types of contributions and distributions. Adverse tax consequences may result
from contributions in excess of specified limits: 1. distributions prior to age
591/2 (subject to certain exceptions); 2. distributions that do not conform to
specified commencement and minimum distribution rules; 3. aggregate
distributions in excess of a specified annual amount; and 4. in other specified
circumstances.
You should consult a qualified tax adviser for more information.
Other Taxes
In addition to federal taxes, you may be subject to state and local taxes on
payments received from us. Depending on the state tax rules pertaining to a
shareholder, a portion of the dividends paid by a Fund that come from direct
obligations of the U.S. Treasury and certain agencies may be exempt from state
and local taxes. Check with your own tax adviser regarding specific questions as
to federal, state and local taxes.
*For each taxable year, we intend to qualify the Fund as a regulated investment
company under Subchapter M of the Code. Qualifying regulated investment
companies distributing substantially all of their ordinary income and capital
gains are not subject to federal income or excise tax on any net investment
income and net realized capital gains distributed to shareholders. However, the
shareholders (you) are subject to tax on these distributions.
Share Price
How Share Price Is Determined
We value Fund securities, primarily traded on a domestic securities exchange or
NASDAQ, at the last sale price on that exchange on the day the valuation is
made. We take price information on listed securities from the exchange where the
security is primarily traded. If no sale is reported, we use the mean of the
latest bid and asked prices. We generally price securities traded
over-the-counter the same way. When market quotations are not readily available,
we value securities and other assets at fair value as determined in good faith
by the Board.
We will value all securities with maturities of 60 days or less at the
time of purchase, on the basis of amortized cost when the Board determines that
amortized cost is fair value. Amortized cost involves valuing an investment at
its cost and a constant amortization to maturity of any discount or premium,
regardless of the effect of assuming movements in interest rates. For more
information, see the Statement of Additional Information.
When Share Price Is Determined
The price of your shares is their net asset value. We determine the net asset
value by calculating the total value of the Fund's assets, deducting total
liabilities, and dividing the result by the number of shares outstanding. We
determine the net asset value only on days that the New York Stock Exchange (the
"Exchange") is open.
If we receive your investment or redemption request before the close of
business on the Exchange, usually 4:00 p.m. Eastern Standard Time, your share
price for that transaction will be the price we determine at the close of the
Exchange that day. When investment and redemption requests are received after
the Exchange is closed, we use the share price at the close of the Exchange the
next day the Exchange is open. We consider investment and redemption requests by
telephone to be received at the time of your telephone call, assuming you've
given us all required information.
We consider purchase payments to be received only when your check, wire, or
automatic investment funds are received by us along with all required
information. We consider wired funds to be received on the day they are
deposited in the Company's bank account. If you call us with wire instructions
before the Exchange closes, we usually deposit the money that day.
Where To Find Information About Share Price
You can get the current net asset values of the Fund by calling us at
1-800-89-ASK-US (1-800-892-7587). The net asset value of the Fund may also be
published in leading newspapers daily, once its net assets reach a certain
amount. Weekly updates of the Fund's net asset value are available on the
Transamerica Premier Funds Web site at http://funds.transamerica.com.
Organization and Management
Transamerica Investors, Inc.
Transamerica Investors, Inc. was organized as a Maryland corporation on February
22, 1995. The Company is registered with the Securities and Exchange Commission
under the 1940 Act as an open-end management investment company of the series
type. The Fund constitutes a separate series, and is part of a family of series
known as the Transamerica Premier Funds. The fiscal year-end of the Fund is
December 31.
There are currently no other classes of shares; however, the Company is
authorized to issue and sell multiple classes of shares for each of the Funds.
This Prospectus describes the Investor Class of Shares for the Funds. The
Company reserves the right to issue additional classes of shares in the future
without the consent of shareholders, and can allocate any remaining unclassified
shares or reallocate any unissued classified shares.
Except for the differences noted below and elsewhere in this
Prospectus, each share of the Fund has equal dividend, redemption and
liquidation rights with other shares of the Fund and when issued, is fully paid
and nonassessable. Each share of each class represents an identical legal
interest in the same investments of the Fund. Should several classes be offered,
each class has certain other expenses related solely to that class. Each class
will have exclusive voting rights under the 12b-1 distribution plan. In the
event that a special meeting of shareholders is called, separate votes are taken
by each class only if a matter affects, or requires the vote of, just that
class. Although the legal rights of holders of each class of shares are
identical, it is likely that the difference in expenses will result in different
net asset values and dividends. The classes may have different exchange
privileges.
As a Maryland corporation, the Company is not required to hold regular
annual meetings of shareholders. Ordinarily there will be no shareholder
meetings, unless requested by shareholders holding 10% or more of the
outstanding shares, or unless required by the 1940 Act or Maryland law. You are
entitled to cast one vote for each share you own of each Transamerica Premier
Fund. At a special shareholders meeting, if one is called, issues that affect
all the Transamerica Premier Funds in substantially the same way will be voted
on by all shareholders. Issues that do not affect a Transamerica Premier Fund
will not be voted on by that Transamerica Premier Fund. Issues that affect all
Funds, but in which their interests are not substantially the same, will be
voted on separately by each Transamerica Premier Fund.
Investment Adviser Services
The Investment Adviser is responsible for making investment decisions for the
Fund. The Investment Adviser is also responsible for the selection of brokers
and dealers to execute transactions for the Fund. Some of these brokers or
dealers may be affiliated persons of the Company, the Investment Adviser,
Administrator, or the Distributor. Since it is our policy to seek the best price
and execution for each transaction, the Investment Adviser may give
consideration to brokers and dealers who provide us with statistical information
and other services in addition to transaction services. Additional information
about the selection of brokers and dealers is provided in the Statement of
Additional Information.
Trading decisions for the Fund described in this Prospectus are made by
a team of expert managers and analysts headed by a team leader. The team leader
is primarily responsible for the day-to-day decisions related to the Fund. He is
supported by the entire group of managers and analysts. The team leader of the
Fund may be on another Transamerica Premier Fund team. The transactions and
performance of the Transamerica Premier Funds are reviewed continuously by the
Investment Adviser's senior officers.
The team leader for the Fund is Philip Treick, Vice President and Fund
Manager, Transamerica Investment
Services. B.S., University of South Florida, 1987. Financial Analyst, Raymond
James Financial Corporation, 1987 -
1988. Joined Transamerica in 1988.
Adviser Fee
For its services to the Fund, the Investment Adviser receives an Adviser Fee.
This fee is based on an annual percentage of the average daily net assets of the
Fund. It is accrued daily, and paid monthly.
The annual fee percentages for the Fund is .85% on the first $1 billion
of assets. This reduces to .82% on the next $1 billion, and finally .80% on
assets over $2 billion. The Investment Adviser may waive some or all of these
fees from time to time at its discretion. See "Fund Expenses" on page 3 for
further details.
Administrator Services
The Investment Adviser pays part of the Adviser Fee to the Administrator. The
Administrator provides office space for the Company and pays the salaries, fees
and expenses of all Company officers and those directors affiliated with
Transamerica Corporation and not already paid by the Investment Adviser. The
Fund pays all of its expenses not assumed by the Administrator. This includes
transfer agent and custodian fees and expenses, legal and auditing fees,
printing costs of reports to shareholders, registration fees and expenses, 12b-1
fees, and fees and expenses of directors unaffiliated with Transamerica
Corporation.
The Administrator may from time to time reimburse the Fund for some or
all of its operating expenses, including 12b-1 fees. Such reimbursements will
increase the Fund's return. This is intended to make the Fund more competitive.
This practice may be terminated at any time.
Custodian and Transfer Agent
Under a Custodian Agreement, State Street Bank and Trust Company ("State
Street"), 225 Franklin Street, Boston, Massachusetts 02110, holds all securities
and cash assets of the Fund, provides recordkeeping services, and serves as the
Fund's custodian. State Street is authorized to deposit securities in securities
depositories or to use services of sub-custodians.
Under a Transfer Agency Agreement, State Street Bank also serves as the
Fund's transfer agent. The
transfer agent is responsible for: a) opening and maintaining your account; b)
reporting information to you about
your account; c) paying you dividends and capital gains; and d) handling your
requests for exchanges, transfers
and redemptions.
Distributor
Transamerica Securities Sales Corporation ("TSSC") is the principal underwriter
and distributor of the shares of the Fund.
TSSC is a wholly-owned subsidiary of Transamerica Insurance Corporation
of California, which is a wholly-owned subsidiary of Transamerica Corporation.
TSSC is registered with the Securities and Exchange Commission as a
broker-dealer. TSSC is also a member of the National Association of Securities
Dealers, Inc.
Distribution Plan
The Fund makes payments to TSSC according to a plan adopted to meet the
requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended.
These fees accrue daily and are based on an annual percentage of the daily
average net assets.
The 12b-1 plan of distribution and related distribution contracts
require the Fund to pay distribution and service fees to TSSC as compensation
for its activities, not as reimbursement for specific expenses. If TSSC's
expenses are more than its fees for the Fund, the Fund will not have to pay more
than those fees. If TSSC's expenses are less than the fees, it will keep the
excess. The Company will pay the distribution and service fees to TSSC until the
distribution contracts are terminated or not renewed. In that event, TSSC's
expenses over and above any fees through the termination date will be TSSC's
sole responsibility and not the obligation of the Company. The Board will review
and approve the distribution plan, contracts and TSSC's expenses quarterly.
There is an annual 12b-1 distribution fee of .25% of the average daily
net assets of the Fund. This fee covers such expenses as preparation, printing
and mailing of the Prospectus and Statement of Additional Information, as well
as sales literature and other media advertising, and related expenses. It can
also be used to compensate sales personnel involved with selling the Fund.
From time to time, the Distributor may waive all or any portion of
these fees at its discretion.
General Information
Performance Information
The Company may publish performance information about the Fund. Fund performance
usually will be shown either as cumulative total return or average periodic
total return compared with other mutual funds by public ranking services, such
as Lipper Analytical Services, Inc. Cumulative total return is the actual
performance over a stated period of time. Average annual total return is the
hypothetical return, compounded annually, that would have produced the same
cumulative return if the Fund's performance had been constant over the entire
period. The Fund's total return shows its overall dollar or percentage change in
value. This includes changes in the share price and reinvestment of dividends
and capital gains.
The performance of the Fund can also be measured in terms of yield. The Fund's
yield shows the rate of income the Fund earns on its investments as a percentage
of the Fund's share price.
The Fund can also separate its cumulative and average annual total returns into
income results and capital gains or losses. The Fund can quote its total returns
on a before-tax or after-tax basis.
The performance information which may be published for the Fund is historical.
It is not intended to represent or guarantee future results. The value of your
Fund shares can be more or less than their original cost when they are redeemed.
Summary of Bond Ratings
Following is a summary of the grade indicators used by two of the most
prominent, independent rating agencies (Moody's Investors Service, Inc. and
Standard & Poor's Corporation) to rate the quality of bonds. The first four
categories are generally considered investment quality bonds. Those below that
level are of lower quality, commonly referred to as "junk bonds."
Standard
Investment Grade Moody's & Poor's
Highest quality Aaa AAA
High quality Aa AA
Upper medium A A
Medium, speculative features Baa BBB
Lower Quality
Moderately speculative Ba BB
Speculative B B
Very speculative Caa CCC
Very high risk Ca CC
Highest risk, may
not be paying interest C C
In arrears or default C D
For more detailed information on bond ratings, including gradations within each
category of quality, see the Statement of Additional Information.
Pension and Retirement Savings Programs
Following is a listing of Pension and Retirement Savings Programs. Provided you
have the necessary plan documents, you can use the Transamerica Premier Funds as
investment options for:
401(a), 401(k), profit sharing, or money purchase pension plans
(including KEOGH/HR 10 Plans) designed to benefit employees of
corporations, partnerships, and sole proprietors.
Section 403(b)(7) (Tax-Sheltered Annuity) Plans* for employees of
educational organizations or other qualifying, tax exempt
organizations.
Individual Retirement Account ("IRA"), or comparable program,
for individuals and Simplified Employee Pension ("SEP") Plans for
employers (including sole proprietors) and their employees.
Section 457 deferred compensation plans for employees of state
governments and tax-exempt organizations. Employers' non-qualified
plans or savings programs, that do not qualify for federal tax
advantages.
Other retirement plans or savings programs allowed by the Board. *You
may be required to have your own custodian for this plan.
<PAGE>
1
Statement of Additional Information
August 27, 1997
Transamerica Premier
Aggressive Growth Fund
Transamerica Premier
Small Company Fund
Transamerica Premier Aggressive Growth Fund
The Fund seeks to maximize long-term capital appreciation by investing
in common stocks selected for high growth potential.
Transamerica Premier Small Company Fund The Fund seeks to maximize long-term
growth by investing in small company stocks.
Your Guide
This Statement of Additional Information ("SAI") pertains to the Transamerica
Premier Aggressive Growth and Transamerica Premier Small Company Funds (the
"Fund" or collectively the "Funds") only. In addition to the Funds, other series
of Transamerica Investors, Inc. (the "Company") include: Transamerica Premier
Equity Fund, Transamerica Premier Index Fund, Transamerica Premier Bond Fund,
Transamerica Premier Balanced Fund, and Transamerica Premier Cash Reserve Fund.
