As filed with the Securities and Exchange Commission on May 1, 1997
File No. 33-99016
File No. 811-9126
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. 2 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 |_|
Amendment No. 3 |X|
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
(Exact Name of Registrant)
1150 South Olive Los Angeles, CA 90015-2211
(Address of Principal Executive Offices)
Registrant's Telephone Number:
1-213-742-2111
Name and Address of Agent for Service: Copy to:
JAMES W. DEDERER, Esq. FREDERICK R. BELLAMY, Esq.
Executive Vice President, General Counsel Sutherland, Asbill & Brennan, L.L.P.
and Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Occidental Life Insurance Company Washington, D.C. 20004-2404
1150 South Olive Street
Los Angeles, California 90015-2211
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the registration statement.
DECLARATION PURSUANT TO RULE 24f-2
The Registrant has previously filed a declaration of indefinite registration of
its shares 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:
|_| immediately upon filing pursuant to paragraph (b)
|X| on May 1, 1997 pursuant to paragraph (b) |_| 60
days after filing pursuant to paragraph (a)(i) |_| on
_________________ pursuant to paragraph (a)(i) |_| 75
days after filing pursuant to paragraph (a)(ii) |_|
on _________________ pursuant to paragraph (a)(ii) of
Rule 485
If appropriate, check the following box:
|_| this Post-Effective Amendment
designates a new effective date
for a previously filed
Post-Effective Amendment.
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TRANSAMERICA VARIABLE INSURANCE FUND
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495
N-1A
Item No. Caption
- -------- -------
PART A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C> <C>
1. Cover Page .......................................... Cover Page
2. Synopsis .......................................... Not Applicable
3. Condensed Financial Information............................. Condensed Financial
Information
4. General Description of Registrant........................... Introduction; Investment
Objectives and Policies;
Investment Methods and
Risks
5. Management of the Fund...................................... Management
5A. Management's Discussion of Performance...................... Not Applicable
6. Capital Stock and Other Securities.......................... Other Information
7. Purchase of Securities Being Offered........................ Offering, Purchase and
Redemption of Shares
8. Redemption or Repurchase.................................... Offering, Purchase and
Redemption of Shares
9. Pending Legal Proceedings................................... Not Applicable
PART B INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page .......................................... Cover Page
11. Table of Contents ..........................................Table of Contents
12. General Information and History............................. Introduction; Shares of
Stock
13. Investment Objectives and Policies.......................... Additional Investment
Policy Information; Special
Investment Methods and
Risks; Investment
Restrictions
14. Management of the Registrant................................ Investment Adviser
15. Control Persons and Principal
Holders of Securities..................................... Shares of Stock
CROSS REFERENCE SHEET -- continued
- 2 -
H:\CS\CL82375\M022\TVIFPEA1\COVERPEA.130
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16. Investment Advisory and
Other Services ........................Investment Adviser
17. Brokerage Allocation and Other
Practices .......................................... Portfolio Transactions, Portfolio
Turnover and
Brokerage
18. Capital Stock and Other Securities.......................... Shares of Stock
19. Purchase, Redemption and Pricing
of Securities Being Offered............................... Determination of Net Asset
Value
20. Tax Status .......................................... Not Applicable
21. Underwriters .......................................... Not Applicable
22. Calculation of Performance Data............................. Performance Information
23. Financial Statements........................................ Other Information
</TABLE>
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.
<PAGE>
GROWTH PORTFOLIO
of the
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
1150 South Olive Street, Los Angeles, California 90015, (213) 742-2111
PROSPECTUS
May 1, 1997
The Growth Portfolio (the "Growth Portfolio" or the "Portfolio") of the
Transamerica Variable Insurance Fund, Inc. (the "Fund") is an open-end,
management investment company. The Growth Portfolio seeks long-term capital
growth. Common stock (listed and unlisted) is the basic form of investment. The
Portfolio may also invest in debt securities and preferred stock having a call
on common stocks.
Shares of the Fund are offered only to separate accounts of insurance
companies to fund the benefits of variable annuity contracts and variable life
insurance policies (collectively "variable insurance contracts") and certain
qualified retirement plans. Each variable insurance contract involves fees and
expenses not described in this Prospectus. See the accompanying variable
insurance contract prospectus for information regarding contract fees and
expenses and any restrictions on purchases or allocations.
This Prospectus contains information about the Fund and the Portfolio
that a prospective purchaser of a variable insurance contract should know before
allocating purchase payments or premiums to the Portfolio. It should be read in
conjunction with the Prospectus for the variable insurance contract and should
be retained for future reference. A Statement of Additional Information
containing more detailed information about the Fund is available free by writing
to the Fund at the Transamerica Annuity Service Center, 401 North Tryon Street,
Suite 700, Charlotte, North Carolina 28202, or by calling (800) 258-4260, ext.
