Transamerica Financial Life Insurance Company, et al., 15738-15741 [2017-06244]
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Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices
affected Contract owners will not be
altered in any way.
6. Affected Contract owners will be
permitted to make at least one transfer
of Contract value from the sub-account
investing in the Existing Fund (before
the Effective Date) or the Replacement
Fund (after the Effective Date) to any
other available investment option under
the Contract without charge for a period
beginning at least 30 days before the
Effective Date through at least 30 days
following the Effective Date. Except as
described in any market timing/shortterm trading provisions of the relevant
prospectus, the Company will not
exercise any right it may have under the
Contract to impose restrictions on
transfers between the sub-accounts
under the Contracts, including
limitations on the future number of
transfers, for a period beginning at least
30 days before the Effective Date
through at least 30 days following the
Effective Date.
7. All affected Contract owners will be
notified, at least 30 days before the
Effective Date about: (a) The intended
substitution of Existing Funds with the
Replacement Funds; (b) the intended
Effective Date; and (c) information with
respect to transfers as set forth in
Condition 6 above. In addition, the
Companies will deliver to all affected
Contract owners, at least 30 days before
the Effective Date, a prospectus for each
applicable Replacement Fund.
8. The Companies will deliver to each
affected Contract owner within five (5)
business days of the Effective Date a
written confirmation which will
include: (a) A confirmation that the
Substitutions were carried out as
previously notified; (b) a restatement of
the information set forth in the preSubstitution notice; and (c) values of the
Contract owner’s positions in the
Existing Fund before the Substitution
and the Replacement Fund after the
Substitution.
9. After the Effective Date the
Applicants agree not to change a
Replacement Fund’s sub- adviser
without first obtaining shareholder
approval of either (a) the sub-adviser
change or (b) the parties’ continued
ability to rely on their manager-ofmanagers exemptive order.
10. For two years following the
Effective Date the net annual expenses
of each Replacement Fund that is a
Transamerica Series Trust Fund will not
exceed the net annual expenses of the
corresponding Existing Fund as of the
fund’s most recent fiscal year. To
achieve this limitation, the Replacement
Fund’s investment adviser will waive
fees or reimburse the Replacement Fund
in certain amounts to maintain expenses
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at or below the limit. Any adjustments
will be made at least on a quarterly
basis. In addition, the Companies will
not increase the Contract fees and
charges, including asset based charges
such as mortality expense risk charges
deducted from the sub-accounts that
would otherwise be assessed under the
terms of the Contracts for a period of at
least two years following the Effective
Date.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–06245 Filed 3–29–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–32571; File No. 812–14487]
Transamerica Financial Life Insurance
Company, et al.
March 24, 2017.
Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of application for an order
approving the substitution of certain
securities pursuant to Section 26(c) of
the Investment Company Act of 1940, as
amended (the ‘‘1940 Act’’ or ‘‘Act’’).
APPLICANTS: Transamerica Financial
Life Insurance Company (‘‘TFLIC’’),
Transamerica Advisors Life Insurance
Company (‘‘TALIC’’) (each a
‘‘Company’’ and together, the
‘‘Companies’’), Merrill Lynch Life
Variable Annuity Separate Account D,
and ML of New York Variable Annuity
Separate Account D (each an ‘‘Account’’
and together, the ‘‘Accounts’’). The
Companies and the Accounts
collectively are referred to herein as the
‘‘Applicants.’’
SUMMARY OF APPLICATION: Applicants
seeks an order pursuant to Section 26(c)
of the 1940 Act, approving the
substitution of shares issued by certain
series of Transamerica Series Trust (the
‘‘Replacement Funds’’) for shares of
certain registered investment companies
currently held by sub-accounts of the
Accounts (the ‘‘Existing Funds’’), to
support certain variable annuity
contracts (collectively, the ‘‘Contracts’’)
issued by the Companies.
FILING DATE: The application was filed
on June 15, 2015, and amended on
December 8, 2015, July 1, 2016, and
November 14, 2016.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
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will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing by writing to the
Secretary of the Commission and
serving the Applicants with a copy of
the request, personally or by mail.
Hearing requests should be received by
the Commission by 5:30 p.m. on April
18, 2017, and should be accompanied
by proof of service on Applicants, in the
form of an affidavit or, for lawyers, a
certificate of service. Pursuant to Rule
0–5 under the Act, hearing requests
should state the nature of the writer’s
interest, any facts bearing upon the
desirability of a hearing on the matter,
the reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Commission: Secretary,
SEC, 100 F Street NE., Washington, DC
20549–1090. Applicants: Alison C.
Ryan, Associate General Counsel,
Transamerica, 1150 South Olive Street,
T–27–01, Los Angeles, CA 90015.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or David J. Marcinkus,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. TALIC is the depositor of Merrill
Lynch Variable Annuity Separate
Account D. TFLIC is the depositor of
ML of New York Variable Annuity
Separate Account D. Each Company is
an indirect wholly-owned subsidiary of
AEGON N.V.
2. Each Account is a ‘‘separate
account’’ as defined by rule 0–1(e)
under the 1940 Act and each is
registered under the 1940 Act as a unit
investment trust. Each Account is
divided into sub-accounts, which reflect
the investment performance of certain
registered investment companies,
including Transamerica Series Trust.
