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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 at 9:00 a.m. on Thursday, July 31, 1997, 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 30, 1997, 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, 1997. The Company's
most recent annual report for the fiscal year ended March 31, 1997, has been
previously mailed to shareholders. It is available without charge from the
transfer agent, ChaseMellon Shareholder Services, L.L.C., 111 Founders Plaza,
Suite 1100, East Hartford, CT 06108, telephone toll free: 1-800-288-9541.
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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, 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, 75, Managing General Partner of Cee'n'Tee Company.
(1981)(2)(4)
RICHARD N. LATZER, 60, President and Director of Transamerica
Investment Services. Senior Vice President and Chief Investment Officer of
Transamerica Corporation. (1989)(1)
DEWAYNE W. MOORE, 83, Retired Senior Vice President, Chief Financial
Officer and Director of Guy F. Atkinson Company of California. (1980)(3)(4)
GARY U. ROLLE, 55, President and Chairman of the Company. Executive
Vice President, Chief Investment Officer and Director of Transamerica Investment
Services. (1988)(1)(2)
PETER J. SODINI, 56, Associate, Freeman Spogli & Co. (1988)(2)(3)(4)
(1) "Interested person" as defined in the Investment Company Act of 1940,
as amended ("the 1940 Act"). These directors receive no fees or expense
reimbursements from the Company.
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(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 $1,000 for each Board meeting attended, $250 for each Committee
meeting attended and reimbursement for travel expenses.
DIRECTOR NOMINEE COMPENSATION
TOTAL
AGGREGATE COMPEN-
COMPEN- SATION FOR
SATION ALL RELATED
FROM INVESTMENT
DIRECTOR NOMINEES COMPANY COMPANIES
- ----------------- -------- -----------
Donald E. Cantlay $4,000 $6,000
Richard N. Latzer -0- -0-
DeWayne W. Moore 4,250 6,250
Gary U. Rolle -0- -0-
Peter J. Sodini 4,250 6,250
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
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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 five investment portfolios. The Total Compensation table above
includes payments by Transamerica Investors to Mr. Rolle, if any.
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, 1996, to March 31, 1997.
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, 1997, the following directors owned
Company shares, including shares held in family trusts: Mr. Cantlay 15,448 and
Mr. Moore 1,000, which holdings, together with shares owned by the Company's
officers, aggregate less than 1% of shares outstanding. Also on that date
Transamerica Occidental Life Insurance Company 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 3,925,521 shares or 62.1% of
the outstanding shares. No person, to the Company's knowledge, owns beneficially
more than 10% of the Company's shares. At March 31, 1997, and on May 30, 1997,
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 percent of the Company's
common stock to file
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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, 1997, 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 24, 1996.
The directors of the Company, and those directors who are not
"interested persons" of parties to the Agreement, on May 22, 1997, approved
continuance of the Agreement and recommended to shareholders ratification of
that continuance. In
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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 ratification is by a vote of 67% or more of the shares present at
the meeting if more than 50% of the shares are present or represented by proxy,
or a vote of more than 50% of the shares, whichever is less.
At the end of the fiscal year, March 31, 1997, the Company had net
assets of $151,196,455 and paid fees of $769,645 to the Adviser for advisory
services during the year. Advisory fees in the fiscal years ended in 1996 and
1995 were $786,809 and $730,010, respectively.
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The directors of the Adviser with ages indicated are Thomas J. Cusack,
41, Executive Vice President of Transamerica Corporation and President and Chief
Executive Officer of Transamerica Life Companies; Richard H. Finn, 62, Executive
Vice President of Transamerica Corporation and President and Chief Executive
Officer of Transamerica Finance Group; Edgar H. Grubb, 58, Executive Vice
President and Chief Financial Officer of Transamerica Corporation; Frank C.
Herringer, 54, Chairman and Chief Executive Officer of Transamerica Corporation;
Richard N. Latzer, 60, President of the Adviser and Senior Vice President and
Chief Investment Officer of Transamerica Corporation; and Gary U. Rolle, 55,
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, 53, Senior Vice President; Sharon K. Kilmer, 39, Vice
President and Susan R. Hughes, 41, Vice President, Chief Financial Officer and
Secretary. Each of the above five 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
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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, 1995,
1996, and 1997, the Company did not pay any brokerage commissions, and the
portfolio turnover rate was 15%, 14% and 16%, respectively.
3. AUDITORS. On May 22, 1997, 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 1998 annual meeting of shareholders must be received by the
Company no later than February 6, 1998, for inclusion in the proxy statement.
For the Board of Directors,
Thomas M. Adams,
Secretary
June 9, 1997
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PROXY TRANSAMERICA INCOME SHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS, JULY 31, 1997
DONALD E. CANTLAY, DeWAYNE W. MOORE, and GARY U. ROLLE 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 31, 1997 at 9:00 A.M. or at any adjournments
on the matters on the reverse side and on any other matters which may come
before the meeting.
(Continued on reverse side)
FOLD AND DETACH HERE
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THIS PROXY WILL BE VOTED AS YOU SPECIFY BELOW. IF NO Please mark
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED FOR your votes as
ITEMS 1, 2 AND 3. indicated in [X]
this example
1. Election of the Director Nominees listed below (except as marked)
FOR WITHHOLD D. Cantlay, R. Latzer, D. Moore, G. Rolle and P. Sodini
AUTHORITY
(INSTRUCTION: To withhold authority to vote for any
[ ] [ ] individual nominee, write that nominee's name on the
space provided below.)
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2. Continuance of the Management and 3. Ratification of Ernst & Young LLP
Investment Advisory Agreement as 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 ______________________, 1997
___________________________________________
Signature
___________________________________________
Signature if held jointly
(Executors and trustees should so indicate)
FOLD AND DETACH HERE