5560. The Statement of Additional Information, which has the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Table of Contents of the Statement of
Additional Information is included at the end of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This Prospectus should be read in
conjunction with the prospectus for the
variable insurance contract.
Mutual fund shares are not deposits or obligations of, or guaranteed or
endorsed by, any bank, nor are fund shares federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investing in fund shares involves certain investment risks,
including possible loss of principal.
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<TABLE>
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TABLE OF CONTENTS
Page
<S> <C>
CONDENSED FINANCIAL INFORMATION..........................................................................1
TRANSAMERICA VARIABLE INSURANCE FUND, INC................................................................5
INVESTMENT OBJECTIVE AND POLICIES........................................................................5
INVESTMENT METHODS AND RISKS.............................................................................7
Small Capitalization Companies..................................................................7
High-Yield ("Junk") Bonds.......................................................................8
Repurchase Agreements...........................................................................8
State Insurance Regulation......................................................................8
PORTFOLIO TURNOVER.......................................................................................9
MANAGEMENT...............................................................................................9
Directors and Officers..........................................................................9
Investment Adviser..............................................................................9
Investment Sub-Adviser.........................................................................10
PERFORMANCE INFORMATION.................................................................................11
DETERMINATION OF NET ASSET VALUE........................................................................12
OFFERING, PURCHASE AND REDEMPTION OF SHARES.............................................................12
INCOME, DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.......................................................13
TAXES...................................................................................................13
OTHER INFORMATION.......................................................................................14
Reports........................................................................................14
Voting and Other Rights........................................................................14
Custody of Assets and Administrative Services..................................................14
Summary of Bond Ratings........................................................................15
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION.....................................................................16
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CONDENSED FINANCIAL INFORMATION
Financial Highlights
The following table gives information regarding income, expenses and
capital changes for the Growth Portfolio of the Transamerica Variable Insurance
Fund, Inc. (formerly Transamerica Occidental's Separate Account Fund C)
attributable to a Portfolio share outstanding throughout the periods indicated.
The information is presented as if the reorganization of Separate Account Fund
C, in which the assets of the Separate Account were transferred intact to the
Growth Portfolio, had always been in effect. The activity prior to the November
1, 1996, reorganization of Separate Account Fund C, represents accumulation unit
values of Separate Account Fund C which have been converted into share values
for presentation purposes.
The per share data in the table for the period January 1, 1992, through
December 31, 1996, has been audited by Ernst & Young LLP, independent auditors
of the Fund, in connection with the annual audit of the Portfolio's financial
statements. The per share data in the table for the period January 1, 1987,
through December 31, 1991, is based upon data from the audited financial
statements of Separate Account Fund C, but Ernst & Young, LLP has not audited
the conversion of that data to Growth Portfolio share values. The financial
statements which appear in the Statement of Additional Information are dated as
of December 31, 1996.
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1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 8.582 $ 5.615 $ 5.239 $ 4.287 $ 3.783
Investment Operations
Net investment income (loss)....................... (0.065) (0.069) (0.041) (0.030) 0.012
Net realized and unrealized gain................... 2.413 3.036 0.418 0.982 0.492
----- ----- ----- ----- -----
Total from investment operations................... . 2.348 2.967 0.376 0.952 0.504
Net asset value, end of year....................... $10.930 $8.582 $5.615 $5.239 $4.287
======= ====== ====== ====== ======
Total Return 27.36% 52.84% 7.19% 22.20% 13.32%
Ratios and Supplemental Data
Net assets, end of year (in thousands)............. $32,238 $25,738 $17,267 $16,584 $13,966
Expenses to average net assets .................... 1.27%(1) 1.41% 1.43% 1.43% 1.43%
Net investment income (loss)
to average net assets .............. (0.68%)(2) (0.94%) (0.80%) (0.65%) 0.31%
Portfolio turnover rate............................ 34.58% 18.11% 30.84% 42.04% 43.07%
Average commission rate (3) $0.07 - - - -
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1
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<CAPTION>
1991 1990 1989 1988 1987
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 2.689 $ 3.026 $ 2.266 $ 1.694 $ 1.504
Investment Operations
Net investment income (loss)....................... (0.009) (0.022) (0.010) (0.054) 0.017
Net realized and unrealized gain................... 1.085 (0.360) 0.750 0.517 0.173
----- ------- ----- ----- -----
Total from investment operations................... . 1.095 (0.337) 0.760 0.572 0.190
Net asset value, end of year....................... $3.783 $2.689 $3.026 $2.266 $1.694
====== ====== ====== ====== ======
Total Return 40.71% -11.14% 33.56% 33.74% 12.60%
Ratios and Supplemental Data
Net assets, end of year (in thousands)............. $12,516 $9,281 $10,861 $8,453 $6,466
Expenses to average net assets .................... 1.43% 1.43% 1.44% 1.43% 1.44%
Net investment income (loss)
to average net assets .............. 0.28% 0.81% 0.37% 2.66% 0.94%
Portfolio turnover rate............................ 32.90% 49.87% 22.39% 52.18% 83.37%
Average commission rate (3) - - - - -
</TABLE>
(1) If the Investment Advisor had not reimbursed expenses for the year
ended December 31, 1996, the ratio of operating expenses to average
net assets would have been 1.34%.