The Accounts are administered and
accounted for as part of the general
business of the Companies. The
application sets forth the registration
statement file numbers for the security
interests under the Contracts and the
Accounts.
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3. The Contracts are individual and
group variable annuity contracts. Each
of the prospectuses for the Contracts
discloses that the issuing Company
reserves the right, subject to compliance
with applicable law, to substitute shares
of another registered open-end
management investment company for
shares of a registered open-end
management investment company held
by a sub-account of an Account.
4. Transamerica Series Trust is an
open-end management investment
company of the series type that is
registered with the Commission under
the 1940 Act (File No. 811–04419).1
Shares of the series are registered under
the Securities Act of 1933 (File No. 033–
00507) and are sold to the separate
accounts of life insurance companies to
fund benefits under variable life policies
or variable annuity contracts and to
certain affiliated asset allocation funds.
5. Transamerica Asset Management,
Inc. (‘‘TAM’’), an investment adviser
that is registered with the Commission,
has overall responsibility for the
management of each Transamerica
Series Trust Replacement Fund. TAM
delegates to a sub-adviser the
Existing fund
15739
responsibility for day-to-day
management of the investments of each
Transamerica Series Trust Replacement
Fund, subject to TAM’s oversight. TAM
may, in the future, determine to provide
the day-to-day management of any
Transamerica Series Trust Replacement
Fund without the use of a sub-adviser.
6. Applicants propose, as set forth
below, to substitute shares of the
Replacement Funds for shares of the
Existing Funds (‘‘Substitutions’’) to fund
the Contracts:
Replacement fund
AllianzGI NFJ Mid-Cap Value Fund (A) ...................................................
American Century Equity Income Fund (A) .............................................
American Century Ultra Fund (A) .............................................................
Columbia Acorn USA (A) .........................................................................
Columbia Acorn International (A) .............................................................
Pioneer Emerging Markets Fund (A) .......................................................
Templeton Foreign Fund (A) ....................................................................
Columbia Large Cap Growth Fund V (formerly known as Columbia
Marsico Growth Fund) (A).
7. The Applicants believe that the
Replacement Funds have investment
objectives, policies and risk profiles, as
described in their prospectuses, that are
substantially the same as, or sufficiently
similar to, the corresponding Existing
Funds to make those Replacement
Funds appropriate candidates as
substitutes. Applicants also state that
the investment objectives and
investment strategies of each
Transamerica
Transamerica
Transamerica
Transamerica
Transamerica
Transamerica
Transamerica
Transamerica
JPMorgan Mid Cap Value VP (Service Class).
Barrow Hanley Dividend Focused VP (Service Class).
Jennison Growth VP (Service Class).
T. Rowe Price Small Cap VP (Service Class).
MFS International Equity VP (Initial Class).
TS&W International Equity VP (Service Class).
MFS International Equity VP (Initial Class).
WMC US Growth VP (Service Class).
Replacement Fund are similar to the
corresponding Existing Fund, or each
Replacement Fund’s underlying
portfolio construction and investment
results are similar to those of the
Existing Fund and therefore the
fundamental objectives, risk and
performance expectations of those
Contract owners with interests in subaccounts of the Existing Funds will
continue to be met after the
Substitutions.
8. The investment objectives of each
Existing Fund and its corresponding
Replacement Fund are set forth below.
Additional information for each Existing
Fund and Replacement Fund, including
principal investment strategies,
principal risks and comparative
performance history, can be found in
the application.
Existing fund
Replacement fund
AllianzGI NFJ Mid-Cap Value Fund seeks long-term growth of capital
and income.
American Century Equity Income Fund seeks current income. Capital
appreciation is a secondary objective.
Transamerica JPMorgan Mid Cap Value seeks growth from capital appreciation.
Transamerica Barrow Hanley Dividend Focused VP Seeks total return
gained from the combination of dividend yield, growth of dividends
and capital appreciation.
Transamerica Jennison Growth VP seeks long-term growth of capital.
Transamerica T. Rowe Price Small Cap VP seeks long-term growth of
capital by investing primarily in common stocks of small growth companies.
Transamerica MFS International Equity VP seeks capital growth.
Transamerica TS&W International Equity VP seeks maximum longterm total return, consistent with reasonable risk to principal, by investing in a diversified portfolio of common stocks of primarily nonU.S. issuers.
Transamerica MFS International Equity VP seeks capital growth.
Transamerica WMC US Growth VP seeks to maximize long-term
growth.
American Century Ultra Fund seeks long-term growth of capital ............
Columbia Acorn USA seeks long-term capital appreciation ....................
Columbia Acorn International seeks long term capital appreciation ........
Pioneer Emerging Markets Fund seeks long term growth of capital .......
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Templeton Foreign Fund seeks long-term capital growth .......................
Columbia Large Cap Growth Fund V seeks long-term growth of capital
9. Applicants state that the
Substitutions are designed to allow
Contract owners to continue their
investment in similar or better
investment options without interruption
and at no additional cost to them.