This Statement of Additional Information will provide you with details beyond
what is available in the Prospectuses. Please refer to the Prospectuses first,
then to this document. Please read it carefully. Save it for future reference.
About the Prospectuses
This SAI is not a prospectus. It should be read in connection with the current
Transamerica Premier Small Company Fund Prospectus dated June 30, 1997 and the
Transamerica Premier Aggressive Growth Fund Prospectus dated August 27, 1997.
The Prospectuses are available without charge by calling 1-800-89-ASK-US.
Terms used in the Prospectuses are incorporated in this SAI.
No person has been authorized to give any information or to make any
representations other than those contained in this SAI and the Prospectuses, as
revised from time to time, and if given or made, such information or
representations may not be relied upon as having been authorized by the Funds.
Contents
Investment Objectives and Policies 2
Investment Restrictions 10
Management of the Company 13
Investment Advisory and Other Services 15
Purchases and Redemption of Shares 16
Brokerage Allocation 17
Determination of Net Asset Value 18
Performance Information 19
Taxes 21
Other Information 22
Appendix A:
Description of Corporate Bond Ratings 23
Appendix B:
Description of Fixed-Income Instruments 18
Investment Objectives and Policies
The investment objectives and policies of the Funds are described in the
Prospectuses. The achievement of each Fund's investment objectives will depend
on market conditions generally and on the analytical and portfolio management
skills of the Investment Adviser. There can be no assurance that the investment
objective of any of the funds can be achieved.
High Yield ("Junk") Bonds
High-yield bonds (commonly called "junk" bonds) are lower rated bonds that
involve a higher degree of credit risk. See "Appendix A" for a description of
credit ratings. Credit risk is the risk that the issuer of the bonds will not be
able to make interest or principal payment on time. If this happened to a bond
in a Fund, the Fund would lose some of its income, and could expect a decline in
the market value of the securities affected. So the Investment Adviser needs to
carefully analyze the financial condition of companies issuing junk bonds. The
prices of junk bonds tend to be more reflective of prevailing economic and
industry conditions, issuers' unique financial situations, and the bonds' coupon
than to small changes in the level of interest rates. But during an economic
downturn or a period of rising interest rates, highly leveraged companies may
have trouble making principal and interest payments, meeting projected business
goals, and obtaining additional financing. Junk bonds' values will generally
decrease in a rising interest rate market.
Junk bonds may contain "call" provisions, which enable the issuers of
the bond to redeem the bond at will. If the issuer exercises this privilege
during a declining interest rate market, the Fund would replace the bond most
likely with a lower yield bond, resulting in a lower return for investors.
Periods of economic or political uncertainty and change can create some
volatility for junk bonds. Since the last major economic recession, there has
been a substantial increase in the use of high-yield debt securities to fund
highly leveraged corporate acquisitions and restructurings. Past experience with
high-yield securities in a prolonged economic downturn may not provide an
accurate indication of future performance during such periods. Lower rated
securities may also be harder to sell than higher rate securities because of bad
publicity and investor perceptions of this market, as well as new or proposed
laws dealing with high yield securities. For many junk bonds, there is no
established retail secondary market. As a result, it may be difficult for the
Investment Adviser to accurately value the bonds because they cannot rely on
available, objective data.
Each Fund may also invest in unrated debt securities. Unrated debt,
while not necessarily of lower quality than rated securities, may not have as
broad a market. Since these ratings do not consider factors relevant to each
issue, and may not be updated regularly, the Investment Adviser may treat high
yield securities as unrated debt.
Because of the size and perceived demand of the issue, among other
factors, certain municipalities may decide not to pay the cost of getting a
rating for their bonds. The Investment Adviser will analyze the creditworthiness
of the issuer, as well as any financial institution or other party responsible
for payments on the security, to determine whether to purchase unrated municipal
bonds. See "Appendix B" for a description of fixed income instruments.
Restricted and Illiquid Securities
A Fund may purchase certain restricted securities of U.S. issuers (those that
are not registered under the Securities Act of 1933, as amended (the "1933 Act")
but can be offered and sold to "qualified institutional buyers" under Rule 144A
of that Act) and limited amounts of illiquid investments, including illiquid
restricted securities.
Illiquid investments include many restricted securities, repurchase
agreements that mature in more than seven days, fixed time deposits that mature
in more than seven days and participation interests in loans.
Certain repurchase agreements which provide for settlement in more than
seven days, however, can be liquidated before the nominal fixed term of seven
days or less notice. The Investment Adviser will consider such repurchase
agreements as liquid. Likewise, restricted securities (including commercial
paper issued pursuant to Section 4(2) of the 1933 Act) that the Board or the
Investment Adviser have determined to be liquid will be treated as such.
The SEC staff has taken the position that fixed time deposits maturing
in more than seven days that cannot be traded on a secondary market and
participation interests in loans are illiquid and not readily marketable. A
considerable amount of time may elapse between a Fund's decision to dispose of
restricted or illiquid securities and the time which such Fund is able to
dispose of them, during which time the value of such securities (and therefore
the value of the Fund's shares held by an account) could decline.
Derivatives
Each Fund may use options, futures, forward contracts, and swap transactions
("derivatives"). The Funds may purchase and write, call or put options on
securities or on indexes ("options") and may enter into interest rate or index
futures contracts for the purchase or sale of instruments based on financial
indexes ("futures contracts"), options on futures contracts, forward contracts,
and interest rate swaps and swap-related products. The Funds may invest more
than 35% of their assets in derivatives.
By investing in derivatives, the Investment Adviser may seek to protect
a Fund against potentially unfavorable movements in interest rates or
securities' prices, or attempt to adjust a Fund's exposure to changing
securities prices, interest rates, or other factors that affect securities
values. This is done in an attempt to reduce a Fund's overall investment risk.
Although it will not generally be a significant part of a Fund's strategies, the
Investment Adviser may also use derivatives to enhance returns. Opportunities to
enhance returns arise when the derivative does not reflect the fair value of the
underlying securities. None of the Funds will use derivatives for leverage.
Risks in the use of derivatives include, in addition to those referred
to above: (1) the risk that interest rates and securities prices do not move in
the directions being hedged against, in which case the Fund has incurred the
cost of the derivative (either its purchase price or, by writing an option,
losing the opportunity to profit from increases in the value of the securities
covered) with no tangible benefit; (2) imperfect correlation between the price
of derivatives and the movements of the securities' prices or interest rates
being hedged; (3) the possible absence of a liquid secondary market for any
particular derivative at any time (some derivatives are not actively traded but
are custom designed to meet the investment needs of a narrow group of
institutional investors and can become illiquid if the needs of that group of
investors change); (4) the potential loss if the counterparty to the transaction
does not perform as promised; and (5) the possible need to defer closing out
certain positions to avoid adverse tax consequences.
The Board will closely monitor the Investment Adviser's use of
derivatives in each of the Funds to assure they are used in accordance with the
investment objectives of each Fund.
Options on Securities and Securities Indexes
A Fund may write (i.e., sell) covered call and put options on any securities in
which it may invest. A call option written by a Fund obligates the Fund to sell
specified securities to the holder of the option at a specified price if the
option is exercised at any time before the expiration date. All call options
written by a Fund are covered, which means that the Fund will own the securities
subject to the option so long as the option is outstanding. A Fund's purpose in
writing covered call options is to realize greater income than would be realized
on securities transactions alone. However, by writing the call option a Fund
might forgo the opportunity to profit from an increase in the market price of
the underlying security.
A put option written by a Fund would obligate the Fund to purchase
specified securities from the option holder at a specified price if the option
is exercised at any time before the expiration date. All put options written by
a Fund would be covered, which means that such Fund would have deposited with
its custodian cash or liquid high grade debt securities with a value at least
equal to the exercise price of the put option. The purpose of writing such
options is to generate additional income for the Fund. However, in return for
the option premium, a Fund accepts the risk that it might be required to
purchase the underlying securities at a price in excess of the securities'
market value at the time of purchase.
In addition, a written call option or put option may be covered by
maintaining cash or liquid high grade debt securities in a segregated account
with its custodian or by purchasing an offsetting option or any other option
which, by virtue of its exercise price or otherwise, reduces a Fund's net
exposure on its written option position.
A Fund may also write (sell) covered call and put options on any
securities index composed of securities in which it may invest. Options on
securities indexes are similar to options on securities, except that the
exercise of securities index options requires cash payments and does not involve
the actual purchase or sale of securities. In addition, securities index options
are designed to reflect price fluctuations in a group of securities or segment
of the securities market rather than price fluctuations in a single security.
A Fund may cover call options on a securities index by owning
securities whose price changes are expected to be similar to those of the
underlying index, or by having an absolute and immediate right to acquire such
securities without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities in the Fund. A Fund may cover call and put options
on a securities index by maintaining cash or liquid high grade debt securities
with a value equal to the exercise price in a segregated account with its
custodian.
A Fund may terminate its obligations under an exchange traded call or
put option by purchasing an option identical to the one it has written.
Obligations under over-the-counter options may be terminated only by entering
into an offsetting transaction with the counterparty to such option. Such
purchases are referred to as "closing purchase" transactions.
A Fund may purchase put and call options on any securities in which it
may invest or options on any securities index based on securities in which it
may invest. A Fund would also be able to enter into closing sale transactions in
order to realize gains or minimize losses on options it had purchased.
A Fund would normally purchase call options in anticipation of an
increase in the market value of securities of the type in which it may invest.
The purchase of a call option would entitle a Fund, in return for the premium
paid, to purchase specified securities at a specified price during the option
period. A Fund would ordinarily realize a gain if, during the option period, the
value of such securities exceeded the sum of the exercise price, the premium
paid and transaction costs; otherwise the Fund would realize a loss on the
purchase of the call option.
A Fund would normally purchase put options in anticipation of a decline
in the market value of its securities ("protective puts") or in securities in
which it may invest. The purchase of a put option would entitle a Fund, in
exchange for the premium paid, to sell specified securities at a specified price
during the option period. The purchase of protective puts is designed to offset
or hedge against a decline in the market value of a Fund's securities. Put
options may also be purchased by a Fund for the purpose of affirmatively
benefiting from a decline in the price of securities which it does not own. A
Fund would ordinarily realize a gain if, during the option period, the value of
the underlying securities decreased below the exercise price sufficiently to
cover the premium and transaction costs; otherwise such a Fund would realize a
loss on the purchase of the put option.
A Fund would purchase put and call options on securities indexes for
the same purposes as it would purchase options on individual securities.
Risks Associated with Options Transactions
There is no assurance that a liquid secondary market on an options exchange will
exist for any particular exchange-traded option or at any particular time. If a
Fund is unable to affect a closing purchase transaction with respect to covered
options it has written, the Fund will not be able to sell the underlying
securities or dispose of assets held in a segregated account until the options
expire or are exercised. Similarly, if a Fund is unable to effect a closing sale
transaction with respect to options it has purchased, it would have to exercise
the options in order to realize any profit and will incur transaction costs upon
the purchase or sale of underlying securities.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or the Options
Clearing Corporation may not at all times be adequate to handle current trading
volume; or (vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that exchange (or in that class or series of options) would cease to
exist, although outstanding options on that exchange that had been issued by the
Options Clearing Corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.
A Fund may purchase and sell both options that are traded on U.S.,
United Kingdom, and other exchanges and options traded over-the-counter with
broker-dealers who make markets in these options. The ability to terminate
over-the-counter options is more limited than with exchange-traded options and
may involve the risk that broker-dealers participating in such transactions will
not fulfill their obligations. Until such time as the staff of the SEC changes
its position, a Fund will treat purchased over-the-counter options and all
assets used to cover written over-the-counter options as illiquid securities,
except that with respect to options written with primary dealers in U.S.
government securities pursuant to an agreement requiring a closing purchase
transaction at a formula price, the amount of illiquid securities may be
calculated with reference to the formula.
Transactions by a Fund in options on securities and securities indexes
will be subject to limitations established by each of the exchanges, boards of
trade or other trading facilities governing the maximum number of options in
each class which may be written or purchased by a single investor or group of
investors acting in concert. Thus, the number of options which a Fund may write
or purchase may be affected by options written or purchased by other investment
advisory clients of the Investment Adviser of the Funds. An exchange, board of
trade or other trading facility may order the liquidations of positions found to
be in excess of these limits, and it may impose certain other sanctions.
The writing and purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary securities transactions. The successful use of protective puts for
hedging purposes depends in part on an ability to anticipate future price
fluctuations and the degree of correlation between the options and securities
markets.
Futures Contracts and Options on Futures Contracts
A Fund may purchase and sell futures contracts and may also purchase and write
options on futures contracts. A Fund may purchase and sell futures contracts
based on various securities (such as U.S. government securities), securities
indexes, and other financial instruments and indexes. A Fund will engage in
futures or related options transactions only for bona fide hedging purposes as
defined below or to increase total returns to the extent permitted by
regulations of the Commodity Futures Trading Commission ("CFTC"). All futures
contracts entered into by a Fund are traded on U.S. exchanges or boards of trade
that are licensed and regulated by the CFTC.
Futures Contracts
A futures contract may generally be described as an agreement between two
parties to buy or sell particular financial instruments for an agreed price
during a designated month (or to deliver the final cash settlement price, in the
case of a contract relating to an index or otherwise not calling for physical
delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, a Fund
can seek to offset a decline in the value of its current securities through the
sale of futures contracts. When rates are falling or prices are rising, a Fund,
through the purchase of futures contracts, can attempt to secure better rates or
prices than might later be available in the market when it effects anticipated
purchases.
