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TRANSAMERICA INCOME SHARES, INC.
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING
To the shareholders:
The annual meeting of shareholders will be held in the offices of Transamerica
Investment Services, Inc., 1150 South Olive Street, 27th floor, Los Angeles,
California 90015 at 9:00 a.m. on Thursday, July 30, 1998, to vote on:
(1) Election of a board of five directors;
(2) To approve or disapprove continuation of the Management and Investment
Advisory Agreement (the "Agreement");
(3) Ratification of Ernst & Young LLP as independent auditors.
Your shares will be voted as you instruct. If your card is not marked, your
shares will be voted for election of the director nominees and in favor of each
unmarked item. You may revoke your vote before the meeting by written notice to
Transamerica Income Shares (the "Company") or by voting in person at the
meeting. If other business arises, the persons named as proxies are authorized
to vote for you.
Shareholders of record on May 29, 1998, are entitled to one vote for each
share owned. This proxy is solicited by the Board of Directors, and the cost is
paid by the Company. Fiduciaries will be requested to forward proxy materials to
their principals, and they will be reimbursed for out-of-pocket expenses. This
statement will be mailed on or about June 9, 1998. The Company's most recent
annual report for the fiscal year ended March 31, 1998, has been previously
mailed to shareholders. It is available without any charge from the transfer
agent, ChaseMellon Shareholder Services, L.L.C., Overpeck Centre, 85 Challenger
Road, Ridgefield Park, NJ 07660, telephone toll free:
1-800-288-9541.
HELP YOUR COMPANY SAVE THE COST OF FOLLOW-UP LETTERS BY PROMPTLY RETURNING THE
PROXY CARD.
1. DIRECTORS. The persons named as proxies intend to vote to re-elect the
five persons currently serving as directors, unless authority to vote for the
election of all or specified individuals is withheld by so marking the proxy
card. If any nominees are unable to serve, the persons named as proxies may vote
for other persons or vote to fix the number of directors at less than five.
Election is by a majority vote of the shares represented at the meeting. The
mailing address of each nominee is 1150 South Olive Street, 27th Floor, Los
Angeles, CA 90015. The name, age, principal occupation for the past five years
and year of election of the nominees, who have consented to serve if elected,
are:
DONALD E. CANTLAY, 76, Managing General Partner of Cee'n'Tee Company.
(1981)(2) (3) (4)
RICHARD N. LATZER, 61, President and Director of Transamerica Investment
Services. Senior Vice President and Chief Investment Officer of Transamerica
Corporation. (1989)(1)
GARY U. ROLLE, 56, President and Chairman of the Company. Executive Vice
President, Chief Investment Officer and Director of Transamerica Investment
Services. (1988)(1)(2)
PETER J. SODINI, 57, Associate, Freeman Spogli & Co. (1988)(2)(3)(4)
JON C. STRAUSS, 58, President of Harvey Mudd College. Vice President and
Chief Financial Officer, Howard Hughes Medical Institute, 1994-1997. Previously
President of Worcester Polytechnic Institute. (3)(4)
(1) "Interested person" as defined in the Investment Company Act of 1940, as
amended ("the 1940
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Act"). These directors receive no fees or expense reimbursements from the
Company.
(2) Member of the Corporate Responsibility Committee, which reviews nominees
for appointment or election as directors. This Committee considers
nominations by shareholders, which should be submitted in writing to the
Secretary at the above address.
(3) Member of the Audit Committee, which recommends the selection of auditors.
This Committee reviews the proposed scope of the audit, the results of both
audit and non-audit services and the fees for those services and supervises
internal controls. The Committee held one meeting during the fiscal year.
(4) Not an "interested person" as defined in the 1940 Act. These directors
receive an annual retainer of $1,500, $1,000 for each Board meeting
attended, $250 for each Committee meeting attended and reimbursement for
travel expenses.
DIRECTOR NOMINEE COMPENSATION
<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPEN-
COMPEN- SATION FOR
SATION ALL RELATED
FROM INVESTMENT
DIRECTOR NOMINEES COMPANY COMPANIES
- ----------------- ------- ---------
<S> <C> <C>
Donald E. Cantlay $4,375 $6,625
Richard N. Latzer -0- -0-
Gary U. Rolle -0- -0-
Peter J. Sodini 3,625 5,375
Jon C. Strauss 2,375 3,625
</TABLE>
Transamerica Income Shares (the "Company") is a closed-end investment
company traded on the New York Stock Exchange. Each of the nominees are also
members of the Board of Managers of variable annuity separate account fund "B"
and are directors of Transamerica Variable Insurance Fund, Inc. sponsored by
Transamerica Occidental Life Insurance Company. Fund B and Transamerica Variable
Insurance Fund are registered investment companies. Because the Company and
these two funds are advised by affiliated companies wholly owned by Transamerica
Corporation, total compensation for these related investment companies is
included in the Total Compensation column.