Contract owners with sub-account
balances invested through the Accounts
in shares of the Replacement Funds will
have the same or lower total expense
ratios taking into account fund expenses
(including Rule 12b–1 fees, if any). With
respect to all of the proposed
Substitutions, the combined
management fee and Rule 12b–1 fees
1 Effective May 1, 2008, Transamerica Series
Trust changed its name from AEGON/Transamerica
Series Trust.
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Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices
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paid by the Replacement Fund are the
same or lower than those of the
corresponding Existing Fund. The
application sets forth the fees and
expenses of each Existing Fund and its
corresponding Replacement Fund in
greater detail.
10. Applicants represent that as of the
effective date of the Substitutions
(‘‘Effective Date’’) shares of the Existing
Funds will be redeemed for cash. The
Companies, on behalf of each Existing
Fund sub-account of each relevant
Account, will simultaneously place a
redemption request with each Existing
Fund and a purchase order with the
corresponding Replacement Fund so
that the purchase of Replacement Fund
shares will be for the exact amount of
the redemption proceeds. Thus,
Contract values will remain fully
invested at all times.
11. The Substitutions will take place
at relative net asset value (in accordance
with Rule 22c–1 under the 1940 Act)
with no change in the amount of any
affected Contract owner’s contract
value, cash value, accumulation value,
account value or death benefit or in
dollar value of his or her investment in
the applicable Accounts.2 No brokerage
commissions or other fees will be paid
by either the Existing Funds or the
Replacement Funds or by the affected
Contract owners in connection with the
Substitutions.
12. The affected Contract owners will
not incur any fees or charges as a result
of the Substitutions nor will their rights
or the Companies’ obligations under the
Contracts be altered in any way. The
Companies or their affiliates will pay all
expenses and transaction costs of the
Substitutions, including brokerage,
legal, accounting, and other fees and
expenses. The Substitutions will not
cause the Contract fees and charges
currently being paid by affected
Contract owners to be greater after the
Substitutions than before the
Substitutions. Moreover, the
Substitutions will not impose any tax
liability on affected Contract owners.
13. As described in the application,
after notification of the Substitution and
2 Applicants state that, because the Substitutions
will occur at relative net asset value, and the fees
and charges under the Contracts will not change as
a result of the Substitutions, the benefits offered by
the guarantees under the Contracts will be the same
immediately before and after the Substitutions.
Applicants also state that what effect the
Substitutions may have on the value of the benefits
offered by the Contract guarantees would depend,
among other things, on the relative future
performance of the Existing Funds and
Replacement Funds, which Applicants cannot
predict. Nevertheless, Applicants note that at the
time of the Substitutions, the Contracts will offer a
comparable variety of investment options with as
broad a range of risk/return characteristics.
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for 30 days after the Effective Date,
affected Contract owners may reallocate
the sub-account value of an Existing
Fund to any other investment option
available under their Contract without
incurring any transfer charges.
14. All Contract owners affected by
the Substitutions will be notified of this
application by means of supplements to
the Contract prospectuses at least 30
days prior to the Effective Date. The
notice will advise Contract owners that
from the date of the notice until the
Effective Date, owners are permitted to
make one transfer of Contract value out
of the Existing Fund sub-account to one
or more other sub-accounts without the
transfer (or exchange) being treated as
one of a limited number of transfers (or
exchanges) permitted without a transfer
charge. Among other information, the
notice will inform affected Contract
owners that the Companies will not
exercise any rights reserved under any
Contract to impose additional
restrictions on transfers until at least 30
days after the Effective Date.
15. If affected Contract owners
reallocate account value during this 60
day period, there will be no charge for
the reallocation of accumulated value
from the Existing Fund sub-accounts
and the reallocation will not count as a
transfer when imposing any applicable
restriction or limit under the Contract
on transfers. Additionally, all affected
Contract owners will be sent
prospectuses of the applicable
Replacement Funds at least 30 days
before the Effective Date.
16. Within five (5) business days after
the Effective Date, affected Contract
owners will be sent a written
confirmation, which will include
confirmation that the Substitutions were
carried out as previously notified, a
restatement of the information set forth
in the pre-Substitution notice and
values of the Contract owner’s position
in the Existing Fund before the
Substitution and the Replacement Fund
after the Substitution.
Applicants’ Legal Analysis
1. Applicants request that the
Commission issue an order pursuant to
Section 26(c) of the 1940 Act approving
the Substitutions. Section 26(c) requires
the depositor of a registered unit
investment trust holding the securities
of a single issuer to obtain Commission
approval before substituting the
securities held by the trust. Section
26(c) requires the Commission to issue
such an order if the evidence establishes
that the substitution is consistent with
the protection of investors and the
purposes fairly intended by the policy
and provisions of the 1940 Act.
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2. Applicants submit that the terms
and conditions of the Substitutions meet
the standards set forth in Section 26(c)
and assert that the replacement of an
Existing Fund with the corresponding
Replacement Fund is consistent with
the protection of investors and the
purposes fairly intended by the policy
and provisions of the l940 Act. As
described in the application, for a
period of two years following the
Effective Date, the Companies or their
affiliates will reimburse any Contract
owner affected by the proposed
Substitutions involving Transamerica
Series Trust Replacement Funds and
whose sub-account invests in the
Replacement Fund to the extent a
Replacement Fund’s net annual
operating expenses exceeds the net
annual operating expenses of the
corresponding Existing Fund.