(2) If the Investment Advisor had not reimbursed expenses for the year ended
December 31, 1996, the ratio of net investment loss
to average net assets would have been (0.75%).
(3) This disclosure is required for fiscal periods beginning on or after
September 1, 1995.
2
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3
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4
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5
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TRANSAMERICA VARIABLE INSURANCE FUND, INC.
GROWTH PORTFOLIO
Transamerica Variable Insurance Fund, Inc. (the "Fund") is an open-end,
diversified management investment company established as a Maryland Corporation
on June 23, 1995. The Fund currently consists of one investment portfolio, the
Growth Portfolio, which is the successor to Transamerica Occidental's Separate
Account Fund C. (Additional Portfolios may be created from time to time.) By
investing in the Portfolio, an investor becomes entitled to a pro rata share of
all dividends and distributions arising from the net income and capital gains on
the investments of the Growth Portfolio. Likewise, an investor shares pro-rata
in any losses of the Growth Portfolio.
Pursuant to an investment advisory agreement and subject to the
authority of the Fund's Board of Directors, Transamerica Occidental Life
Insurance Company ("Transamerica" or the "Investment Adviser") serves as the
Fund's investment adviser and conducts the business and affairs of the Fund.
Transamerica has engaged Transamerica Investment Services, Inc. ("Investment
Services") to act as the Fund's sub-advisor to provide the day-to-day portfolio
management for the Portfolio.
The Fund currently offers its shares solely to Separate Account C of
Transamerica Occidental Life Insurance Company as a funding vehicle for the
variable annuity contracts supported by Separate Account C. The Fund does not
offer its shares directly to the general public. A separate prospectus, which
accompanies this Prospectus, describes Separate Account C and the variable
annuity contracts it supports. The Fund may, in the future, offer its shares to
other insurance company separate accounts supporting other variable annuity or
variable life insurance contracts and to qualified pension and retirement plans.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Growth Portfolio are
described below. There can be no assurance that the Growth Portfolio will
achieve its investment objective. Investors should not consider any one
Portfolio alone to be a complete investment program. As with any security, a
risk of loss, including possible loss of principal, is inherent in an investment
in the shares of the Portfolio.
The different types of securities, investments, and investment
techniques used by the Portfolio involve risks of varying degrees. These risks
are described in greater detail, under "Investment Methods and Risks" and in
the Statement of Additional Information. The
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Portfolio is subject to certain investment restrictions that are described under
the caption "Investment Restrictions" in the Statement of Additional
Information.
The investment objective of the Portfolio as well as the investment
policies that are not fundamental may be changed by the Fund's Board of
Directors without shareholder approval. Certain of the investment restrictions
of the Portfolio are fundamental, however, and may not be changed without the
approval of a majority of the votes attributable to the outstanding shares of
the Portfolio. See "Investment Restrictions" in the Statement of Additional
Information.
The Growth Portfolio's investment objective is long-term capital
growth. Common stock, listed and unlisted, is the basic form of investment.
Although the Portfolio invests the majority of its assets in common stocks, the
Portfolio may also invest in debt securities and preferred stocks (both having a
call on common stocks by means of a conversion privilege or attached warrants)
and warrants or other rights to purchase common stocks. Unless market conditions
would indicate otherwise, the Growth Portfolio will be invested primarily in
such equity-type securities. When in the judgment of Investment Services market
conditions warrant, the Growth Portfolio may, for temporary defensive purposes,
hold part or all of its assets in cash, debt or money market instruments.
The Portfolio may invest up to 10% of the Portfolio's assets in debt
securities having a call on common stocks that are rated below investment grade.
Those securities are rated Ba1 or lower by Moody's Investors Service, Inc.
("Moody's") or BB+ or lower by Standard & Poor's Corporation ("S&P"), or, if
unrated, deemed to be of comparable quality by Investment Services.
If a security that was originally rated "investment grade" is
downgraded by a ratings service, it may or may not be sold. This depends on
Investment Services' assessment of the issuer's prospects. However, Investment
Services will not purchase below-investment-grade securities if that purchase
would increase their representation in the Portfolio to more than 10%.
The Portfolio may invest up to 10% of its net assets in the securities
of foreign issuers that are in the form of American Depository Receipts
("ADRs"). ADRs are registered stocks of foreign companies that are typically
issued by an American bank or trust company evidencing ownership of the
underlying securities. ADRs are designed for use on the U.S.
stock exchanges.