Positions taken in the futures markets are not normally held to
maturity, but are instead liquidated through offsetting transactions which may
result in a profit or a loss. While a Fund's futures contracts on securities
will usually be liquidated in this manner, it may instead make or take delivery
of the underlying securities whenever it appears economically advantageous for a
Fund to do so. A clearing corporation associated with the exchange on which
futures on securities are traded guarantees that, if still open, the sale or
purchase will be performed on the settlement date.
Hedging Strategies
Hedging by use of futures contracts seeks to establish more certainty than would
otherwise be possible in the effective price or rate of return on securities
that a Fund owns or proposes to acquire. A Fund may, for example, take a "short"
position in the futures market by selling futures contracts in order to hedge
against an anticipated rise in interest rates or a decline in market prices that
would adversely affect the value of the Fund's securities. Such futures
contracts may include contracts for the future delivery of securities held by
the Fund or securities with characteristics similar to those of a Fund's
securities.
If, in the opinion of the Investment Adviser, there is a sufficient
degree of correlation between price trends for a Fund's securities and futures
contracts based on other financial instruments, securities indexes or other
indexes, the Fund may also enter into such futures contracts as part of its
hedging strategy. Although under some circumstances prices of a Fund's
securities may be more or less volatile than prices of such futures contracts,
the Investment Adviser will attempt to estimate the extent of this difference in
volatility based on historical patterns and to compensate for it by having a
Fund enter into a greater or lesser number of futures contracts or by attempting
to achieve only a partial hedge against price changes affecting the Fund's
securities. When hedging of this character is successful, any depreciation in
the value of the Fund's securities will be substantially offset by appreciation
in the value of the futures position. On the other hand, any unanticipated
appreciation in the value of the Fund's securities would be substantially offset
by a decline in the value of the futures position.
On other occasions, a Fund may take a "long" position by purchasing
such futures contracts. This would be done, for example, when a Fund anticipates
the subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or interest rates then available in the applicable market
to be less favorable than prices or rates that are currently available.
Options on Futures Contracts
The acquisition of put and call options on futures contracts will give a Fund
the right (but not the obligation), for a specified price, to sell or to
purchase, respectively, the underlying futures contract at any time during the
option period. As the purchaser of an option on a futures contract, a Fund
obtains the benefit of the futures position if prices move in a favorable
direction but limits its risk of loss in the event of an unfavorable price
movement to the loss of the option premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of a Fund's assets. By writing
a call option, a Fund becomes obligated, in exchange for the premium, to sell a
futures contract, which may have a value higher than the exercise price.
Conversely, the writing of a put option on a futures contract generates a
premium, which may partially offset an increase in the price of securities that
a Fund intends to purchase. However, a Fund becomes obligated to purchase a
futures contract, which may have a value lower than the exercise price. Thus,
the loss incurred by a Fund in writing options on futures is potentially
unlimited and may exceed the amount of the premium received. A Fund will
increase transaction costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate
its position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. A Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
Other Considerations
Where permitted, a Fund will engage in futures transactions and in related
options transactions only for bona fide hedging or to increase total return to
the extent permitted by CFTC regulations. A Fund will determine that the price
fluctuations in the futures contracts and options on futures used for hedging
purposes are substantially related to price fluctuations in securities held by
the Fund or which it expects to purchase. Except as stated below, each Fund's
futures transactions will be entered into for traditional hedging purposes,
i.e., futures contracts will be sold to protect against a decline in the price
of securities that the Fund owns, or futures contracts will be purchased to
protect the Fund against an increase in the price of securities it intends to
purchase. As evidence of this hedging intent, a Fund expects that on 75% or more
of the occasions on which they take a long futures or option position (involving
the purchase of futures contracts), that Fund will have purchased, or will be in
the process of purchasing, equivalent amounts of related securities in the cash
market at the time when the futures or option position is closed out. However,
in particular cases, when it is economically advantageous for a Fund to do so, a
long futures position may be terminated or an option may expire without the
corresponding purchase of securities or other assets.
As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits a Fund to elect to comply with a different
test, under which the aggregate initial margin and premiums required to
establish positions in futures contracts and options on futures for the purpose
of increasing total return, will not exceed 5% of the Fund's net asset value,
after taking into account unrealized profits and losses on any such positions
and excluding the amount by which such options were in-the-money at the time of
purchase. As permitted, each Fund will engage in transactions in futures
contracts and in related options transactions only to the extent such
transactions are consistent with the requirements of the Internal Revenue Code
of 1986, as amended (the "Code") for maintaining its qualification as a
regulated investment company for federal income tax purposes.
Transactions in futures contracts and options on futures involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating a Fund to purchase securities or currencies, require the Fund
to segregate with its custodian liquid high grade debt securities in an amount
equal to the underlying value of such contracts and options.
While transactions in futures contracts and options on futures may
reduce certain risks, such transactions themselves entail certain other risks.
Thus, unanticipated changes in interest rates or securities prices may result in
a poorer overall performance for a Fund than if it had not entered into any
futures contracts or options transactions. In the event of an imperfect
correlation between a futures position and the position which is intended to be
protected, the desired protection may not be obtained and a Fund may be exposed
to risk of loss.
Perfect correlation between a Fund's futures positions and current
positions may be difficult to achieve because no futures contracts based on
individual equity securities are currently available. The only futures contracts
available to these Funds for hedging purposes are various futures on U.S.
government securities and securities indexes.
Interest Rate Swaps
A Fund may enter into interest rate swaps for hedging purposes and non-hedging
purposes. Since swaps are entered into for good faith hedging purposes or are
offset by a segregated account as described below, the Investment Adviser
believes that swaps do not constitute senior securities as defined in the 1940
Act and, accordingly, will not treat them as being subject to the Fund's
borrowing restrictions. The net amount of the excess, if any, of a Fund's
obligations over its "entitlement" with respect to each interest rate swap will
be accrued on a daily basis and an amount of cash or liquid high grade debt
securities (i.e., securities rated in one of the top three ratings categories by
Moody's or S&P, or, if unrated, deemed by the Investment Adviser to be of
comparable credit quality) having an aggregate net asset value at least equal to
such accrued excess will be maintained in a segregated account by the Fund's
custodian. A Fund will not enter into any interest rate swap unless the credit
quality of the unsecured senior debt or the claims-paying ability of the other
party thereto is considered to be investment grade by the Investment Adviser. If
there is a default by the other party to such a transaction, a Fund will have
contractual remedies pursuant to the agreement. 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. As a result, the swap market has become relatively liquid in
comparison with the markets for other similar instruments which are traded in
the interbank market.
Swap Transactions
The Funds may, to the extent permitted by the SEC, enter into privately
negotiated "swap" transactions with other financial institutions in order to
take advantage of investment opportunities generally not available in public
markets. In general, these transactions involve "swapping" a return based on
certain securities, instruments, or financial indexes with another party, such
as a commercial bank, in exchange for a return based on different securities,
instruments, or financial indexes.
By entering into swap transactions, a Fund may be able to protect the
value of a portion of its securities against declines in market value. A Fund
may also enter into swap transactions to facilitate implementation of allocation
strategies between different market segments or to take advantage of market
opportunities which may arise from time to time. A Fund may be able to enhance
its overall performance if the return offered by the other party to the swap
transaction exceeds the return swapped by the Fund. However, there can be no
assurance that the return a Fund receives from the counterparty to the swap
transaction will exceed the return it swaps to that party.
While a Fund will only enter into swap transactions with counterparties
it considers creditworthy (and will monitor the creditworthiness of parties with
which it enters into swap transactions), a risk inherent in swap transactions is
that the other party to the transaction may default on its obligations under the
swap agreement. If the other party to the swap transaction defaults on its
obligations, a Fund would be limited to contractual remedies under the swap
agreement. There can be no assurance that a Fund will succeed when pursuing its
contractual remedies. To minimize a Fund's exposure in the event of default, the
Funds will usually enter into swap transactions on a net basis (i.e., the
parties to the transaction will net the payments payable to each other before
such payments are made). When a Fund enters into swap transactions on a net
basis, the net amount of the excess, if any, of the Fund's obligations over its
entitlements with respect to each such swap agreement will be accrued on a daily
basis and an amount of liquid assets having an aggregate market value at least
equal to the accrued excess will be segregated by the Fund's custodian. To the
extent a Fund enters into swap transactions other than on a net basis, the
amount segregated will be the full amount of the Fund's obligations, if any,
with respect to each such swap agreement, accrued on a daily basis. See
"Segregated Funds" below.
Swap agreements are considered to be illiquid by the SEC staff and will
be subject to the limitations on illiquid investments. See "Restricted and
Illiquid Securities" on page 2.
To the extent that there is an imperfect correlation between the return
a Fund is obligated to swap and the securities or instruments representing such
return, the value of the swap transaction may be adversely affected. A Fund
therefore will not enter into a swap transaction unless it owns or has the right
to acquire the securities or instruments representative of the return it is
obligated to swap with the counterparty to the swap transaction. It is not the
intention of the Funds to engage in swap transactions in a speculative manner,
but rather primarily to hedge or manage the risks associated with assets held in
a Fund, or to facilitate the implementation of strategies of purchasing and
selling assets for a Fund.
Foreign Securities
All Funds can invest in foreign securities. Foreign securities, other than ADRs,
will be held in custody by State Street London Limited, who will handle
transactions with the transnational depositories Euroclear and Cedel.
Segregated Accounts
In connection with when-issued securities, firm commitment agreements, futures,
the writing of options, and certain other transactions in which a Fund incurs an
obligation to make payments in the future, a Fund may be required to segregate
assets with its custodian in amounts sufficient to settle the transaction. To
the extent required, such segregated assets will consist of liquid assets such
as cash, United States government securities or other appropriate high grade,
short-term debt obligations as may be permitted by law.
Purchase of "When-Issued" Securities
The Funds may enter into firm commitment agreements for the purchase of
securities on a specified future date. Thus, the Funds may purchase, for
example, new issues of fixed-income instruments on a "when-issued" basis,
whereby the payment obligation, or yield to maturity, or coupon rate on the
instruments may not be fixed at the time of the transaction. In addition, the
Funds may invest in asset-backed securities on a delayed delivery basis. This
reduces the Funds' risk of early repayment of principal, but exposes the Funds
to some additional risk that the transaction will not be consummated.
When the Funds enter into firm commitment agreements, liability for the
purchase price and the rights and risks of ownership of the securities accrue to
the Funds at the time they become obligated to purchase such securities,
although delivery and payment occur at a later date. Accordingly, if the market
price of the security should decline, the effect of the agreement would be to
obligate the Funds to purchase the security at a price above the current market
price on the date of delivery and payment. During the time the Funds are
obligated to purchase such securities they will be required to segregate assets.
See "Segregated Accounts," on page 6. A Fund will not purchase securities on a
"when-issued" basis if, as a result, more than 15% of the Fund's net assets
would be so invested. Lending of Securities Subject to investment restriction
number 2 titled "Lending" on page 3 (relating to loans of securities), a Fund
may lend its securities to brokers and dealers that are not affiliated with the
Investment Adviser, are registered with the Commission and are members of the
NASD, and also to certain other financial institutions. All loans will be fully
collateralized. In connection with the lending of its securities, a Fund will
receive as collateral cash, securities issued or guaranteed by the United States
government (i.e., Treasury securities), or other collateral permitted by
applicable law, which at all times while the loan is outstanding will be
maintained in amounts equal to at least 102% of the current market value of the
loaned securities, or such lesser percentage as may be permitted by applicable
law, as reviewed daily. The Fund lending its securities will receive amounts
equal to the interest or dividends paid on the securities loaned and in addition
will expect to receive a portion of the income generated by the short-term
investment of cash received as collateral or, alternatively, where securities or
a letter of credit are used as collateral, a lending fee paid directly to the
Fund by the borrower of the securities. Such loans will be terminable by the
Fund at any time and will not be made to affiliates of the Investment Adviser. A
Fund may terminate a loan of securities in order to regain record ownership of,
and to exercise beneficial rights related to, the loaned securities, including
but not necessarily limited to voting or subscription rights, and may, in the
exercise of its fiduciary duties, terminate a loan in the event that a vote of
holders of those securities is required on a material matter. The Fund may pay
reasonable fees to persons unaffiliated with the Fund for services or for
arranging such loans. Loans of securities will be made only to firms deemed
creditworthy. As with any extension of credit, however, there are risks of delay
in recovering the loaned securities, should the borrower of securities default,
become the subject of bankruptcy proceedings, or otherwise be unable to fulfill
its obligations or fail financially.
Borrowing Policies of the Funds
We can borrow money from banks or engage in reverse repurchase agreements, for
temporary or emergency purposes. We can borrow up to one-third of a Fund's total
assets. To secure borrowings, we can mortgage or pledge securities in an amount
up to one-third of a Fund's net assets. If we borrow money, a Fund's share price
may be subject to greater fluctuation until the borrowing is paid off. The Fund
will not make any additional investments, other than the case of reverse
repurchase agreements, while the level of the borrowing exceeds 5% of the Fund's
total assets.