Applicants further assert that each
Replacement Fund has similar
investment objectives and investment
strategies as the corresponding Existing
Fund, or each Replacement Fund’s
underlying portfolio construction and
investment results are similar to those of
the corresponding Existing Fund.
Accordingly, Applicants believe that the
fundamental investment objectives, risk
and performance expectations of the
Contract owners will continue to be met
after the Substitutions.
3. Applicants also maintain that it is
in the best interests of the Contract
owners to substitute the Replacement
Fund for its corresponding Existing
Fund. Applicants anticipate that the
substitution of an Existing Fund with
the corresponding Replacement Fund
will result in a Contract that is
administered and managed more
efficiently, and one that is more
competitive with other variable
products. The rights of affected Contract
Owners and the obligations of the
Companies under the Contracts will not
be altered by the Substitutions. Affected
Contract owners will not incur any
additional tax liability or any additional
fees and expenses as a result of the
Substitutions.
4. Each of the prospectuses for the
Contracts discloses that the issuing
Company reserves the right, subject to
compliance with applicable law, to
substitute shares of another registered
open-end management investment
company for shares of an open-end
management investment company held
by a sub-account of an Account.
5. Applicants also assert that none of
the proposed Substitutions is of the type
that Section 26(c) was designed to
prevent. Unlike a traditional unit
investment trust where a depositor
could only substitute an investment
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Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices
security in a manner which
permanently affected all the investors in
the trust, the Contracts provide each
Contract owner with the right to
exercise his or her own judgment and
transfer account values into other subaccounts. Moreover, the Contracts will
offer affected Contract owners the
opportunity to transfer amounts out of
the affected sub-accounts into any of the
remaining sub-accounts without cost or
other disadvantage. The Substitution,
therefore, will not result in the type of
costly forced redemptions that Section
26(c) was designed to prevent.
Applicants also maintain that the
Substitutions are unlike the type of
substitutions which Section 26(c) was
designed to prevent in that by
purchasing a Contract, Contract owners
select much more than a particular
registered management open-end
investment company in which to invest
their account values. They also select
the specific type of insurance coverage
offered by the Companies under their
Contracts as well as other rights and
privileges set forth in the Contracts.
Applicants’ Conditions:
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The proposed Substitutions will
not be effected unless the Companies
determine that: (a) The Contracts allow
the substitution of shares of registered
open-end investment companies in the
manner contemplated by the
application; (b) the Substitutions can be
consummated as described in the
application under applicable insurance
laws; and (c) any regulatory
requirements in each jurisdiction where
the Contracts are qualified for sale have
been complied with to the extent
necessary to complete the Substitutions.
2. The Companies or their affiliates
will pay all expenses and transaction
costs of the Substitutions, including
legal and accounting expenses, any
applicable brokerage expenses and other
fees and expenses. No fees or charges
will be assessed to the Contract owners
to effect the Substitutions.
3. The proposed Substitutions will be
effected at the relative net asset values
of the respective shares in conformity
with Section 22(c) of the 1940 Act and
Rule 22c–1 thereunder without the
imposition of any transfer or similar
charges by Applicants. The
Substitutions will be effected without
change in the amount or value of any
Contracts held by affected Contract
owners.
4. The proposed Substitutions will in
no way alter the tax treatment of
affected Contract owners in connection
with their Contracts, and no tax liability
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will arise for affected Contract owners
as a result of the Substitutions.
5. The rights or obligations of the
Companies under the Contracts of
affected Contract owners will not be
altered in any way.
6. Affected Contract owners will be
permitted to make at least one transfer
of Contract value from the sub-account
investing in the Existing Fund (before
the Effective Date) or the Replacement
Fund (after the Effective Date) to any
other available investment option under
the Contract without charge for a period
beginning at least 30 days before the
Effective Date through at least 30 days
following the Effective Date. Except as
described in any market timing/shortterm trading provisions of the relevant
prospectus, the Company will not
exercise any right it may have under the
Contract to impose restrictions on
transfers between the sub-accounts
under the Contracts, including
limitations on the future number of
transfers, for a period beginning at least
30 days before the Effective Date
through at least 30 days following the
Effective Date.
7. All affected Contract owners will be
notified, at least 30 days before the
Effective Date about: (a) The intended
substitution of Existing Funds with the
Replacement Funds; (b) the intended
Effective Date; and (c) information with
respect to transfers as set forth in
Condition 6 above. In addition, the
Companies will deliver to all affected
Contract owners, at least 30 days before
the Effective Date, a prospectus for each
applicable Replacement Fund.
8. The Companies will deliver to each
affected Contract owner within five (5)
business days of the Effective Date a
written confirmation which will
include: (a) A confirmation that the
Substitutions were carried out as
previously notified; (b) a restatement of
the information set forth in the preSubstitution notice; and (c) values of the
Contract owner’s positions in the
Existing Fund before the Substitution
and the Replacement Fund after the
Substitution.