With respect to 75% of total assets, the Portfolio may not purchase
more than 10% of the voting securities of any one issuer. The Portfolio may not
invest in companies for the purposes of exercising control or management.
Purchases or acquisitions may be made of securities which are not
readily marketable by reason of the fact that they are subject to the
registration requirements of the Securities Act of 1933 or the salability of
which is otherwise conditioned, including real estate and
7
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certain repurchase agreements or time deposits maturing in more than seven days
("restricted securities"), as long as any such purchase or acquisition will not
immediately result in the value of all such restricted securities exceeding 15%
of the value of the Portfolio's net assets.
INVESTMENT METHODS AND RISKS
The Growth Portfolio is subject to the risk of changing economic
conditions and fluctuations in the price of securities owned by the Portfolio.
In addition, the different types of securities, investments, and
investment techniques used by the Portfolio involve risks of varying degrees.
For example, with respect to equity securities, there can be no assurance of
capital appreciation and there is a substantial risk of decline in value. With
respect to debt securities, there exists the risk that the issuer of a security
may not be able to meet its obligations on interest or principal payments at the
time required by the investment. Certain risks associated with the types of
investments in which the Portfolio may invest are discussed below. For more
information on investment methods and risks, see "Special Investment Methods and
Risks" in the Statement of Additional Information.
Small Capitalization Companies
The Growth Portfolio may invest in securities of smaller, lesser-known
companies. Such investments involve greater risks than the investments of
larger, more mature, better known issuers, including an increased possibility of
portfolio price volatility. Historically, small capitalization stocks and stocks
of recently organized companies have been more volatile in price than the larger
capitalization stocks included in the S&P 500. Among the reasons for the greater
price volatility of these small company stocks are the less certain growth
prospects of smaller firms, the lower degree of liquidity in the markets for
such stocks and the greater sensitivity of small companies to changing economic
conditions. For example, these companies are associated with higher investment
risk than that normally associated with larger, more mature, better known firms
due to the greater business risks of small size and limited product lines,
markets, distribution channels and financial and managerial resources.
The values of small company stocks may fluctuate independently of
larger company stock prices. Small company stocks may decline in price as large
company stock prices rise, or rise in price as large company stock prices
decline. Investors should therefore expect that to the extent the Portfolio
invests in stock of small capitalization companies, the net asset value of the
Portfolio's shares may be more volatile than, and may fluctuate independently
of, broad stock market indices such as the S&P 500. Furthermore, the securities
of companies with small stock market capitalizations may trade less frequently
and in limited volume.
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Convertible Securities
The Growth Portfolio may invest in convertible securities. Convertible
securities may include corporate notes or preferred stock but are ordinarily a
long-term debt obligation of the issuer convertible at a stated exchange rate
into common stock of the issuer. Convertible securities have general
characteristics similar to both fixed-income and equity securities. As with all
debt securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, to increase as interest rates decline.
In addition, because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the underlying
common stock, and therefore, will react to variations in the general market for
equity securities. As the market price of the underlying common stock declines,
the convertible security tends to trade increasingly on a yield basis, and thus
may not depreciate to the same extent as the underlying common stock.
As fixed-income securities, convertible securities are investments that
provide for a stable stream of income with generally higher yields than common
stocks. Like all fixed-income securities, there is no assurance of current
income as the issuer might default in its obligations. Convertible securities
generally offer lower interest or dividend yields than non-convertible
securities of similar quality. Convertible securities generally are subordinated
to other similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, rank senior to common stocks
in an issuer's capital structure and are consequently of higher quality and
entail less risk of declines in market value than the issuer's common stock.
However, the extent to which such risk is reduced depends in large measure upon
the degree to which the convertible security sells above its value as a
fixed-income security.
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 than higher-rated bonds. Credit risk
is the risk that the issuer of the bonds will not be able to make interest or
principal payments on time. The prices of junk bonds tend to be more reflective
of prevailing economic and industry conditions, the issuer's unique financial
situation, and the bond's coupon than to small changes in the market level of
interest rates. During an economic downturn or a period of rising interest
rates, highly leveraged companies may experience difficulties in making
principal and interest payments, meeting projected business goals, and obtaining
additional financing. See "Summary of Bond Ratings" on page 15 and the Statement
of Additional Information for a description of bond rating categories.
Repurchase Agreements
The Growth Portfolio may enter into repurchase agreements with Federal
Reserve System member banks or U.S. securities dealers. A repurchase agreement
occurs when the
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Portfolio purchases an interest-bearing debt obligation and 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 Portfolio'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. The Portfolio's 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, the Portfolio's expected proceeds
could be delayed, or the Portfolio could suffer a loss in principal or current
interest, or incur costs in liquidating the collateral. In evaluating whether to
enter into a repurchase agreement, Investment Services will carefully consider
the creditworthiness of the seller pursuant to procedures established by the
Fund's Board of Directors.