Short-term corporate obligations may also include variable amount
master demand notes. Variable amount master notes are obligations that permit
the investment of fluctuating amounts by the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the borrower.
These notes permit daily changes in the amounts borrowed. The Fund has the right
to increase the amount under the note at any time up to the full amount provided
by the note agreement, or to decrease the amount, and the borrower may repay up
to the full amount of the note without penalty. The borrower is typically a
large industrial or finance company which also issues commercial paper.
Typically these notes provide that the interest rate is set daily by the
borrower. The rate is usually the same or similar to the interest rate on
commercial paper being issued by the borrower. Because variable amount master
notes are direct lending arrangements between the lender and borrower, it is not
generally contemplated that such instruments will be traded, and there is no
secondary market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at the face value, plus accrued interest,
at any time. Accordingly, the Fund's right to redeem is dependent on the ability
of the borrower to pay principal and interest on demand. In connection with
master demand note arrangements, the Fund considers earning power, cash flow,
and other liquidity ratios of the issuer. The Fund will only invest in master
demand notes of U.S. issuers. While master demand notes, as such, are not
typically rated by credit rating agencies, if not so rated the Fund may invest
in them only if at the time of an investment the issuer meets the criteria set
forth in the Prospectuses for all other commercial paper issuers. The Fund will
not invest more than 25% of its assets in master demand notes.
Repurchase Agreements
Repurchase agreements have the characteristics of loans by a Fund, and will be
fully collateralized (either with physical securities or evidence of book entry
transfer to the account of the custodian bank) at all times. During the term of
the repurchase agreement the Fund retains the security subject to the repurchase
agreement as collateral securing the seller's repurchase obligation, continually
monitors the market value of the security subject to the agreement, and requires
the Fund's seller to deposit with the Fund additional collateral equal to any
amount by which the market value of the security subject to the repurchase
agreement falls below the resale amount provided under the repurchase agreement.
The Funds will enter into repurchase agreements only with member banks of the
Federal Reserve System, and with primary dealers in United States government
securities or their wholly-owned subsidiaries whose creditworthiness has been
reviewed and found satisfactory by the Investment Adviser and who have,
therefore, been determined to present minimal credit risk.
Securities underlying repurchase agreements will be limited to
certificates of deposit, commercial paper, bankers' acceptances, or obligations
issued or guaranteed by the United States government or its agencies or
instrumentalities, in which the Fund may otherwise invest.
If a seller of a repurchase agreement defaults and does not repurchase
the security subject to the agreement, the Fund would look to the collateral
security underlying the seller's repurchase agreement, including the securities
subject to the repurchase agreement, for satisfaction of the seller's obligation
to the Fund; in such event the Fund might incur disposition costs in liquidating
the collateral and might suffer a loss if the value of the collateral declines.
In addition, if bankruptcy proceedings are instituted against a seller of a
repurchase agreement, realization upon the collateral may be delayed or limited.
Reverse Repurchase Agreements and Leverage
We may enter into reverse repurchase agreements with Federal Reserve member
banks and U.S. securities dealers from time to time. In a reverse repurchase
transaction we sell securities and simultaneously agree to repurchase them at a
price which reflects an agreed-upon rate of interest. We will use the proceeds
of reverse repurchase agreements to make other investments which either mature
or are under an agreement to resell at a date simultaneous with or prior to the
expiration of the reverse repurchase agreement. The Fund may utilize reverse
repurchase agreements only if the interest income to be earned from the
investment proceeds of the transaction is greater than the interest expense of
the reverse repurchase transaction.
Reverse repurchase agreements are a form of leverage which increases
the opportunity for gain and the risk of loss for a given change in market
value. In addition, the gains or losses will cause the net asset value of the
Funds' shares to rise or fall faster than would otherwise be the case. There may
also be a risk of delay in the recovery of the underlying securities if the
opposite party has financial difficulties.
A Fund's obligations under all borrowings, including reverse repurchase
agreements, will not exceed one-third of the Fund's net assets.
The use of reverse repurchase agreements is included in the Fund's
borrowing policy and is subject to the limit of Section 18(f)(1) of the
Investment Company Act of 1940, as amended. During the time a reverse repurchase
agreement is outstanding, each Fund that has entered into such an agreement
maintains a segregated account with its Custodian containing cash, U.S.
government or other liquid high grade debt securities having a value at least
equal to the repurchase price under the reverse repurchase agreement.
Other Investment Techniques and Opportunities.
The Funds may take certain actions with respect to merger proposals, tender
offers, conversion of equity-related securities and other investment
opportunities with the objective of enhancing overall return, irrespective of
how these actions may affect the weight of the particular securities in a Fund.
It is not the policy of any of the Funds to select investments based primarily
on the possibility of one or more of these investment techniques and
opportunities being presented.
Investment Restrictions
Investment restrictions numbered 1 through 10 below have been adopted by the
Company as fundamental policies of the Funds. Under the Investment Company Act
of 1940, as amended (the "1940 Act"), a fundamental policy may not be changed
with respect to a Fund without the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund. Each Fund will operate as a
"diversified company" within the meaning of the 1940 Act, except the
Transamerica Premier Aggressive Growth Fund which will operate as a
nondiversified fund. The Transamerica Premier Aggressive Growth Fund reserves
the right to become a diversified company by limiting the investments in which
more than 5% of its total assets are invested. Investment restrictions 11
through 16 may be changed by a vote of the Board of Directors of the Company
(the "Board") at any time.
1. Borrowing. Each Fund may borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests and cash
payments of dividends and distributions that might otherwise require the
untimely disposition of securities, in an amount not to exceed 33-1\3% of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing is made. Whenever borrowings, not including reverse repurchase
agreements, of 5% or more of a Fund's total assets are outstanding, the Fund
will not make any additional investments.
2. Lending. No Fund may lend its assets or money to other persons, except
through (a) purchasing debt obligations, (b) lending securities in an amount not
to exceed 331/3% of the Fund's assets taken at market value, (c) entering into
repurchase agreements (d) trading in financial futures contracts, index futures
contracts, securities indexes and options on financial futures contracts,
options on index futures contracts, options on securities and options on
securities indexes and (e) entering into variable rate demand notes.
3. 5% Fund Rule. Except for the Transamerica Premier Aggressive Growth Fund, no
Fund may purchase securities (other than government securities) of a single
issuer if, as a result of the purchase, more than 5% of the Fund's total assets
would be invested in the securities of the issuer, except that up to 25% of the
value of the total assets of each Fund may be invested without regard to this
limitation. All securities of a foreign government and its agencies will be
treated as a single issuer for purposes of this restriction. With respect to the
Transamerica Premier Aggressive Growth Fund, no more than 25% of the Fund's
total assets may be invested in the securities of a single issuer (other than
cash items and government securities); and with respect to 50% of the Fund's
total assets, no more than 5% may be invested in the securities of a single
issuer (other than cash items and government securities).
4. 10% Issuer Rule. No Fund may purchase more than 10% of the voting securities
of any one issuer, or more than 10% of the outstanding securities of any class
of issuer, except that (a) this limitation is not applicable to a Fund's
investments in government securities and (b) up to 25% of the value of the
assets of a Fund may be invested without regard to these 10% limitations. All
securities of a foreign government and its agencies will be treated as a single
issuer for purposes of this restriction. These limitations are subject to any
further limitation under the 1940 Act.
5. 25% Industry Rule. No Fund may invest more than 25% of the value of its total
assets in securities issued by companies engaged in any one industry, including
non-domestic banks or any foreign government. This limitation does not apply to
securities issued or guaranteed by the United States government, its agencies or
instrumentalities.
6. Underwriting. No Fund may underwrite any issue of securities, except to the
extent that the sale of securities in accordance with the Fund's investment
objective, policies and limitations may be deemed to be an underwriting, and
except that the Fund may acquire securities under circumstances in which, if the
securities were sold, the Fund might be deemed to be an underwriter for purposes
of the Securities Act of 1933, as amended.
7. Real Estate. No Fund may purchase or sell real estate or real estate limited
partnership interests, or invest in oil, gas or mineral leases, or mineral
exploration or development programs, except that a Fund may (a) invest in
securities secured by real estate, mortgages or interests in real estate or
mortgages, (b) purchase securities issued by companies that invest or deal in
real estate, mortgages or interests in real estate or mortgages, (c) engage in
the purchase and sale of real estate as necessary to provide it with an office
for the transaction of business or (d) acquire real estate or interests in real
estate securing an issuer's obligations, in the event of a default by that
issuer.
8. Short Sales. No Fund may make short sales of securities or maintain a short
position, unless at all times when a short position is open, the Fund owns an
equal amount of the securities or securities convertible into or exchangeable
for, without payment of any further consideration, securities of the same issue
as, and equal in amount to, the securities sold short.
9. Margin Purchases. No Fund may purchase securities on margin, except that a
Fund may obtain any short-term credits necessary for the clearance of purchases
and sales of securities. For purposes of this restriction, the deposit or
payment of initial or variation margin in connection with futures contracts,
financial futures contracts or related options, and options on securities, and
options on securities indexes will not be deemed to be a purchase of securities
on margin by a Fund.
10. Commodities. No Fund may invest in commodities, except that each Fund may
invest in futures contracts (including financial futures contracts or securities
index futures contracts) and related options and other similar contracts as
described in this Statement of Additional Information and in the Prospectuses.
11. Securities of Other Investment Companies. No Fund may 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, if as a result of the purchase: (a) more
than 10% of the value of the Fund's total assets would be invested in the
securities of investment companies; (b) more than 5% of the value of the Fund's
total assets would be invested in the securities of any one investment company;
or (c) the Fund would own more than 3% of the total securities of any investment
company.
12. Invest for Control. No Fund may invest in companies for the purposes of
exercising control or management.
13. 3-Year Rule. No Fund may purchase securities (other than government
securities) if, as a result of the purchase, the Fund would then have more than
5% of its total assets invested in securities of companies (including
predecessors) that have been in continuous operation for fewer than three years.
This restriction will apply to the entity supplying the revenues from which the
issue is to be paid.
14. Affiliated Parties. No Fund may purchase or retain securities of any company
if any of the Company's officers or directors or any officer or director of the
Investment Adviser who individually own 1/2 of 1% of the company, together own
more than 5% of the company.
15. Warrants. No Fund may purchase warrants (other than warrants acquired by the
Fund as part of a unit or attached to securities at the time of purchase) if, as
a result, the investments (valued at the lower of cost or market) would exceed
5% of the value of the Fund's net assets of which not more than 2% of the value
of the Fund's net assets may be invested in warrants not listed on the New York
Stock Exchange, Inc. (the "NYSE") or the American Stock Exchange. For purposes
of this restriction, warrants acquired by a Fund in units or attached to
securities may be deemed to be without value.
16. Restricted and Illiquid Securities. The Funds will each not invest more than
10% of their total assets in securities that are not registered or are offered
in an exempt, non-public offering ("restricted securities") under the Securities
Act of 1933, as amended ("1933 Act"). However, such restriction will not apply
to restricted securities offered and sold to "qualified institutional buyers"
under Rule 144A of the 1933 Act or to foreign securities which are offered or
sold outside the United States in accordance with Regulation S of the 1933 Act.
In addition, no Fund will invest more than 15% of its net assets in illiquid
investments, which includes most repurchase agreements maturing in more than
seven days, currency and interest rate swaps, time deposits with a notice or
demand period of more than seven days, certain over-the-counter option
contracts, participation interests in loans, securities that are not readily
marketable, and restricted securities, unless the Investment Adviser determines,
based upon a continuing review of the trading markets and available reliable
price information for the specific security, that such restricted securities are
eligible under Rule 144A and are liquid. For purposes of this restriction,
illiquid securities are securities that cannot be disposed of by a Fund within
seven days in the ordinary course of business at approximately the amount at
which the Fund has valued the securities. In no event, will any Fund's
investment in illiquid restricted securities, in the aggregate, exceed 15% of
its assets. If through a change in values, net assets, or other circumstances,
any Fund were in a position where more than 15% of its assets were invested in
illiquid securities, it would take appropriate steps to protect liquidity.
The Board has adopted guidelines and delegated to the Investment
Adviser the daily function of determining and monitoring the liquidity of
restricted securities. The Board, however, will retain sufficient oversight and
be ultimately responsible for the determinations. When no market, dealer, or
matrix quotations are available for a security, illiquid investments are priced
at fair value as determined in good faith by a committee appointed by the Board.
Since it is not possible to predict with assurance exactly how the market for
restricted securities sold and offered under Rule 144A will develop, the Board
will carefully monitor each Fund's investments in these securities, focusing on
such important factors, among others, as valuation, liquidity, and availability
of information. To the extent that qualified institutional buyers become for a
time uninterested in purchasing these restricted securities, this investment
practice could have the effect of decreasing the level of liquidity in a Fund.
The purchase price and subsequent valuation of restricted securities
normally reflect a discount from the price at which such securities would trade
if they were not restricted, since the restriction makes them less liquid. The
amount of the discount from the prevailing market prices is expected to vary
depending upon the type of security, the character of the issuer, the party who
will hear the expenses of registering the restricted securities, and prevailing
supply and demand conditions.