9. After the Effective Date the
Applicants agree not to change a
Replacement Fund’s sub- adviser
without first obtaining shareholder
approval of either (a) the sub-adviser
change or (b) the parties’ continued
ability to rely on their manager-ofmanagers exemptive order.
10. For two years following the
Effective Date the net annual expenses
of each Replacement Fund that is a
Transamerica Series Trust Fund will not
exceed the net annual expenses of the
corresponding Existing Fund as of the
fund’s most recent fiscal year. To
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15741
achieve this limitation, the Replacement
Fund’s investment adviser will waive
fees or reimburse the Replacement Fund
in certain amounts to maintain expenses
at or below the limit. Any adjustments
will be made at least on a quarterly
basis. In addition, the Companies will
not increase the Contract fees and
charges, including asset based charges
such as mortality expense risk charges
deducted from the sub-accounts that
would otherwise be assessed under the
terms of the Contracts for a period of at
least two years following the Effective
Date.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–06244 Filed 3–29–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80311; File No. SR–NYSE–
2016–45]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Partial Amendment No. 4 and
Order Granting Accelerated Approval
of a Proposed Rule Change, as
Modified by Amendment Nos. 1
Through 4, To Amend the Co-Location
Services Offered by the Exchange To
Add Certain Access and Connectivity
Fees
March 24, 2017.
I. Introduction
On July 29, 2016, the New York Stock
Exchange LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend the co-location services offered
by the Exchange to add certain access
and connectivity fees, applicable to
Users 3 in the Exchange’s data center in
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
from the Exchange. See Securities Exchange Act
Release No. 76008 (September 29, 2015), 80 FR
60190 (October 5, 2015) (SR–NYSE–2015–40). As
specified in the Price List, a User that incurs colocation fees for a particular co-location service
pursuant thereto would not be subject to co-location
fees for the same co-location service charged by the
Exchange’s affiliates NYSE MKT LLC (‘‘NYSE
MKT’’) and NYSE Arca, Inc. (‘‘NYSE Arca’’). See
2 17
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]]>Agencies
[Federal Register Volume 82, Number 60 (Thursday, March 30, 2017)]
[Notices]
[Pages 15738-15741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06244]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-32571; File No. 812-14487]
Transamerica Financial Life Insurance Company, et al.
March 24, 2017.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of application for an order approving the substitution of
certain securities pursuant to Section 26(c) of the Investment Company
Act of 1940, as amended (the ``1940 Act'' or ``Act'').
Applicants: Transamerica Financial Life Insurance Company (``TFLIC''),
Transamerica Advisors Life Insurance Company (``TALIC'') (each a
``Company'' and together, the ``Companies''), Merrill Lynch Life
Variable Annuity Separate Account D, and ML of New York Variable
Annuity Separate Account D (each an ``Account'' and together, the
``Accounts''). The Companies and the Accounts collectively are referred
to herein as the ``Applicants.''
Summary of Application: Applicants seeks an order pursuant to Section
26(c) of the 1940 Act, approving the substitution of shares issued by
certain series of Transamerica Series Trust (the ``Replacement Funds'')
for shares of certain registered investment companies currently held by
sub-accounts of the Accounts (the ``Existing Funds''), to support
certain variable annuity contracts (collectively, the ``Contracts'')
issued by the Companies.
Filing Date: The application was filed on June 15, 2015, and amended
on December 8, 2015, July 1, 2016, and November 14, 2016.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Secretary of
the Commission and serving the Applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on April 18, 2017, and should be accompanied by
proof of service on Applicants, in the form of an affidavit or, for
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act,
hearing requests should state the nature of the writer's interest, any
facts bearing upon the desirability of a hearing on the matter, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Commission: Secretary, SEC, 100 F Street NE., Washington, DC
20549-1090. Applicants: Alison C. Ryan, Associate General Counsel,
Transamerica, 1150 South Olive Street, T-27-01, Los Angeles, CA 90015.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or David J. Marcinkus, Branch Chief, at (202) 551-6821
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. TALIC is the depositor of Merrill Lynch Variable Annuity
Separate Account D. TFLIC is the depositor of ML of New York Variable
Annuity Separate Account D. Each Company is an indirect wholly-owned
subsidiary of AEGON N.V.
2. Each Account is a ``separate account'' as defined by rule 0-1(e)
under the 1940 Act and each is registered under the 1940 Act as a unit
investment trust. Each Account is divided into sub-accounts, which
reflect the investment performance of certain registered investment
companies, including Transamerica Series Trust. The Accounts are
administered and accounted for as part of the general business of the
Companies. The application sets forth the registration statement file
numbers for the security interests under the Contracts and the
Accounts.
[[Page 15739]]
3. The Contracts are individual and group variable annuity
contracts. Each of the prospectuses for the Contracts discloses that
the issuing Company reserves the right, subject to compliance with
applicable law, to substitute shares of another registered open-end
management investment company for shares of a registered open-end
management investment company held by a sub-account of an Account.