The Growth Portfolio will not invest in repurchase agreements maturing
in more than seven days if that would constitute more than 10% of the
Portfolio's net assets when taking into account the remaining days to maturity
of the Portfolio's existing repurchase agreements.
State Insurance Regulation
The Portfolio is intended to be a funding vehicle for variable annuity
contracts and variable life policies to be offered by insurance companies and
will seek to be offered in as many jurisdictions as possible. Certain states
have regulations or guidelines concerning concentration of investments and other
investment techniques. If such regulations and guidelines are applied to the
Portfolio, the Portfolio may be limited in its ability to engage in certain
techniques and to manage its portfolio with the flexibility provided herein. It
is the Portfolio's intention that it operate in material compliance with current
insurance laws and regulations, as applied, in each jurisdiction in which the
Portfolio is offered.
PORTFOLIO TURNOVER
The Growth Portfolio will not consider portfolio turnover to be a
limiting factor in making investment decisions. Changes will be made in the
Portfolio if such changes are considered advisable to better achieve the
Portfolio's investment objective. The portfolio turnover rate is calculated by
dividing the lesser of the dollar amount of sales or purchases of portfolio
securities by the average monthly value of the portfolio securities, excluding
debt securities having a maturity at the date of purchase of one year or less.
Investment Services anticipates that the annual turnover rate for the Growth
Portfolio will generally not exceed 75%.
High rates of portfolio turnover involve correspondingly greater
expenses which must be borne by the Portfolio and its shareholders, including
higher brokerage commissions, dealer mark-ups and other transaction costs on the
sale of securities and reinvestment of other securities. High rate of turnover
may result in the acceleration of taxable gains and may under certain
circumstances make it more difficult for a Portfolio to qualify as a regulated
investment company under the Internal Revenue Code. See "Federal Tax Matters" in
the
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Statement of Additional Information.
MANAGEMENT
Directors and Officers
The Fund's Board of Directors is responsible for deciding matters of
general policy and reviewing the actions of the Investment Adviser and
Investment Sub-Adviser, the custodian, the accounting and administrative
services providers and other providers of services to the Portfolio. The
officers of the Fund supervise its daily business operations. The Statement of
Additional Information contains information as to the identity of, and other
information about, the directors and officers of the Fund.
Investment Adviser
Transamerica Occidental Life Insurance Company ("Transamerica"), 1150
South Olive Street, Los Angeles, California 90015, is the investment adviser of
the Portfolio. Transamerica is a stock life insurance company incorporated in
the state of California on June 30, 1906. It has been a wholly-owned direct or
indirect subsidiary of Transamerica Corporation, 600 Montgomery Street, San
Francisco, California 94111, since March 14, 1930. Transamerica acted as
investment adviser to Transamerica Occidental's Separate Account Fund C
("Separate Account Fund C"), the Fund's predecessor.
The Fund has entered into an Investment Advisory Agreement with
Transamerica under which the Transamerica assumes overall responsibility,
subject to the supervision of the Fund's Board of Directors, for administering
all operations of the Fund and for monitoring and evaluating the management of
the assets of the Portfolio by Investment Services on an ongoing basis.
Transamerica provides or arranges for the provision of the overall business
management and administrative services necessary for the Fund's operations and
furnishes or procures any other services and information necessary for the
proper conduct of the Fund's business. Transamerica also acts as liaison among,
and supervisor of, the various service providers to the Fund.
For its services to the Portfolio, Transamerica receives an annual
advisory fee of 0.75% of the average daily net assets of the Growth Portfolio.
The fee is deducted daily from the assets of the Portfolio. This fee may be
higher than the average advisory fee paid to the investment advisers of other
growth portfolios. Transamerica may waive some or all of its fee from time to
time at its discretion.
Investment Sub-Adviser
Transamerica has contracted with Transamerica Investment Services, Inc.
("Investment Services"), a wholly-owned subsidiary of Transamerica Corporation,
to render investment
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services to the Portfolio. Investment Services has been in existence since 1967
and has provided investment services to investment companies since 1968 and to
the Transamerica Life Companies since 1981. Investment Services is located at
1150 South Olive Street, Los Angeles, California 90015-2211. Transamerica has
agreed to pay Investment Services a monthly fee at the annual rate of 0.30% of
the first $50 million of the Portfolio's average daily net assets, 0.25% of the
next $150 million, and 0.20% of assets in excess of $200 million. Investment
Services will provide recommendations on the management of Portfolio assets,
provide investment research reports and information, supervise and manage the
investments of the Portfolio, and direct the purchase and sale of Portfolio
investments.
Investment Services 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 Transamerica and Investment Services,
although presently none are. Although it is the policy of Investment Services to
seek the best price and execution for each transaction, Investment Services may
give consideration to brokers and dealers who provide Investment Services 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.