Mr. Rolle is also a director of Transamerica Investors, Inc., a registered
investment company advised by Transamerica Investment Services and which offers
eight investment portfolios. He receives no compensation from that fund.
None of the director nominees currently receive any pension or retirement
benefits from the Company and thus will not receive any benefits funded by the
Company upon retirement. The above data is for the Company's fiscal year, April
1, 1997, to March 31, 1998.
The Board held four meetings during the fiscal year. Each nominee for
director attended 75% or more of all Board and applicable committee meetings. At
the Company's fiscal year end on March 31, 1998, Mr. Cantlay owned 15,448
Company shares, including shares held in family trusts, which holdings, together
with shares owned by the Company's officers, aggregate less than 1% of shares
outstanding. Also on that date the Transamerica life insurance companies owned
479,575 shares or 7.6% of shares outstanding and the Depository Trust Company (a
securities clearing corporation) held of record but not beneficially 4,111,502
shares or 65.1% of the outstanding shares. No person, to the Company's
knowledge, owns beneficially more than 10% of the Company's shares. At March 31,
1998, and on May 29, 1998, the record date for voting at the annual meeting,
6,318,771 shares were outstanding.
Section 30(f) of the 1940 Act requires the Company's officers, directors
and investment adviser, the affiliated persons of the investment adviser, and
the beneficial owners of more than ten
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percent of the Company's common stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission and
the New York Stock Exchange, and to provide copies of these reports to the
Company. Based solely on a review of copies of reports received by it and of
written representations by reporting persons that no additional reports are due,
the Company believes that the requirements for Section 30(f) filing and
reporting of changes of beneficial ownership during the fiscal year ended March
31, 1998, were satisfied.
2. MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT. Transamerica Investment
Services, Inc., (the "Adviser"), a wholly owned subsidiary of Transamerica
Corporation, 600 Montgomery Street, San Francisco, CA 94111, provides
management, investment advisory and research services to the Company for an
annual fee of one-half of one percent of the Company's average net assets
(accrued weekly and payable monthly), and pays for office space, facilities,
equipment and salaries of the Company's officers. The Company pays all other
expenses, including taxes, brokerage, transfer agent fees, custodial fees, stock
exchange listing costs, shareholder reports, postage, auditing and legal fees.
The Adviser guarantees that the Company's expenses shall not exceed 1 1/2 % of
the first $30 million of average net assets and 1% over $30 million. If that
limit is exceeded, the Adviser will pay the excess to the Company. The Agreement
must be renewed annually by the directors or a majority of the Company's shares,
and by a majority of the directors who are not "interested persons" of parties
to the Agreement. The Agreement was entered into in 1972 and was last ratified
by shareholders at the annual meeting of shareholders held on July 31, 1997.
The directors of the Company, and those directors who are not "interested
persons" of parties to the Agreement, on May 14, 1998, approved continuance of
the Agreement and recommended to shareholders ratification of that continuance.
In connection with its recommendation that shareholders ratify continuance of
the Agreement, the Board evaluated such factors as the Adviser's experience in
providing various financial services and investment advice to investment
companies and other clients, as well as its reputation, integrity, financial
responsibility and stability. The Board is provided and reviews on a continuing
basis, the Adviser's outlook for the economy, productivity and fixed income
investments; the Company's portfolio holdings and investment transactions;
trading allocation data; characteristics of the portfolio including quality,
maturity and call protection; revenues received from the debt securities held
and expenses of operations; changes in the Company's net asset value, earnings
and yield; the Company's performance and its expenses as compared to other
similar companies; the quality and experience of the Adviser's officers and
employees and the Adviser's income, expenses, profitability and balance sheet.
Based upon its review, the Board concluded that the terms of the Agreement and
the fees are fair and reasonable, in light of usual and customary terms and
charges made by others for comparable services, and that it is in the best
interests of the Company and its shareholders to renew the Agreement.
Shareholder approval is by a vote of the lesser of a) a majority of outstanding
shares, or b) 67% of the shares voted, so long as more than 50% of the shares
actually vote.
At the end of the fiscal year, March 31, 1998, the Company had net assets
of $159,926,576 and paid fees of $789,942 to the Adviser for advisory services
during the year. Advisory fees in the fiscal years ended in 1997 and 1996 were
$769,645 and $786,809.