The Company may make commitments more restrictive than the restrictions
listed above with respect to a Fund to permit the sale of shares of the Fund in
certain states. If the Company determines that any such commitment is no longer
in the best interests of a Fund and its shareholders, the Company will revoke
the commitment by terminating the sale of shares of the Fund in the state
involved or may otherwise modify its commitment based on a change in the state's
restrictions. The percentage limitations in the restrictions listed above apply
at the time of purchases of securities.
Management of the Company
The names of the directors and executive officers of the Company, their business
addresses and their principal occupations during the past five years are listed
below. Each of the officers listed below is an employee of an entity that
provides services to the Funds. An asterisk (*) appears after the name of each
director who is an "interested person" of the Company, as defined in the 1940
Act.
<TABLE>
<CAPTION>
Position
Held with
Name, Address Transamerica Principal Occupations
& Age Investors During Past 5 Years
<S> <C> <C>
Nooruddin S. Veerjee* Chief Executive President, Transamerica Life
Transamerica Center Officer and Chairman Insurance and Annuity Company
1150 S. Olive St. of the Board ("TALIAC"), and President,
Los Angeles, CA 90015 Asset Management Division,
Age 38 Transamerica Occidental Life
Insurance Company ("TOLIC")
since 1993. Formerly Senior Vice
President, TOLIC.
Gary U. Roll'* Director Chairman and President,
Transamerica Center Transamerica Income Shares, Inc.;
1150 S. Olive St. Executive Vice President & Chief
Los Angeles, CA 90015 Investment Officer, Transamerica
Age 55 Investment Services ("TIS"); and
Chief Investment Officer,
TOLIC and TALIAC.
Sidney E. Harris Director Professor of Management, Peter
2058 N. Mills Road F. Drucker Management Center,
Suite 428 Claremont Graduate School.
Claremont, CA 91711 Formerly Dean of the Peter F.
Age 47 Drucker Management Center.
Charles C. Reed Director Executive Vice President,
Alexander & Alexander Alexander & Alexander of
801 S. Figueroa St, Suite 700 California, Inc. (business risk
Los Angeles, CA 90017 management and insurance
Age 63 brokerage) since 1993.
Formerly First Vice President &
Director of Marketing, H.F.
Ahmanson & Co. (Savings & Loan
holding company).
Carl R. Terzian Director Chairman of Carl Terzian
Carl Terzian Associates Associates (public relations).
12400 Wilshire Blvd, Suite 200
Los Angeles, CA 90025
Age 61
Nicki Bair President Senior Vice President, TOLIC &
Transamerica Center TALIAC since 1996. Formerly
1150 S. Olive St. Vice President, TOLIC & TALIAC.
Los Angeles, CA 90015
Age 41
E. Joy Heckendorf Senior Vice President Marketing Director, TALIAC since
Transamerica Center 1996. Formerly President, Dreyfus
1150 S. Olive St. Service Corporation in 1996.
Los Angeles, CA 90015 Formerly Vice President Marketing,
Age 40 Janus Capital Corporation.
</TABLE>
The directors are responsible for major decisions relating to the Funds'
objectives, policies and operations pursuant to the Funds' Bylaws, Articles of
Incorporation, Maryland law and the 1940 Act. Day to day decisions by the
officers of the Funds are reviewed by the directors on a quarterly basis. During
the interim between quarterly Board meetings, the Executive Committee is
empowered to act when necessary for the Board of Directors.
The Executive Committee members are Nooruddin S. Veerjee and Gary U. Rolle.'
No officer, director or employee of Transamerica Investment Services,
Inc. or Transamerica Occidental Life Insurance Company or any of their
affiliates receives any compensation from the Company for acting as a director
or officer of the Company. Each director of the Company who is not an
"interested person" of the Company receives an annual fee of $10,000, and $1,000
for each meeting of the Company's Board attended, and $500 for each Board
committee meeting attended, and is reimbursed for expenses incurred in
connection with such attendance.
Following is a table of the compensation expected to be paid to all directors
during the current fiscal year ending December 31, 1997.
<TABLE>
<CAPTION>
Estimated Total
Annual Compensation
Compensation Pension Benefits at All Related
Name Paid Benefits Retirement Funds
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sidney E. Harris $15,000 $0 $0 $15,000
Charles C. Reed $15,000 $0 $0 $15,000
Carl R. Terzian $15,000 $0 $0 $15,000
Gary U. Rolle' $0 $0 $0 $0
Nooruddin S. Veerjee $0 $0 $0 $0
</TABLE>
Investment Advisory and Other Services
Investment Adviser and Administrator
Responsibility for the management and supervision of the Company and its Funds
rests with the Board of Directors of Transamerica Investors, Inc. (the "Board").
The Investment Adviser and the Administrator are subject to the direction of the
Board.
The Funds' Investment Adviser is Transamerica Investment Services, Inc.
(the "Investment Adviser"), 1150 South Olive Street, Los Angeles, California
90015. The Investment Adviser will: (1) supervise and manage the investments of
each Fund and direct the purchase and sale of its investment securities; and (2)
see that investments follow the investment objectives and comply with government
regulations. The Investment Adviser is also responsible for the selection of
brokers and dealers to execute transactions for each Fund. Some of these brokers
or dealers may be affiliated persons of the Company, the Investment Adviser,
Administrator, or the Distributor. Since it is our policy to seek the best price
and execution for each transaction, the Investment Adviser may give
consideration to brokers and dealers who provide us with statistical information
and other services in addition to transaction services. For its services to the
Funds, the Investment Adviser receives an Adviser Fee. This fee is based on an
annual percentage of the average daily net assets of each Fund. It is accrued
daily, and paid monthly.
The Adviser Fee for any Fund may be reduced in any year if the Fund's
expenses exceed the limits on investment company expenses imposed by any statute
or regulatory authority of any jurisdiction in which shares of the Fund are
qualified to offer for sale. The term "expenses" is defined in the statutes or
regulations of such jurisdictions, but it generally excludes brokerage
commissions, taxes, interest, and extraordinary expenses.
The Funds' Administrator is Transamerica Occidental Life Insurance
Company (the "Administrator"), 1150 South Olive Street, Los Angeles, California
90015. The Administrator will: (1) provide the Funds with administrative and
clerical services, including the maintenance of the Funds' books and records;
(2) arrange periodic updating of the Funds' prospectus and any supplements; (3)
provide proxy materials and reports to Fund shareholders and the Securities and
Exchange Commission; and (4) provide the Funds with adequate office space and
all necessary office equipment and services. The Administrator also provides
services for the registration of Fund shares with those states and other
jurisdictions where its shares are offered or sold.
Transamerica Occidental Life Insurance Company is a wholly-owned
subsidiary of Transamerica Insurance
Corporation of California. Both Transamerica Insurance Corporation of California
and Transamerica Investment
Services, Inc. are wholly-owned subsidiaries of Transamerica Corporation, 600
Montgomery Street, San Francisco,
California 94111, one of the nation's largest financial services companies.
Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as custodian to the Funds. Under its
custodian contract with the Company, State Street is authorized to appoint one
or more banking institutions as subcustodians of assets owned by each Fund. For
its custody services, State Street receives monthly fees charged to the Funds
based upon the month-end, aggregate net asset value of the Funds, plus certain
charges for securities transactions. The assets of the Company are held under
bank custodianship in accordance with the 1940 Act.
Under a Foreign Subcustodian Agreement with State Street, State Street
London Limited is responsible for foreign assets and transactions with the
transnational depositories of Euroclear and Cedel.
Under a Transfer Agency Agreement, State Street Bank is also
responsible for processing redemption requests and crediting dividends to the
accounts of shareholders of the Funds.
Distribution of Shares of the Funds
Transamerica Securities Sales Corporation ("TSSC") serves as the principal
underwriter of shares of the Funds, which are continuously distributed.
Transamerica Financial Resources, Inc. ("TFR") will also distribute shares of
the Funds pursuant to a selling agreement with TSSC. Both TSSC and TFR are
wholly-owned subsidiaries of Transamerica Insurance Corporation of California,
which is a wholly-owned subsidiary of Transamerica Corporation. TSSC and TFR are
registered with the Securities and Exchange Commission as broker/dealers, and
are members of the National Association of Securities Dealers, Inc. TSSC may
also enter into arrangements whereby Fund shares may be sold by other
broker/dealers, which may or may not be affiliated with TFR or TSSC.
The Company has adopted a plan of distribution pursuant to Rule 12b-1
(the "Plan") under the Investment Company Act of 1940, as amended (the "1940
Act"). Under the Plan, each Fund makes payments monthly to TSSC based on an
annual percentage of the average net value of the assets represented by each
class of shares.
For the Investor Shares class, there is an annual 12b-1 distribution
fee of .25% of the average daily net assets of the Investor shares of each Fund.
This fee covers such expenses as preparation, printing and mailing of the
Prospectuses and Statement of Additional Information, as well as sales
literature and other media advertising, and related expenses. It can also be
used to compensate sales personnel involved with selling the Funds.
From time to time, and for one or more Funds within each class of
Shares, the Distributor may waive any or all of these fees at its discretion.
Purchases and Redemptions of Shares
Detailed information on how to purchase and redeem shares of a Fund is included
in the Prospectuses under "How to Buy Shares" and "How to Sell Shares."
The right of redemption of shares of a Fund may be suspended or the
date of payment postponed (1) for any periods during which the New York Stock
Exchange is closed (other than for customary weekend and holiday closings), (2)
when trading in the markets the Fund normally utilizes is restricted, or an
emergency, as defined by the rules and regulations of the SEC, exists, making
disposal of a Fund's investments or determination of its net asset value not
reasonably practicable, or (3) for such other periods as the Securities and
Exchange Commission by order may permit for the protection of the Fund's
shareholders. A shareholder who pays for Fund shares by personal check will
receive the proceeds of a redemption of those shares when the purchase check has
been collected, which may take up to 10 days or more. Shareholders who
anticipate the need for more immediate access to their investment should
purchase shares with Federal funds or bank wire or by a certified or cashier's
check.
Redemptions in Excess of $250,000
If you request a redemption of up to $250,000, the amount will be paid in cash.
If you redeem more than $250,000 from any one account in any one Fund in a
90-day period, the entire redemption will be paid in cash if you provide
Transamerica with an unconditional instruction to redeem at least 30 days prior
to the date on which the redemption transaction is to occur. The instruction
must specify the dollar amount or number of shares to be redeemed and the date
of the transaction. The date must be a minimum of 30 days after receipt of the
instruction by Transamerica. If you have authorized Transamerica to accept such
instructions, your instruction may be by telephone or in writing without a
signature guarantee. If you have not done so, the instruction must be in writing
with all signatures guaranteed. Your shares will be redeemed at the price
determined on the date you specify in your instruction and the proceeds will be
sent by mail, wire or electronic funds transfer in accordance with the
procedures specified in the Prospectuses.
Receipt of your instruction to redeem 30 days prior to the transaction
provides the Fund with sufficient time to raise the cash in an orderly manner to
pay the redemption and thereby minimizes the effect of the redemption on the
Fund and its shareholders.
You may cancel your redemption instruction prior to the transaction
date. However, if you do so, Transamerica may not accept an instruction from you
to redeem in accordance with this alternative for a period of 90 days from the
date of cancellation.
If you do not provide your instruction to redeem 30 days prior to the
transaction, Transamerica offers you two alternatives:
(1) You may redeem up to $250,000 in cash the first day, and the remainder over
the next 20 business days at the rate of not less than $50,000 or more than
$500,000 per day (and such lesser amount on the last day to redeem all the
shares remaining), but not more than $10 million total. The redemption each day
will be at the price determined that day. For example, a request to redeem
$525,000, or a number of shares worth $525,000, will be effective at $250,000 on
the first day, and $50,000 per day for the next five business days, and $25,000
on the last day. A request to redeem $11 million would be effective at $250,000
the first day and $500,000 per day for the next 20 business days ($10.25 million
total) and the remaining $750,000 to be redeemed by the delivery of securities.
Since the price is determined not on the date the redemption
request is received, but instead on succeeding business days when the redemption
is effected, the number of shares redeemed will vary from day to day. The total
you will receive over the entire period may be more or less than the amount that
you would have received had the redemption been effected on the day your
redemption request was received. In the first example above, falling per-share
prices could cause the value of the shares on the last day to be less than
$25,000, and the redemption on the last day would be only of the shares left in
the account.
(2) In lieu of receiving cash as described earlier, you may elect to receive
securities from Transamerica's fund. The securities delivered will be selected
at the sole discretion of Transamerica. They will be readily marketable with an
active and substantial secondary market given the type of companies involved and
the characteristics of the markets in which they trade, but will not necessarily
be representative of the entire fund, and will be securities that Transamerica
may regard as least desirable. You may incur brokerage costs in converting the
securities to cash.
The method of valuing securities used to make the redemptions will be
the same as the method of valuing securities described under "Determination of
Net Asset Value," page 17, and such valuation will be made as of the same time
the redemption price is determined.
These alternatives are designed to lessen the adverse effect of large
redemptions on the Fund and its non-redeeming shareholders. For example, assume
that a shareholder redeems $1 million on a given day and that the Fund pays him
$250,000 in cash and is required to sell securities for $750,000 to raise the
remainder of the cash to pay him. The securities valued at $750,000 on the day
of the redemption may bring a lower price when sold thereafter, so that more
securities may be sold to realize $750,000. In that case, the redeeming
shareholder's proceeds would be fixed at $750,000 and the market risk would be
imposed on the Fund and its remaining shareholders, who would suffer the loss.