The transactions and performance of the Growth Portfolio are reviewed
continuously by the senior officers of Investment Services. The portfolio
manager for the Growth Portfolio is Jeffrey S. Van Harte, C.F.A., Vice President
and Senior Fund Manager at Investment Services. Mr. Van Harte is a member of
the San Francisco Society of Financial Analysts and received a B.A. from
California State University at Fullerton in 1980. Mr. Van Harte has been
managing the portfolio of the Fund's predecessor, Separate Account Fund C, since
1984.
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PERFORMANCE INFORMATION
From time to time the Fund may disseminate average annual total return
figures for the Portfolio in advertisements and communications to shareholders
or sales literature.
Average annual total return is determined by computing the annual
percentage change in value of $1,000 invested for specified periods ending with
the most recent calendar quarter, assuming reinvestment of all dividends and
distributions at net asset value. The average annual total return calculation
assumes a complete redemption of the investment at the end of the relevant
period.
The Fund also may from time to time disseminate year-by-year total
return, cumulative total return and yield information for the Portfolio in
advertisements, communications to shareholders or sales literature. These may be
provided for various specified periods by means of quotations, charts, graphs or
schedules. Year-by-year total return and cumulative total return for a specified
period are each derived by calculating the percentage rate required to make a
$1,000 investment in the Portfolio (assuming all distributions are reinvested)
at the beginning of such period equal to the actual total value of such
investment at the end of such period.
In addition, the Fund may from time to time publish performance of the
Portfolio relative to certain performance rankings and indices.
As the successor to Separate Account Fund C, the Growth Portfolio
treats the historical performance data of Separate Account Fund C as its own for
periods prior to the reorganization. The performance data for the Growth
Portfolio prior to the reorganization does not reflect any sales or insurance
charges, or any other separate account or contract level charges, that were
imposed under the annuity contracts issued through Separate Account Fund C.
Since the Fund is not available directly to the public, its performance
data is not advertised unless accompanied by comparable data for the applicable
variable annuity or variable life insurance policy. The Portfolio's performance
data does not reflect separate account or contract level charges.
The investment results of the Portfolio will fluctuate over time and
any presentation of investment results for any prior period should not be
considered a representation of what an investment may earn or what the
Portfolio's performance may be in any future period. In addition to information
provided in shareholder reports, the Fund may, in its discretion, from time to
time make a list of the Portfolio's holdings available to investors upon
request.
13
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Portfolio is normally determined
once daily as of the close of regular trading on the New York Stock Exchange,
currently 4:00 p.m. New York time, on each day when the New York Stock Exchange
is open, except as noted below. The New York Stock Exchange is scheduled to be
open Monday through Friday throughout the year, except for certain holidays. The
net asset value of the Portfolio's shares will not be calculated on the Friday
following Thanksgiving, the Friday following Christmas if Christmas falls on a
Thursday and the Monday before Christmas if Christmas falls on a Tuesday. The
net asset value of the Portfolio is determined by dividing the value of the
Portfolio's securities, cash, and other assets (including accrued but
uncollected interest and dividends), less all liabilities (including accrued
expenses but excluding capital and surplus) by the number of shares of the
Portfolio outstanding.
The value of the Growth Portfolio's securities and assets generally is
determined on the basis of their market values. The short-term debt securities
having remaining maturities of sixty days or less held by the Growth Portfolio
(if any) are valued by the amortized cost method, which approximates market
value. Investments for which market quotations are not readily available are
valued at their fair value as determined in good faith by, or under authority
delegated by, the Fund's Board of Directors. See "Determination of Net Asset
Value" in the Statement of Additional Information.
OFFERING, PURCHASE AND REDEMPTION OF SHARES
Pursuant to a participation agreement between the Fund and
Transamerica, shares of the Portfolio are sold in a continuous offering and are
authorized to be offered to Separate Account C to support its variable annuity
contracts (the "Contracts"). Net purchase payments under the Contracts are
placed in Separate Account C and the assets of the Separate Account C are
invested in the shares of the Growth Portfolio. Separate Account C purchases and
redeems shares of the Portfolio at net asset value without sales or redemption
charges.
For each day on which the Portfolio's net asset value is calculated,
Separate Account C will transmit to the Fund any orders to purchase or redeem
shares of the Portfolio based on the purchase payments, redemption (surrender)
requests, and transfer requests from Contract owners, annuitants and
beneficiaries that have been processed on that day. Shares of the Portfolio are
purchased and redeemed at the Portfolio's net asset value per share calculated
as of that same day although such purchases and redemptions may be executed the
next morning.
In the future, the Fund may offer shares of the Portfolio (including
new Portfolios that might be added to the Fund) to other separate accounts of
various insurance companies, whether or not affiliated with Transamerica, to
support variable annuity contracts or variable life insurance contracts.