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The directors of the Adviser with ages indicated are Thomas J. Cusack, 42,
Executive Vice President of Transamerica Corporation and President and Chief
Executive Officer of Transamerica Life Companies; Richard H. Finn, 63, Senior
Advisor to the Chief Executive Officer of Transamerica Corporation; Edgar H.
Grubb, 59, Executive Vice President and Chief Financial Officer of Transamerica
Corporation; Frank C. Herringer, 55, Chairman and Chief Executive Officer of
Transamerica Corporation; Richard N. Latzer, 61, President of the Adviser and
Senior Vice President and Chief Investment Officer of Transamerica Corporation;
and Gary U. Rolle, 56, Executive Vice President and Chief Investment Officer of
the Adviser. In addition to Messrs. Latzer and Rolle (above) the officers of the
Adviser are: Susan A. Silbert, 54, Senior Vice President; and Susan R. Hughes,
42, Vice President, Chief Financial Officer and Secretary. Each of the above
four persons who are officers of the Company have held the positions shown or
executive positions in Transamerica Corporation or Transamerica subsidiaries for
more than five years except Ms. Hughes who, from 1992 to 1996 was a financial
consultant and from 1984 to 1992 was Treasurer and Chief Financial Officer of
Janus Capital Corporation.
Decisions to buy and sell securities, selection of brokers or dealers, and
negotiation of commissions are made by the Adviser. Securities orders are placed
with brokers or dealers selected for their ability to give execution at prices
and commission rates (if any) favorable to the Company and, in some instances,
for the ability to provide research and other services. As part of the process
of brokerage allocation, the Adviser is authorized to pay commissions which may
exceed what another broker might have charged. If portfolio business is
transacted with brokers or dealers which provide research, comparative
performance data, pricing quotations, or other services, the Company pays any
cost of such services and the Adviser and other investment companies advised by
the Adviser may benefit. Portfolio debt securities normally are bought from or
sold to an underwriter or market maker, and the dealer's compensation is
normally included in the price of the security.
Neither the Adviser nor any affiliate receives any brokerage commissions
from the Company. During the fiscal years ended March 31, 1996, 1997, and 1998,
the Company did not pay any brokerage commissions, and the portfolio turnover
rate was 14%, 16% and 9% , respectively.
3. AUDITORS. On May 14, 1998, the Audit Committee and the directors, including a
majority who are not "interested persons," selected Ernst & Young LLP as the
independent auditors for the current fiscal year. Ratification is by a majority
of the shares represented at the annual meeting. Services provided include
examination of the annual financial statements, meeting with the Audit
Committee, and review of federal income tax returns. Ernst & Young LLP will not
attend the annual meeting.
SHAREHOLDER PROPOSALS. Any shareholder proposal intended to be presented at
the 1999 annual meeting of shareholders must be received by the Company no later
than February 5, 1999, for inclusion in the proxy statement.
For the Board of Directors,
Thomas M. Adams,
Secretary
June 9, 1998
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PROXY
TRANSAMERICA INCOME SHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS, JULY 30, 1998
DONALD E. CANTLAY, GARY U. ROLLE and JON C. STRAUSS, or any one of them,
are authorized to represent me and vote my shares of stock at the Annual
Meeting of Transamerica Income Shares, Inc. to be held in the offices of
Transamerica Investment Services, Inc., 1150 South Olive Street, 27th Floor, Los
Angeles, California on July 30, 1998 at 9:00 A.M. or at any adjournments on the
matters on the reveres side and on any other matters which may come before the
meeting.
(Continued on reverse side)
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Please mark
your vote as [X]
indicated in
this example
THIS PROXY WILL BE VOTED AS YOU SPECIFY BELOW. IF NO SPECIFICATION IS MADE, THE
PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3.
1. Election of the Director Nominees listed below (except as marked)
WITHHOLD D. Cantlay, R. Latzer, G. Rolle, P. Sodini and J. Strauss
FOR AUTHORITY
(INSTRUCTION: To withhold authority to vote for any
[ ] [ ] individual nominee, write that nominee's name on the
space provided below.)
_______________________________________________________
2. Continuance of the Management and 3. Ratification of Ernst & Young LLP as
Investment Advisory Agreement Independent Auditors.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS. HELP YOUR COMPANY
SAVE THE EXPENSE OF ANOTHER MAILING BY
RETURNING THIS PROXY PROMPTLY.
Dated ____________________________, 1998
________________________________________
Signature
________________________________________
Signature if held jointly
(Executors and trustees should so indicate)
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