By delivering securities instead of cash or staggering the payment of cash, the
market risk is imposed on the redeeming shareholder. If securities are
delivered, the redeeming shareholder (and not the Fund) bears the brokerage cost
of selling them.
Brokerage Allocation
Subject to the direction of the Board, the Investment Adviser has responsibility
for making a Fund's investment decisions, for effecting the execution of trades
for a Fund and for negotiating any brokerage commissions thereon. It is the
Investment Adviser's policy to obtain the best price and execution available,
giving attention to net price (including commissions where applicable),
execution capability (including the adequacy of a firm's capital position), and
other services related to execution; the relative priority given to these
factors will depend on all of the circumstances regarding a specific trade.
The Investment Adviser receives a variety of brokerage and research
services from brokerage firms in return for the execution by such brokerage
firms of trades on behalf of the Funds. These brokerage and research services
include, but are not limited to, quantitative and qualitative research
information and purchase and sale recommendations regarding securities and
industries, analyses and reports covering a broad range of economic factors and
trends, statistical data relating to the strategy and performance of the Funds
and other investment companies, services related to the execution of trades in a
Fund's securities and advice as to the valuation of securities. The Investment
Adviser considers the quantity and quality of such brokerage and research
services provided by a brokerage firm along with the nature and difficulty of
the specific transaction in negotiating commissions for trades in a Fund's
securities and may pay higher commission rates than the lowest available when it
is reasonable to do so in light of the value of the brokerage and research
services received generally or in connection with a particular transaction.
Consistent with federal legislation, the Investment Adviser may obtain
such brokerage and research services regardless of whether they are paid for (1)
by means of commissions, or (2) by means of separate, non-commission payments.
The Investment Adviser's judgment as to whether and how it will obtain the
specific brokerage and research services will be based upon its analysis of the
quality of such services and the cost (depending upon the various methods of
payment which may be offered by brokerage firms) and will reflect the Investment
Adviser's opinion as to which services and which means of payment are in the
long-term best interests of the Funds. The Investment Adviser will not effect
any brokerage transactions in the Funds' securities with any affiliate of the
Company, the Investment Adviser, or the Administrator except in accordance with
applicable SEC rules.
Certain executive officers of the Investment Adviser also have
supervisory responsibility with respect to the securities of the Investment
Adviser's own accounts. In placing orders for the purchase and sale of debt
securities for a Fund, the Investment Adviser will normally use its own
facilities. A Fund and another fund or another advisory client of the Investment
Adviser, or the Investment Adviser itself, may desire to buy or sell the same
publicly traded security at or about the same time. In such a case, the
purchases or sales will normally be allocated as nearly as practicable on a pro
rata basis in proportion to the amounts to be purchased or sold by each. In
determining the amounts to be purchased and sold, the main factors to be
considered are the respective investment objectives of a Fund and the other
funds, the relative size of holdings of the same or comparable securities,
availability of cash for investment by a Fund and the other funds, and the size
of their respective investment commitments.
Determination of Net Asset Value
Under the 1940 Act, the Board is responsible for determining in good faith the
fair value of securities of each Fund, and each class of each Fund. In
accordance with procedures adopted by the Board, the net asset value per share
is calculated by determining the net worth of each Fund (assets, including
securities at market value, minus liabilities) divided by the number of that
Fund's outstanding shares. All securities are valued as of the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. Eastern Standard
Time). Each Fund will compute its net asset value once daily at the close of
such trading on each day that the New York Stock Exchange is open for business
(as described in the Prospectuses).
In the event that the New York Stock Exchange, the Federal Reserve, or
the national securities exchange on which stock options are traded adopt
different trading hours on either a permanent or temporary basis, the Board will
reconsider the time at which net asset value is computed. In addition, the Funds
may compute their net asset value as of any time permitted pursuant to any
exemption, order or statement of the SEC or its staff.
Assets of the Funds are valued as follows:
(a) equity securities and other similar investments ("Equities") listed on any
U.S. or foreign stock exchange or the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") are valued at the last sale price on that
exchange or NASDAQ on the valuation day; if no sale occurs, Equities traded on a
U.S. exchange or NASDAQ are valued at the mean between the closing bid and
closing asked prices. Equities traded on a foreign exchange will be valued at
the official bid price; (b) over-the-counter securities not quoted on NASDAQ are
valued at the last sale price on the valuation day or, if no sale occurs, at the
mean between the last bid and asked prices; (c) debt securities purchased with a
remaining maturity of 61 days or more are valued on the basis of dealer-supplied
quotations or by a pricing service selected by the Investment Adviser and
approved by the Board; (d) options and futures contracts are valued at the last
sale price on the market where any such option or futures contract is
principally traded; (e) over-the-counter options are valued based upon prices
provided by market makers in such securities or dealers in such currencies. (f)
forward foreign currency exchange contracts are valued based upon quotations
supplied by dealers in such contracts; (g) all other securities and other
assets, including those for which a pricing service supplies no quotations or
quotations are not deemed by the Investment Adviser to be representative of
market values, but excluding debt securities with remaining maturities of 60
days or less, are valued at fair value as determined in good faith pursuant to
procedures established by the Board; and (h) debt securities with a remaining
maturity of 60 days or less will be valued at their amortized cost, which
approximates market value.
Equities traded on more than one U.S. national securities exchange or
foreign securities exchange are valued at the last sale price on each business
day at the close of the exchange representing the principal market for such
securities. The value of all assets and liabilities expressed in foreign
currencies will be converted into U.S. dollar values at the noon (Eastern
Standard Time) Reuters spot rate. If such quotations are not available, the rate
of exchange will be determined in good faith by or under procedures established
by the Board.
Performance Information
Performance information for the Funds including the yield and the total return
of all Funds, may appear in reports or promotional literature to current or
prospective shareholders.
30-Day Yield for Non-Money Market Funds
Quotations of yield for the remaining Funds will be based on all investment
income per share earned during a particular 30-day period, less expenses accrued
during the period ("net investment income"), and will be computed by dividing
net investment income by the value of a share on the last day of the period,
according to the following formula:
Yield = 2[({[a-b]/cd} + 1)6 - 1] Where:
a = dividends and interest earned during the period b = the expenses accrued for
the period (net of reimbursements) c = the average daily number of shares
outstanding during the period d = the maximum offering price per share on the
last day of the period
Average Annual Total Return for Non-Money Market Funds
Quotations of average annual total return for any Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in a Fund over a period of one, five and ten years (or, if less, up
to the life of the Fund), calculated pursuant to the formula:
P(1 + T)n = ERV Where:
P = a hypothetical initial payment of $1,000 T = an average annual total return
n = the number years ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5, or 10 year period at the end of the
1, 5, 10 year period (or fractional portion thereof)
Any performance data quoted for a Fund will represent historical performance and
the investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
original cost.
Published Performance
From time to time the Company may publish, or provide telephonically, an
indication of the Funds' past performance as measured by independent sources
such as (but not limited to) Lipper Analytical Services, Incorporated,
Weisenberger Investment Companies Service, IBC's Money Fund Report, Barron's,
Business Week, Changing Times, Financial World, Forbes, Fortune, Money, Personal
Investor, Sylvia Porter's Personal Finance and The Wall Street Journal. The
Company may also advertise information which has been provided to the NASD for
publication in regional and local newspapers.
In addition, the Company may from time to time advertise its
performance relative to certain indexes and benchmark investments, including:
the Lipper Analytical Services, Inc. Mutual Fund Performance Analysis,
Fixed-Income Analysis and Mutual
Fund Indexes (which measure total return and average current yield for the
mutual fund industry and rank
mutual fund performance);
the CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
(which analyzes price, risk and
various measures of return for the mutual fund industry);
the Consumer Price Index published by the U.S. Bureau of Labor Statistics
(which measures changes in the
price of goods and services);
Stocks, Bonds, Bills and Inflation published by Ibbotson Associates (which
provides historical performance figures for stocks, government securities
and inflation);
the Hambrecht & Quist Growth Stock Index;
the NASDAQ OTC Composite Prime Return;
the Russell Midcap Index;
the Russell 2000 Index;
the ValueLine Composite;
the Wilshire 5000 Index;
the Salomon Brothers World Bond Index (which measures the total return in
U.S. dollar terms of government bonds, Eurobonds and foreign bonds of ten
countries, with all such bonds having a minimum maturity of five years);
the Shearson Lehman Brothers Aggregate Bond Index or its component indexes
(the Aggregate Bond Index
measures the performance of Treasury, U.S. government agencies, mortgage
and Yankee bonds);
the S&P Bond indexes (which measure yield and price of corporate,
municipal and U.S. government bonds);
the J.P. Morgan Global Government Bond Index;
IBC's Money Market Fund Report (which provides industry averages of 7-day
annualized and compounded yields
of taxable, tax-free and U.S. government money market funds);
historical investment data supplied by the research departments of Goldman
Sachs, Lehman Brothers, First Boston Corporation, Morgan Stanley (including
EAFE), Salomon Brothers, Merrill Lynch, Donaldson Lufkin and Jenrette or
other providers of such data;
the FT-Actuaries Europe and Pacific Index;
mutual fund performance indexes published by Morningstar, Inc., Variable
Annuity Research & Data Service, the Investment Company Institute, the
Investment Company Data, Inc., Media General Financial, and Value Line
Mutual Fund Survey; and
financial industry analytical surveys, such as Piper Universe.
The composition of the investments in such indexes and the characteristics of
such benchmark investments are not identical to, and in some cases are very
different from, those of a Fund. These indexes and averages are generally
unmanaged and the items included in the calculations of such indexes and
averages may be different from those of the equations used by the Company to
calculate a Fund's performance figures.
The Funds may also from time to time include in such advertising a
total return figure that is not calculated according to the formula set forth
above in order to compare more accurately the performance of a Fund with other
measures of investment return. For example, unmanaged indexes may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.
The Company may from time to time summarize the substance of
discussions contained in shareholder reports in advertisements and publish the
Investment Adviser's views as to markets, the rationale for a Fund's
investments, and discussions of the Fund's current asset allocation.
From time to time, advertisements or information may include a
discussion of certain attributes or benefits to be derived by an investment in a
particular Fund. Such advertisements or information may include symbols,
headlines or other material which highlight or summarize the information
discussed in more detail in the communication.
Such performance data will be based on historical results and will not
be intended to indicate future performance. The total return or yield of a Fund
will vary based on market conditions, expenses, investments, and other factors.
The value of a Fund's shares will fluctuate and an investor's shares may be
worth more or less than their original cost upon redemption. The Company may
also, at its discretion, from time to time make a list of a Fund's holdings
available to investors upon request.
Taxes
Each Fund intends to qualify and to continue to qualify as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"). The distribution requirement, in order to qualify for that
treatment, is that each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income, consisting
generally of net investment income, net short-term capital gains, and net gains
from certain foreign currency transactions. The Company must also meet the
following additional requirements: (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, 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) The Fund must derive
less than 30% of its gross income each taxable year from gains (without
including losses) on the sales or other disposition of securities, or any of the
following, that were held for less than three months - options, futures, or
forward contracts (other than those on foreign currencies), or foreign
currencies (or options, futures, or forwards thereon) that are not directly
related to the Fund's principal business of investing in securities (or options
and futures with respect thereto) ("Short-Short Limitation"); (3) At the close
of each quarter of the 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 (4) At the close of each quarter of the 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.
Each Fund will be subject to a nondeductible 4% excise tax on amounts
not distributed to shareholders on a timely basis. The Fund intends to make
sufficient distributions to avoid this 4% excise tax.
Dividends and interest received by each 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. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and foreign countries generally do not impose taxes on capital gains in
respect to investments by foreign investors.
Certain of the Funds 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, the
Fund would 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. The
balance of the PFIC income would be included in the Fund's investment company
taxable income, and accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders. If the 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, that Fund will be required to include
income each year to its pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain (the excess of net long-term capital gain
over net short-term capital loss), even if they are not distributed to the Fund;
those amounts would be subject to the Distribution Requirement. The ability of a
Fund to make this election may be limited.
The use of hedging strategies, such as writing (selling) and purchasing
options and futures contracts and entering into forward contracts, involves
complex rules that will determine for income tax purposes the character and
timing of recognition of the income received in connection therewith by a Fund.
Income from the disposition of foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in options, futures, and forward contracts derived by a Fund with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However, income from
the disposition of options and futures contracts (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition of foreign currencies,
options, futures, and forward contracts on foreign currencies, that are not
directly related to a Fund's principal business of investing in securities (or
options and futures with respect thereto) also will be subject to the
Short-Short Limitation if they are held for less than three months.
If a Fund satisfies certain requirements, any increase in value on a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether that Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Fund intends that, when it engages in hedging transactions, it will qualify for
this treatment, but it is not clear whether this treatment will be available for
all of the Fund's hedging transactions. To the extent this treatment is not
available, a Fund may be forced to defer the closing out of certain options and
futures contracts beyond the time when it otherwise would be advantageous to do
so, in order for the Fund to qualify as a RIC.
The foregoing is only a general summary of some of the important
Federal income tax considerations generally affecting the Funds and their
shareholders. No attempt is made to present a complete explanation of the
Federal tax treatment of the Funds' activities. Potential investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any applicable state, local, or foreign taxes.