Likewise, the Fund may also, in the future, offer shares of the Portfolio
directly to qualified pension and retirement plans.
14
<PAGE>
In the event that shares of the Portfolio are offered to a separate
account supporting variable life insurance or to qualified pension and
retirement plans, a potential for certain conflicts may exist between the
interests of variable annuity contract owners, variable life insurance contract
owners and plan participants. The Fund currently does not foresee any
disadvantage to owners of the Contracts arising from the fact that shares of the
Portfolio might be held by such entities. However, in such an event, the Fund's
Board of Directors will monitor the Portfolio in order to identify any material
irreconcilable conflicts of interest which may possibly arise, and to determine
what action, if any, should be taken in response to such conflicts.
INCOME, DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Growth Portfolio distributes substantially all of its net
investment income in the form of dividends to its shareholders. The Growth
Portfolio declares its dividends and capital gain distributions at least
annually.
TAXES
The Fund believes that the Portfolio qualifies as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Portfolio intends to distribute substantially all
of its net income and net capital gains to its shareholders. As a result, under
the provisions of subchapter M, there should be little or no income or gains
taxable to the Portfolio. In addition, the Portfolio intends to comply with
certain other distribution rules specified in the Code so that it will not incur
a 4% nondeductible federal excise tax that otherwise would apply. See "Federal
Tax Matters" in the Statement of Additional Information.
The shareholders of the Portfolio are currently limited to Separate
Account C and Transamerica. For more information regarding the tax implications
for the purchaser of a Contract who allocates investments to the Portfolio,
please refer to the prospectus for Separate Account C.
15
<PAGE>
OTHER INFORMATION
Reports
Annual Reports containing audited financial statements of the Fund and
Semi-Annual Reports containing unaudited financial statements, as well as proxy
materials, are sent to Contract owners, annuitants or beneficiaries, as
appropriate. Inquiries may be directed to the Fund at the telephone number or
address set forth on the cover page of this Prospectus.
Voting and Other Rights
Each share outstanding is entitled to one vote on all matters submitted
to a vote of shareholders (of the Portfolio or the Fund) and is entitled to a
pro-rata share of any distributions made by the Portfolio and, in the event of
liquidation, of its net assets remaining after satisfaction of outstanding
liabilities. Each share (of the Portfolio), when issued, is nonassessable and
has no preemptive or conversion rights. The shares have noncumulative voting
rights.
As a Maryland corporation, the Fund is not required to hold regular
annual shareholder meetings and does not intend to do so. The Fund is, however,
required to hold shareholder meetings for the following purposes: (i) approving
certain agreements as required by the 1940 Act; (ii) changing fundamental
investment objectives, policies and restrictions of the Portfolio; and (iii)
filling vacancies on the Board of Directors in the event that less than a
majority of the members of the Board of Directors were elected by shareholders.
Directors may also be removed by shareholders by a vote of two-thirds of the
outstanding votes attributable to shares at a meeting called at the request of
holders of 10% or more of such votes. The Fund has the obligation to assist in
shareholder communications.
Transamerica currently owns more than 25% of the outstanding shares of
the Portfolio which may result in it being deemed a controlling person of the
Portfolio, as that term is defined in the 1940 Act.
Custody of Assets and Administrative Services
Pursuant to a custody agreement with the Fund, State Street Bank and
Trust Company ("State Street"), 225 Franklin Street, Boston, Massachusetts
02110, will hold all securities and cash assets of the Fund, provide
recordkeeping and certain accounting services and serve as the custodian of the
Fund's assets. The custodian will be authorized to deposit securities in
securities depositories and to use the services of sub-custodians.
16
<PAGE>
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."
<TABLE>
<CAPTION>
Investment Grade Moody's Standard & Poor's
---------------- ------- -----------------
<S> <C> <C>
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 D D
</TABLE>
For more information on bond ratings, including gradations within each
category of quality, see the Statement of Additional Information.