4. Transamerica Series Trust is an open-end management investment
company of the series type that is registered with the Commission under
the 1940 Act (File No. 811-04419).\1\ Shares of the series are
registered under the Securities Act of 1933 (File No. 033-00507) and
are sold to the separate accounts of life insurance companies to fund
benefits under variable life policies or variable annuity contracts and
to certain affiliated asset allocation funds.
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\1\ Effective May 1, 2008, Transamerica Series Trust changed its
name from AEGON/Transamerica Series Trust.
---------------------------------------------------------------------------
5. Transamerica Asset Management, Inc. (``TAM''), an investment
adviser that is registered with the Commission, has overall
responsibility for the management of each Transamerica Series Trust
Replacement Fund. TAM delegates to a sub-adviser the responsibility for
day-to-day management of the investments of each Transamerica Series
Trust Replacement Fund, subject to TAM's oversight. TAM may, in the
future, determine to provide the day-to-day management of any
Transamerica Series Trust Replacement Fund without the use of a sub-
adviser.
6. Applicants propose, as set forth below, to substitute shares of
the Replacement Funds for shares of the Existing Funds
(``Substitutions'') to fund the Contracts:
------------------------------------------------------------------------
Existing fund Replacement fund
------------------------------------------------------------------------
AllianzGI NFJ Mid-Cap Value Fund (A)... Transamerica JPMorgan Mid Cap
Value VP (Service Class).
American Century Equity Income Fund (A) Transamerica Barrow Hanley
Dividend Focused VP (Service
Class).
American Century Ultra Fund (A)........ Transamerica Jennison Growth VP
(Service Class).
Columbia Acorn USA (A)................. Transamerica T. Rowe Price
Small Cap VP (Service Class).
Columbia Acorn International (A)....... Transamerica MFS International
Equity VP (Initial Class).
Pioneer Emerging Markets Fund (A)...... Transamerica TS&W International
Equity VP (Service Class).
Templeton Foreign Fund (A)............. Transamerica MFS International
Equity VP (Initial Class).
Columbia Large Cap Growth Fund V Transamerica WMC US Growth VP
(formerly known as Columbia Marsico (Service Class).
Growth Fund) (A).
------------------------------------------------------------------------
7. The Applicants believe that the Replacement Funds have
investment objectives, policies and risk profiles, as described in
their prospectuses, that are substantially the same as, or sufficiently
similar to, the corresponding Existing Funds to make those Replacement
Funds appropriate candidates as substitutes. Applicants also state that
the investment objectives and investment strategies of each Replacement
Fund are similar to the corresponding Existing Fund, or each
Replacement Fund's underlying portfolio construction and investment
results are similar to those of the Existing Fund and therefore the
fundamental objectives, risk and performance expectations of those
Contract owners with interests in sub-accounts of the Existing Funds
will continue to be met after the Substitutions.
8. The investment objectives of each Existing Fund and its
corresponding Replacement Fund are set forth below. Additional
information for each Existing Fund and Replacement Fund, including
principal investment strategies, principal risks and comparative
performance history, can be found in the application.
------------------------------------------------------------------------
Existing fund Replacement fund
------------------------------------------------------------------------
AllianzGI NFJ Mid-Cap Value Fund seeks Transamerica JPMorgan Mid Cap
long-term growth of capital and income. Value seeks growth from
capital appreciation.
American Century Equity Income Fund Transamerica Barrow Hanley
seeks current income. Capital Dividend Focused VP Seeks
appreciation is a secondary objective. total return gained from the
combination of dividend yield,
growth of dividends and
capital appreciation.
American Century Ultra Fund seeks long- Transamerica Jennison Growth VP
term growth of capital. seeks long-term growth of
capital.
Columbia Acorn USA seeks long-term Transamerica T. Rowe Price
capital appreciation. Small Cap VP seeks long-term
growth of capital by investing
primarily in common stocks of
small growth companies.
Columbia Acorn International seeks long Transamerica MFS International
term capital appreciation. Equity VP seeks capital
growth.
Pioneer Emerging Markets Fund seeks Transamerica TS&W International
long term growth of capital. Equity VP seeks maximum long-
term total return, consistent
with reasonable risk to
principal, by investing in a
diversified portfolio of
common stocks of primarily non-
U.S. issuers.
Templeton Foreign Fund seeks long-term Transamerica MFS International
capital growth. Equity VP seeks capital
growth.
Columbia Large Cap Growth Fund V seeks Transamerica WMC US Growth VP
long-term growth of capital. seeks to maximize long-term
growth.
------------------------------------------------------------------------
9. Applicants state that the Substitutions are designed to allow
Contract owners to continue their investment in similar or better
investment options without interruption and at no additional cost to
them. Contract owners with sub-account balances invested through the
Accounts in shares of the Replacement Funds will have the same or lower
total expense ratios taking into account fund expenses (including Rule
12b-1 fees, if any). With respect to all of the proposed Substitutions,
the combined management fee and Rule 12b-1 fees
[[Page 15740]]
paid by the Replacement Fund are the same or lower than those of the
corresponding Existing Fund. The application sets forth the fees and
expenses of each Existing Fund and its corresponding Replacement Fund
in greater detail.