Other Information
Legal Matters
An opinion of counsel as to the legality of the shares of the Funds has been
given by Reid A. Evers.
Independent Auditors
Ernst & Young LLP, 515 S. Flower Street, Los Angeles, California 90071, performs
audits of the Funds' financial statements.
Other Information
A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Company and the shares of the Funds discussed in this Statement of Additional
Information. Not all of the information set forth in the Registration Statement,
amendments and exhibits thereto has been included in the Prospectuses or this
Statement of Additional Information. Statements contained herein concerning the
contents of certain other legal instruments are intended to be summaries. For a
complete statement of the terms of these documents, reference should be made to
the instruments filed with the Commission.
<PAGE>
Appendix A
Description of Corporate Bond Ratings
Moody's Investors Service, Inc. and Standard and Poor's Corporation are two
prominent independent rating agencies
that rate the quality of bonds. Following are expanded explanations of the
ratings shown in the Prospectuses.
Moody's Investors Service, Inc.
Aaa: Bonds with this rating are judged to be of the best quality. They carry
the smallest degree of investment
risk. Interest payments are protected by a large or exceptionally stable margin
and principal is secure.
Aa: Bonds with this rating are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude.
A: Bonds with this rating possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds with this rating are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds with this rating are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds with this rating generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds with this rating are of poor standing. Such issues may be in default
or there may be present elements
of danger with respect to principal or interest.
Ca: Bonds with this rating represent obligations which are speculative in a high
degree. Such issues are often in
default or have other marked shortcomings.
C: Bonds with this rating are the lowest rated class of bonds. Issues so rated
can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Generally, investment-grade debt securities are those rated Baa3 or better by
Moody's.
Standard & Poor's Corporation
AAA: This rating is the highest rating assigned by Standard & Poor's. Capacity
to pay interest and repay
principal is very strong.
AA: This rating indicates a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only by a small degree.
A: This rating indicates a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: This rating indicates an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
BB, B, CCC, CC: These ratings indicate, on balance, a predominantly speculative
capacity of the issuer to pay interest and repay principal in accordance with
the terms of the obligation. BB indicates the lowest degree of speculation and
CC the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C: This rating is reserved for income bonds on which no interest is being paid.
D: This rating indicates debt in default, and payment of interest and/or
repayment of principal are in arrears.
The ratings from "AA" to "B" may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories, for example A
or B+.
Generally, investment-grade debt securities are those rated BBB or better by
Standard & Poor's.
<PAGE>
Appendix B
Description of Fixed-Income Instruments
U.S. Government Obligations
Securities issued or guaranteed as to principal and interest by the United
States government include a variety of Treasury securities, which differ in
their interest rates, maturities and times of issuance. Treasury Bills have a
maturity of one year or less; Treasury Notes have maturities of one to ten
years; and Treasury Bonds can be issued with any maturity period but generally
have a maturity of greater than ten years. Agencies of the United States
government which issue or guarantee obligations include, among others, the
Export-Import Bank of the United States, Farmers Home Administration, Federal
Housing Administration, Government National Mortgage Association, Maritime
Administration, Small Business Administration and The Tennessee Valley
Authority. Obligations of instrumentalities of the United States government
include securities issued or guaranteed by, among others, banks of the Farm
Credit System, the Federal National Mortgage Association, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Student Loan Marketing
Association, Federal Intermediate Credit Banks, Federal Land Banks, Banks for
Cooperatives, and the U.S. Postal Service. Some of these securities are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the Treasury, while still
others are supported only by the credit of the instrumentality.
Certificates of Deposit
Certificates of deposit are generally short-term, interest-bearing negotiable
certificates issued by banks, savings and loan associations or savings banks
against funds deposited in the issuing institution.
Time Deposits
Time deposits are deposits in a bank or other financial institution for a
specified period of time at a fixed interest rate for which a negotiable
certificate is not received. Certain time deposits may be considered illiquid.
Bankers' Acceptance
A bankers' acceptance is a draft drawn on a commercial bank by a borrower
usually in connection with an international commercial transaction (to finance
the import, export, transfer or storage of goods). The borrower is liable for
payment as well as the bank, which unconditionally guarantees to pay the draft
at its face amount on the maturity date. Most acceptances have maturities of six
months or less and are traded in secondary markets prior to maturity.
Commercial Paper
Commercial paper refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding 270 days.
Variable Rate, Floating Rate, or Variable Amount Securities. Variable
rate, floating rate, or variable amount securities are short-term unsecured
promissory notes issued by corporations to finance short-term credit needs.
These are interest-bearing notes on which the interest rate generally fluctuates
on a scheduled basis.
Corporate Debt Securities
Corporate debt securities are debt issued by a corporation that pays interest
and principal to the holders at specified times.
Asset-Backed Securities
Asset-backed securities are securities which represent an undivided fractional
interest in a trust whose assets generally consist of mortgages, motor vehicle
retail installment sales contracts, or other consumer-based loans.
Participation Interests in Loans
A participation interest in a loan entitles the purchaser to receive a portion
of principal and interest payments due on a commercial loan extended by a bank
to a specified company. The purchaser of such an interest has no recourse
against the bank if payments of principal and interest are not made by the
borrower and generally relies on the bank to administer and enforce the loan's
terms.
International Organization Obligations
International organization obligations include obligations of those
organizations designated or supported by U.S. or foreign government agencies to
promote economic reconstruction and development, international banking, and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank, and the InterAmerican Development Bank.
Custody Receipts
A Fund may acquire custody receipts in connection with securities issued or
guaranteed as to principal and interest by the U.S. government, its agencies,
authorities or instrumentalities. Such custody receipts evidence ownership of
future interest payments, principal payments or both on certain notes or bonds
issued by the U.S. government, its agencies, authorities or instrumentalities.
These custody receipts are known by various names, including "Treasury
Receipts," "Treasury Investors Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). For certain securities law purposes,
custody receipts are not considered U.S. government securities.
Pass-Through Securities
The Funds may invest in mortgage pass-through securities such as Government
National Mortgage Association ("GNMA") certificates or Federal National Mortgage
Association ("FNMA") and other mortgage-backed obligations, or modified
pass-through securities such as collateralized mortgage obligations issued by
various financial institutions. In connection with these investments, early
repayment of investment principal arising from prepayments of principal on the
underlying mortgage loans due to the sale of the underlying property, the
refinancing of the loan, or foreclosure may expose the Fund to a lower rate of
return upon reinvestment of the principal. Prepayment rates vary widely and may
be affected by changes in market interest rates. In periods of falling interest
rates, the rate of prepayment tends to increase, thereby shortening the actual
average life of the mortgage-related security. Conversely, when interest rates
are rising, the rate of prepayment tends to decrease, thereby lengthening the
actual average life of the mortgage-related security. Accordingly, it is not
possible to accurately predict the average life of a particular pool of
pass-through securities. Reinvestment of prepayments may occur at higher or
lower rates than the original yield on the certificates. Therefore, the actual
maturity and realized yield on pass-through or modified pass-through
mortgage-related securities will vary based upon the prepayment experience of
the underlying pool of mortgages. For purposes of calculating the average life
of the assets of the relevant Fund, the maturity of each of these securities
will be the average life of such securities based on the most recent or
estimated annual prepayment rate.
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are incorporated by reference to the N-30D
filing on behalf of Transamerica Investors, Inc. (File No. 33-90888)
March 3, 1997.
(b) Exhibits
(1) Form of Articles Supplementary of Transamerica Investors, Inc.1/5/6/
(2) Amended Bylaws of Transamerica Investors, Inc.2/5/
(3) Not Applicable.
(4) Not Applicable.
(5) Form of Investment Advisory and Administrative Services
Agreement between Transamerica
Investors, Inc. and Transamerica Investment Services, Inc.2/5/
(6) (a) Form of Distribution Agreement between Transamerica
Investors, Inc. and
Transamerica Securities Sales Corporation ("TSSC").2/
(b) Form of Selling Agreement between TSSC and Transamerica
Financial Resources, Inc.2/
(c) Form of Operating Agreement between Transamerica
Investors, Inc. and Charles Schwab & Co.2/
(7) Not Applicable.
(8) (a)Form of Custodian Agreement between Transamerica Investors,
Inc. and State Street Bank and Trust Company.2/
-
(b)Form of Sub-Custodian Agreement between State Street Bank
and Trust Company and State Street London Limited.2/
(9) Transfer Agency Agreement between Transamerica Investors, Inc.
<PAGE>
and Boston Financial Data Services.2/
(10) Opinion and Consent of Counsel 6/
(11) Auditors Consent 9/
(12) No Financial Statements are omitted from Item 23.
(13) Subscription agreement.2/
(14) Form of Disclosure Statement and Custodial Account Agreement
for Transamerica Investors IRA.2/
(15)(i) Form of Plan of Distribution Pursuant to Rule 12b-1.2/
(a) Investor Shares.
(1) Transamerica Premier Equity Fund (2) Transamerica
Premier Index Fund (3) Transamerica Premier Bond Fund (4)
Transamerica Premier Balanced Fund (5) Transamerica
Premier Short-Term Government Fund (6) Transamerica
Premier Cash Reserve Fund
(b) Adviser Shares.
(1) Transamerica Premier Equity Fund (2) Transamerica
Premier Index Fund (3) Transamerica Premier Bond Fund (4)
Transamerica Premier Balanced Fund (5) Transamerica
Premier Short-Term Government Fund (6) Transamerica
Premier Cash Reserve Fund
(15)(ii) Premier Aggressive Growth Fund 5/
Premier Small Company Fund 5/
(16) Not Applicable.
(17) Not Applicable.
(18) Form of Multi-Class Plan Pursuant to Rule 18f-3.2/
(19) Powers of Attorney.2/5/
2
<PAGE>
(27) Financial Data Schedule 6/
1/ Filed with initial registration statement on April 3, 1995.
2/ Filed with Pre-Effective Amendment No. 1 to this registration
statement on August 29, 1995.
3/ Filed with Pre-Effective Amendment No. 2 to this registration statement on
September 18, 1995.
4/ Filed with Post-Effective Amendment No. 1 to this registration statement on
April 2, 1996.
5/ Filed with Post-Effective Amendment No. 2 to this registration statement on
April 11, 997.
6/ Filed with Post-Effective Amendment No. 3 to this registration statement on
April 28, 1997.
7/ Filed with Post-Effective Amendment No. 4 to this registration statement on
June 26, 1997.
8/ Filed with Post-Effective Amendment No. 5 to this registration statement on
July 1, 1997.
9/ Filed herewith.
Item 25. Person Controlled by or Under Common Control With the Registrant.
The Registrant, Transamerica Investors, Inc., is controlled by
Transamerica Occidental Life Insurance Company ("Transamerica Occidental"), a
wholly-owned subsidiary of Transamerica Insurance Corporation of California,
which, in turn is a wholly-owned subsidiary of Transamerica Corporation.
The following chart indicates the persons controlled by or under common
control with Transamerica Corporation:
<PAGE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
3
<PAGE>
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation
ARC Reinsurance Corporation - Hawaii
Inter-America Corporation - California
Mortgage Corporation of America - California
Pyramid Insurance Company, Ltd. - Hawaii
Pacific Cable Ltd. - Bermuda
TC Cable, Inc. - Delaware
River Thames Insurance Company Limited - England
RTI Holdings, Inc. - Delaware
Transamerica Airlines, Inc. - Delaware
Transamerica Asset Management Group, Inc. - Delaware
Criterion Investment Management Company - Texas
Transamerica CBO I, Inc. - Delaware
Transamerica Corporation (Oregon) - Oregon
Transamerica Delaware, L.P. - Delaware
Transamerica Finance Group, Inc. - Delaware
BWAC Twelve, Inc. - Delaware
Transamerica Insurance Finance Corporation - Maryland
Transamerica Insurance Finance Company (Europe) - Maryland
Transamerica Insurance Finance Corporation, California -
California
Transamerica Insurance Finance Corporation, Canada - Ontario
Transamerica Finance Corporation - Delaware
TA Leasing Holding Co., Inc. - Delaware
Trans Ocean Ltd. - Delaware
Trans Ocean Container Corp. - Delaware
Cool Solutions, Inc. - Delaware
TOD Liquidating Corp. - California
TOL S.R.L. - Italy
Trans Ocean Leasing Deutschland GMBH - Germany
Trans Ocean Leasing PTY Limited - Australia
Trans Ocean Management Corporation -
Trans Ocean Regional Corporate Holdings - California
Trans Ocean SARL - France
Trans Ocean Tank Services Corporation - Delaware
Trans Ocean Container Finance Corp. - Delaware
Transamerica Leasing Inc. - Delaware
Better Asset Management Company LLC - Delaware
Greybox L.L.C. - Delaware
Transamerica Leasing Holdings Inc. - Delaware
Greybox Services Limited - United Kingdom
Intermodal Equipment, Inc. - Delaware
4
<PAGE>
Transamerica Leasing N.V. - Belgium
Transamerica Leasing SRL - Italy
Transamerica Distribution Services Inc. - Delaware
Transamerica Leasing Coordination Center - Belgium
Transamerica Leasing do Brasil Ltda. - Brazil
Transamerica Leasing GmbH - West Germany
Transamerica Leasing Limited - United Kingdom
ICS Terminals (UK) Limited - United Kingdom
Transamerica Leasing Pty. Ltd. - Australia
Transamerica Leasing (Canada) Inc. - Canada
Transamerica Leasing (HK) Ltd. - Hong Kong
Transamerica Leasing (Proprietary) Limited - South Africa
Transamerica Tank Container Leasing Pty. Limited
- - Australia
Transamerica Trailer Holdings I Inc. - Delaware
Transamerica Trailer Holdings II Inc. - Delaware
Transamerica Trailer Holdings III Inc. - Delaware
Transamerica Trailer Leasing AB - Sweden
Transamerica Trailer Leasing A/S - Denmark.