10. Applicants represent that as of the effective date of the
Substitutions (``Effective Date'') shares of the Existing Funds will be
redeemed for cash. The Companies, on behalf of each Existing Fund sub-
account of each relevant Account, will simultaneously place a
redemption request with each Existing Fund and a purchase order with
the corresponding Replacement Fund so that the purchase of Replacement
Fund shares will be for the exact amount of the redemption proceeds.
Thus, Contract values will remain fully invested at all times.
11. The Substitutions will take place at relative net asset value
(in accordance with Rule 22c-1 under the 1940 Act) with no change in
the amount of any affected Contract owner's contract value, cash value,
accumulation value, account value or death benefit or in dollar value
of his or her investment in the applicable Accounts.\2\ No brokerage
commissions or other fees will be paid by either the Existing Funds or
the Replacement Funds or by the affected Contract owners in connection
with the Substitutions.
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\2\ Applicants state that, because the Substitutions will occur
at relative net asset value, and the fees and charges under the
Contracts will not change as a result of the Substitutions, the
benefits offered by the guarantees under the Contracts will be the
same immediately before and after the Substitutions. Applicants also
state that what effect the Substitutions may have on the value of
the benefits offered by the Contract guarantees would depend, among
other things, on the relative future performance of the Existing
Funds and Replacement Funds, which Applicants cannot predict.
Nevertheless, Applicants note that at the time of the Substitutions,
the Contracts will offer a comparable variety of investment options
with as broad a range of risk/return characteristics.
---------------------------------------------------------------------------
12. The affected Contract owners will not incur any fees or charges
as a result of the Substitutions nor will their rights or the
Companies' obligations under the Contracts be altered in any way. The
Companies or their affiliates will pay all expenses and transaction
costs of the Substitutions, including brokerage, legal, accounting, and
other fees and expenses. The Substitutions will not cause the Contract
fees and charges currently being paid by affected Contract owners to be
greater after the Substitutions than before the Substitutions.
Moreover, the Substitutions will not impose any tax liability on
affected Contract owners.
13. As described in the application, after notification of the
Substitution and for 30 days after the Effective Date, affected
Contract owners may reallocate the sub-account value of an Existing
Fund to any other investment option available under their Contract
without incurring any transfer charges.
14. All Contract owners affected by the Substitutions will be
notified of this application by means of supplements to the Contract
prospectuses at least 30 days prior to the Effective Date. The notice
will advise Contract owners that from the date of the notice until the
Effective Date, owners are permitted to make one transfer of Contract
value out of the Existing Fund sub-account to one or more other sub-
accounts without the transfer (or exchange) being treated as one of a
limited number of transfers (or exchanges) permitted without a transfer
charge. Among other information, the notice will inform affected
Contract owners that the Companies will not exercise any rights
reserved under any Contract to impose additional restrictions on
transfers until at least 30 days after the Effective Date.
15. If affected Contract owners reallocate account value during
this 60 day period, there will be no charge for the reallocation of
accumulated value from the Existing Fund sub-accounts and the
reallocation will not count as a transfer when imposing any applicable
restriction or limit under the Contract on transfers. Additionally, all
affected Contract owners will be sent prospectuses of the applicable
Replacement Funds at least 30 days before the Effective Date.
16. Within five (5) business days after the Effective Date,
affected Contract owners will be sent a written confirmation, which
will include confirmation that the Substitutions were carried out as
previously notified, a restatement of the information set forth in the
pre-Substitution notice and values of the Contract owner's position in
the Existing Fund before the Substitution and the Replacement Fund
after the Substitution.
Applicants' Legal Analysis
1. Applicants request that the Commission issue an order pursuant
to Section 26(c) of the 1940 Act approving the Substitutions. Section
26(c) requires the depositor of a registered unit investment trust
holding the securities of a single issuer to obtain Commission approval
before substituting the securities held by the trust. Section 26(c)
requires the Commission to issue such an order if the evidence
establishes that the substitution is consistent with the protection of
investors and the purposes fairly intended by the policy and provisions
of the 1940 Act.
2. Applicants submit that the terms and conditions of the
Substitutions meet the standards set forth in Section 26(c) and assert
that the replacement of an Existing Fund with the corresponding
Replacement Fund is consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the l940 Act.
As described in the application, for a period of two years following
the Effective Date, the Companies or their affiliates will reimburse
any Contract owner affected by the proposed Substitutions involving
Transamerica Series Trust Replacement Funds and whose sub-account
invests in the Replacement Fund to the extent a Replacement Fund's net
annual operating expenses exceeds the net annual operating expenses of
the corresponding Existing Fund. Applicants further assert that each
Replacement Fund has similar investment objectives and investment
strategies as the corresponding Existing Fund, or each Replacement
Fund's underlying portfolio construction and investment results are
similar to those of the corresponding Existing Fund. Accordingly,
Applicants believe that the fundamental investment objectives, risk and
performance expectations of the Contract owners will continue to be met
after the Substitutions.
3. Applicants also maintain that it is in the best interests of the
Contract owners to substitute the Replacement Fund for its
corresponding Existing Fund. Applicants anticipate that the
substitution of an Existing Fund with the corresponding Replacement
Fund will result in a Contract that is administered and managed more
efficiently, and one that is more competitive with other variable
products. The rights of affected Contract Owners and the obligations of
the Companies under the Contracts will not be altered by the
Substitutions. Affected Contract owners will not incur any additional
tax liability or any additional fees and expenses as a result of the
Substitutions.
4. Each of the prospectuses for the Contracts discloses that the
issuing Company reserves the right, subject to compliance with
applicable law, to substitute shares of another registered open-end
management investment company for shares of an open-end management
investment company held by a sub-account of an Account.
5. Applicants also assert that none of the proposed Substitutions
is of the type that Section 26(c) was designed to prevent. Unlike a
traditional unit investment trust where a depositor could only
substitute an investment
[[Page 15741]]
security in a manner which permanently affected all the investors in
the trust, the Contracts provide each Contract owner with the right to
exercise his or her own judgment and transfer account values into other
sub-accounts. Moreover, the Contracts will offer affected Contract
owners the opportunity to transfer amounts out of the affected sub-
accounts into any of the remaining sub-accounts without cost or other
disadvantage. The Substitution, therefore, will not result in the type
of costly forced redemptions that Section 26(c) was designed to
prevent. Applicants also maintain that the Substitutions are unlike the
type of substitutions which Section 26(c) was designed to prevent in
that by purchasing a Contract, Contract owners select much more than a
particular registered management open-end investment company in which
to invest their account values. They also select the specific type of
insurance coverage offered by the Companies under their Contracts as
well as other rights and privileges set forth in the Contracts.
Applicants' Conditions:
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The proposed Substitutions will not be effected unless the
Companies determine that: (a) The Contracts allow the substitution of
shares of registered open-end investment companies in the manner
contemplated by the application; (b) the Substitutions can be
consummated as described in the application under applicable insurance
laws; and (c) any regulatory requirements in each jurisdiction where
the Contracts are qualified for sale have been complied with to the
extent necessary to complete the Substitutions.
2. The Companies or their affiliates will pay all expenses and
transaction costs of the Substitutions, including legal and accounting
expenses, any applicable brokerage expenses and other fees and
expenses. No fees or charges will be assessed to the Contract owners to
effect the Substitutions.
3. The proposed Substitutions will be effected at the relative net
asset values of the respective shares in conformity with Section 22(c)
of the 1940 Act and Rule 22c-1 thereunder without the imposition of any
transfer or similar charges by Applicants. The Substitutions will be
effected without change in the amount or value of any Contracts held by
affected Contract owners.
4. The proposed Substitutions will in no way alter the tax
treatment of affected Contract owners in connection with their
Contracts, and no tax liability will arise for affected Contract owners
as a result of the Substitutions.
5. The rights or obligations of the Companies under the Contracts
of affected Contract owners will not be altered in any way.
6. Affected Contract owners will be permitted to make at least one
transfer of Contract value from the sub-account investing in the
Existing Fund (before the Effective Date) or the Replacement Fund
(after the Effective Date) to any other available investment option
under the Contract without charge for a period beginning at least 30
days before the Effective Date through at least 30 days following the
Effective Date. Except as described in any market timing/short-term
trading provisions of the relevant prospectus, the Company will not
exercise any right it may have under the Contract to impose
restrictions on transfers between the sub-accounts under the Contracts,
including limitations on the future number of transfers, for a period
beginning at least 30 days before the Effective Date through at least
30 days following the Effective Date.
7. All affected Contract owners will be notified, at least 30 days
before the Effective Date about: (a) The intended substitution of
Existing Funds with the Replacement Funds; (b) the intended Effective
Date; and (c) information with respect to transfers as set forth in
Condition 6 above. In addition, the Companies will deliver to all
affected Contract owners, at least 30 days before the Effective Date, a
prospectus for each applicable Replacement Fund.
8. The Companies will deliver to each affected Contract owner
within five (5) business days of the Effective Date a written
confirmation which will include: (a) A confirmation that the
Substitutions were carried out as previously notified; (b) a
restatement of the information set forth in the pre-Substitution
notice; and (c) values of the Contract owner's positions in the
Existing Fund before the Substitution and the Replacement Fund after
the Substitution.
9. After the Effective Date the Applicants agree not to change a
Replacement Fund's sub- adviser without first obtaining shareholder
approval of either (a) the sub-adviser change or (b) the parties'
continued ability to rely on their manager-of-managers exemptive order.
10. For two years following the Effective Date the net annual
expenses of each Replacement Fund that is a Transamerica Series Trust
Fund will not exceed the net annual expenses of the corresponding
Existing Fund as of the fund's most recent fiscal year. To achieve this
limitation, the Replacement Fund's investment adviser will waive fees
or reimburse the Replacement Fund in certain amounts to maintain
expenses at or below the limit. Any adjustments will be made at least
on a quarterly basis. In addition, the Companies will not increase the
Contract fees and charges, including asset based charges such as
mortality expense risk charges deducted from the sub-accounts that
would otherwise be assessed under the terms of the Contracts for a
period of at least two years following the Effective Date.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-06244 Filed 3-29-17; 8:45 am]
BILLING CODE 8011-01-P