Transamerica Trailer Leasing GmbH - Germany
Transamerica Trailer Leasing S.A. - Fra.
Transamerica Trailer Leasing S.p.A. - Italy
Transamerica Trailer Leasing (Belgium) N.V. - Belg.
Transamerica Trailer Leasing (Netherlands) B.V. - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
TELColorado Holding Co., Inc. - Delaware
Transamerica Commercial Finance Corporation, I - Delaware
BWAC Credit Corporation - Delaware
BWAC International Corporation - Delaware
Transamerica Business Credit Corporation - Delaware
The Plain Company - Delaware
Transamerica Global Distribution Finance Corporation - Delaware
Transamerica Inventory Finance Corporation - Delaware
BWAC Seventeen, Inc. - Delaware
Transamerica Commercial Finance Canada, Limited - Ontario
Transamerica Commercial Finance Corporation, Canada - Canada
TCF Commercial Leasing Corporation, Canada - Ontario
BWAC Twenty-One, Inc. - Delaware
Transamerica Commercial Holdings Limited - United Kingdom
Transamerica Commercial Finance Limited - United Kingdom
Transamerica Trailer Leasing Limited - United Kingdom
Transamerica Commercial Finance Corporation - Delaware
TCF Asset Management Corporation - Colorado
Transamerica Joint Ventures, Inc. - Delaware
5
<PAGE>
Transamerica Commercial Finance France S.A. - France
Transamerica GmbH Inc. - Delaware
Transamerica Financieringsmaatschappij B.V. - Netherlands
Transamerica GmbH - Germany - Germany
Transamerica Finance Loan Company - Delaware
Transamerica Financial Services Holding Company - Delaware
Arcadia General Insurance Company - Arizona
Arcadia National Life Insurance Company - Arizona
First Credit Corporation - Delaware
Pacific Agency, Inc. - Indiana
Pacific Agency, Inc. - Nevada
Pacific Finance Loans - California
Pacific Service Escrow Inc. - Delaware
Transamerica Acceptance Corporation - Delaware
Transamerica Financial Services Limited, United Kingdom -
United Kingdom
Transamerica Credit Corporation - Nevada
Transamerica Credit Corporation (Washington) - Washington
Transamerica Financial Consumer Discount Company (Pennsylvania) -
Pennsylvania
Transamerica Financial Corporation - Nevada
Transamerica Financial Services Mortgage Company - Delaware
Transamerica Financial Professional Services, Inc. - California
Transamerica Financial Services - California
NAB Services, Inc. - California
Transamerica Financial Services Company - Ohio
Transamerica Financial Services Inc. - Hawaii
Transamerica Financial Services Inc. - Minnesota
Transamerica Financial Services of Dover, Inc. - Delaware
Transamerica Financial Services, Inc. - Alabama
Transamerica Financial Services, Inc. - British Columbia
Transamerica Financial Services, Inc. - New Jersey
Transamerica Financial Services, Inc. - Texas
Transamerica Financial Services, Inc. - West Virginia
Transamerica Insurance Administrators, Inc. - Delaware
Transamerica Mortgage Company - Delaware
Transamerica Financial Services Finance Co. - Delaware
Transamerica HomeFirst, Inc. - California
Transamerica Foundation - California
Transamerica Information Management Services, Inc. - Delaware
Transamerica Insurance Corporation of California - California
Arbor Life Insurance Company - Arizona
Plaza Insurance Sales, Inc. - California
Transamerica Advisors, Inc. - California
Transamerica Annuity Service Corporation - New Mexico
6
<PAGE>
Transamerica Financial Resources, Inc. - Delaware
Financial Resources Insurance Agency of Texas - Texas
TBK Insurance Agency of Ohio, Inc. - Ohio
Transamerica Financial Resources Insurance Agency of Alabama Inc.
- Alabama
Transamerica Financial Resources Insurance Agency of Massachusetts
Inc. -
Massachusetts
Transamerica International Insurance Services, Inc. - Delaware
Home Loans and Finance Ltd. - United Kingdom
Transamerica Occidental Life Insurance Company - California Bulkrich
Trading Limited - Hong Kong First Transamerica Life Insurance
Company - New York NEF Investment Company - California Transamerica
Life Insurance and Annuity Company - North Carolina
Transamerica Assurance Company - Colorado
Transamerica Life Insurance Company of Canada - Canada
Transamerica Variable Insurance Fund, Inc. - Maryland
USA Administration Services, Inc. - Kansas
Transamerica Products, Inc. - California
Transamerica Leasing Ventures, Inc. - California
Transamerica Products II, Inc. - California
Item 26. Numbers of Holders of Securities.
Item 27. Indemnification
Transamerica Investors' Bylaws provide in Article VII as follows:
Section 1. OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND OTHERS. The
Corporation shall indemnify its Officers, Directors, employees and agents and
any person who serves at the request of the Corporation as a Director, Officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise as follows:
(a) Every person who is or has been a Director, Officer, employee or
agent of the Corporation and persons who serve at the Corporation's
request as Director, Officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall be
indemnified by the Corporation to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid
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by him or her in connection with any debt, claim, action, demand, suit,
proceeding, judgment, decree, liability or obligation of any kind in
which he or she becomes involved as a party or otherwise by virtue of
his or her being or having been a Director, Officer, employee or agent
of the Corporation or of another employee or agent of the Corporation
or of another corporation, partnership, joint venture, trust or other
enterprise at the request of the Corporation and against amounts paid
or incurred by him or her in the settlement thereof.
(b) The words "claim," "action," "suit" or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal,
administrative, legislative, investigative or other, including
appeals), actual or threatened, and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(c) No indemnification shall be provided hereunder to a Director,
Officer, employee or agent against any liability to the Corporation or
its shareholders by reason of willful misfeasance, active and
deliberate dishonesty, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Corporation, shall be severable,
shall not affect any other rights to which any Director, Officer,
employee or agent may now or hereafter be entitled, shall continue as
to a person who has ceased to be such Director, Officer, employee or
agent and shall insure to the benefit of the heirs, executors and
administrators of such a person.
(e) In the absence of a final decision on the merits by a court or
other body before which such proceeding was brought, an indemnification
payment will not be made, except as provided in paragraph (f) of this
Section 1, unless in the absence of such a decision, a reasonable
determination based upon a factual review has been made: (1) by a
majority vote of a quorum of non-party Directors who are not
"interested persons" of the Corporation as defined in Section 2(a)(19)
of the Investment Company Act of 1940; (2) by independent legal counsel
approved by the Board of Directors in a written opinion that the
indemnitee was not liable for an act of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties; or (3) by the
shareholders.
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(f) The Corporation further undertakes that advancement of expenses
incurred in the defense of a proceeding by an Officer, Director, or
controlling person of the Corporation in advance of the final
disposition of the proceeding (upon receipt by the Corporation of: (a)
a written affirmation by the Officer, Director, or controlling person
of the Corporation of that person's good faith belief that the standard
of conduct necessary for indemnification by the Corporation as
authorized in the Maryland General Corporation Law has been met; and
(b) a written undertaking by or on behalf of such person to repay the
amount if it shall ultimately be determined that the standard of
conduct as stated above has not been met) will not be made absent the
fulfillment of at least one of the following conditions: (1) the
Corporation is insured against losses arising by reason of any lawful
advances; or (2) a majority of a quorum of disinterested, non-party
Directors or independent legal counsel in a written opinion makes a
factual determination that there is a reason to believe the indemnitee
will be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by the director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of Transamerica Investors, Inc. are covered
under a Directors and Officers liability program which includes direct coverage
to directors and officers and corporate reimbursement to reimburse the Company
for indemnification of its directors and officers. Such directors and officers
are indemnified for loss arising from any covered claim by reason of any
Wrongful Act in their capacities as directors or officers. In general, the term
"loss" means any amount which the insureds are legally obligated to pay for a
claim for Wrongful Acts. In general, the term "Wrongful Acts" means any breach
of duty, neglect, error, misstatement, misleading statement or omission caused,
committed or attempted by a director or officer while acting individually or
collectively in their capacity as such, claimed against them solely by reason of
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their being directors and officers. The limit of liability under the program is
$5,000,000 for the period from the date of effectiveness of this registration
statement to 2/1/96. The primary policy under the program is with ICI Mutual
Insurance Company.
Item 28. Business and Other Connections of the Investment Adviser:
Transamerica Investment Services, Inc. (the "Adviser") is a registered
investment adviser. The Adviser is a
direct wholly-owned subsidiary of Transamerica Corporation.
Information as to the officers and directors of the Adviser is included in its
Form ADV last filed in March 1995 with the Securities and Exchange Commission
(registration number 801-7740) and is incorporated herein by reference.
Item 29. Principal Underwriter
(a) Transamerica Securities Sales Corporation ("TSSC") serves as the
principal underwriter of shares of the Funds.
(b) TSSC is the principal underwriter for the Registrant. Transamerica
Financial Resources, Inc. ("TFR") will also distribute shares of the funds. Set
forth below is a list of the directors and officers of TSSC and TFR and their
positions with the Registrant.
NAME AND PRINCIPAL POSITIONS AND OFFICE POSITIONS
BUSINESS ADDRESS* WITH TSSC WITH REGISTRANT
Barbara A. Kelley President and Director None
Regina M. Fink Secretary and Director None
Benjamin Tang Treasurer None
Nooruddin Veerjee Director Director & CEO
Dan S. Trivers Senior Vice President None
Nicki Bair Vice President President, CA &
CFO
Christopher W. Shaw Second Vice President Assistant Vice
President
* The principal business address for each officer and director is 1150
South Olive, Los Angeles, CA 90015.
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NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS
BUSINESS ADDRESS* WITH TFR WITH
REGISTRANT
Barbara A. Kelley President and Director None
Regina M. Fink Secretary and Counsel None
Monica Suryapranata Treasurer None
Gilbert Cronin Director None
James W. Dederer Director None
John Leon Second Vice-President None
Dan Trivers Second Vice President, None
Director of Administration and Chief Compliance
Officer
Ronald F. Wagley Director None
Kerry Rider Compliance Manager None
Second Vice President and Director of Compliance
* The principal business address for each officer and director is 1150
South Olive, Los Angeles, CA 90015.
Item 30. Location and Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules promulgated thereunder are maintained at the offices
of:
Registrant, located at 1150 South Olive, Los Angeles, California 90015-2211;
State Street Bank and Trust Company, Registrant's custodian, located at 225
Franklin Street, Boston, Massachusetts 02110; and Boston Financial Data
Services, Inc., a subsidiary of State Street, located at 2 Heritage Drive,
Quincy, Massachusetts 02171.
Item 31. Management Services
All management contracts are discussed in Parts A or B.
<PAGE>
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Items 32. Undertakings
(a) Not Applicable.
(b) Registrant undertakes that it will file a post-effective amendment, using
financial statements of a reasonably current date which need not be certified,
within four to six months from the commencement of operations of the Funds.
(c) Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of its most recent annual report to shareholders, upon
request and without charge.
(d) Registrant hereby undertakes to call for a meeting of shareholders for the
purpose of voting upon the question of removal of one or more of the directors
if requested to do so by the holders of at least 10% of a Fund's outstanding
shares, and to assist in communication with other shareholders as required by
Section 16(c).
<PAGE>
C-14
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Transamerica Investors, Inc. certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness if this Registration Statement and
has caused this Registration Statement to be signed on its behalf in the City of
Los Angeles and State of California on the 30th day of December, 1997.
TRANSAMERICA INVESTORS, INC.
By: __________________________
Nicki Bair
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 6 to the Registration Statement has been signed by the following persons in
the capaciaties and on the date indicated.
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<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C> <C>
______________________ Director and Chief December 30, 1997
Nooruddin Veerjee Executive Officer
______________________ President December 30, 1997
Nicki Bair
______________________ Treasurer and December 30, 1997
Susan Hughes Chief Accounting Officer
______________________ Director December 30, 1997
Sidney E. Harris
______________________ Director December 30, 1997
Charles C. Reed
_____________________ Director December 30, 1997
Gary U. Rolle
______________________ Director December 30, 1997
Carl R. Terzian
</TABLE>
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Exhibit 11
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Ernst & Young LLP
515 South Flower Street
Los Angeles, CA 90071
213-977-3200
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Other Information" in
Post- Effective Amendment No. 6 under the Securities Act of 1933 and
Post-Effective Amendment No. 8 under the Investment Company Act of 1940 to the
Registration Statement (Form N-1A No. 33-90888) and related Prospectus and
Statement of Additional Information of Transamerica Investors, Inc. We also
consent to the incorporation by reference therein of our report dated February
3, 1997 with respect to the financial statements of Transamerica Investors, Inc.
for the years ended December 31, 1996 and 1995 included in the Annual Report for
1996 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
December 18, 1997
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