17
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The following is
the Table of Contents for that Statement:
TABLE OF CONTENTS
Page
INTRODUCTION............................................................1
ADDITIONAL INVESTMENT POLICY INFORMATION................................2
SPECIAL INVESTMENT METHODS AND RISKS....................................2
Convertible Securities.........................................2
Restricted and Illiquid Securities.............................3
Borrowing......................................................3
Other Investment Companies.....................................4
Options on Securities and Securities Indices...................4
Warrants and Rights............................................6
Repurchase Agreements..........................................6
High-Yield ("Junk") Bonds......................................7
Foreign Securities.............................................7
INVESTMENT RESTRICTIONS........................................8
Fundamental Restrictions.......................................8
Non-fundamental Restrictions...................................9
Interpretive Rules............................................10
INVESTMENT ADVISER.....................................................11
Investment Advisory Agreement.................................11
Investment Sub-Advisory Agreement.............................12
PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND BROKERAGE...............13
DETERMINATION OF NET ASSET VALUE.......................................14
PERFORMANCE INFORMATION................................................16
FEDERAL TAX MATTERS....................................................18
SHARES OF STOCK........................................................20
CUSTODY OF ASSETS......................................................21
DIRECTORS AND OFFICERS.................................................21
Compensation..................................................23
LEGAL PROCEEDINGS......................................................24
OTHER INFORMATION......................................................24
Legal Counsel.................................................24
Other Information.............................................24
Independent Auditors..........................................24
Financial Statements..........................................24
APPENDIX A........................................................... .25
18
<PAGE>
-----------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
GROWTH PORTFOLIO
of the
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
May 1, 1997
This Statement of Additional Information is not a prospectus. Much of
the information contained in this Statement expands upon information discussed
in the Prospectus for the Growth Portfolio of the Transamerica Variable
Insurance Fund, Inc. (the "Fund") and should, therefore, be read in conjunction
with the Prospectus for the Fund. To obtain a copy of the Prospectus with the
same date as this Statement of Additional Information write to the Fund at the
Transamerica Annuity Service Center, 401 North Tryon Street, Suite 700,
Charlotte, North Carolina 28202, , or by calling (800) 258-4260, ext. 5560.
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION............................................... 1
ADDITIONAL INVESTMENT POLICY INFORMATION................... 2
SPECIAL INVESTMENT METHODS AND RISKS....................... 2
Convertible Securities..................................... 2
Restricted and Illiquid Securities................ 3
Borrowing.................................................. 3
Other Investment Companies................................. 4
Options on Securities and Securities Indices...... 4
Warrants and Rights............................... 6
Repurchase Agreements...................................... 6
High-Yield ("Junk") Bond................................... 7
Foreign Securities......................................... 7
INVESTMENT RESTRICTIONS.................................... 8
Fundamental Restrictions.......................... 8
Non-Fundamental Restrictions...................... 8
Interpretive Rules................................10
INVESTMENT ADVISER.........................................11
Investment Advisory Agreement.....................11
Investment Sub-Advisory Agreement..........................12
PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND BROKERAGE...13
DETERMINATION OF NET ASSET VALUE...........................14
PERFORMANCE INFORMATION....................................15
FEDERAL TAX MATTERS.................................................18
SHARES OF STOCK............................................20
CUSTODY OF ASSETS..........................................20
DIRECTORS AND OFFICERS.....................................21
Compensation...............................................22
LEGAL PROCEEDINGS...................................................23
OTHER INFORMATION..........................................23
Legal Counsel.....................................23
Other Information.................................23
Independent Auditors.......................................24
Financial Statements..............................24
APPENDIX A.................................................25
ii
<PAGE>
INTRODUCTION
Transamerica Variable Insurance Fund, Inc. (the "Fund") is an open-end
management investment company established as a Maryland corporation on June 23,
1995. The Fund's Growth Portfolio is the successor to Transamerica Occidental's
Separate Account Fund C ("Separate Account Fund C"). The reorganization of
Separate Account Fund C from a management investment company into a unit
investment trust, Separate Account C, was approved at a meeting of the Contract
owners held on October 30, 1996. The assets of Separate Account Fund C, as of
close of business October 31, 1996, were transferred intact to the Growth
Portfolio of the Fund in exchange for shares in the Growth Portfolio which are
held by Separate Account C.
The Fund currently consists of one investment portfolio, the Growth
Portfolio (the "Portfolio" or "Growth Portfolio"). By investing in the
Portfolio, an investor becomes entitled to a pro-rata share of all dividends and
distributions arising from the net income and capital gains on the investments
of the Portfolio. Likewise, an investor shares pro-rata in any losses of that
Portfolio. The Fund plans to add a money market portfolio during 1997.
Pursuant to an investment advisory agreement and subject to the
authority of the Fund's board of directors (the "Board of Directors"),
Transamerica Occidental Life Insurance Company ("Transamerica") serves as the
Fund's investment adviser and conducts the business and affairs of the Fund.
Transamerica has engaged Transamerica Investment Services, Inc. ("Investment
Services") to act as the Fund's sub-adviser to provide the day-to-day portfolio
management for the Portfolio.
The Fund currently offers shares of the Growth Portfolio to Separate
Account C of Transamerica Occidental Life Insurance Company ("Separate Account
C") as the underlying funding vehicle for the variable annuity contracts (the
"Contracts") supported by Separate Account C. The Fund does not offer its stock
directly to the general public. Separate Account C, like the Fund, is registered
as an investment company with the Securities and Exchange Commission ("SEC"),
and a separate prospectus, which accompanies the prospectus for the Portfolio,
describes that separate account and the Contracts it supports. The prospectus
for Separate Account C and the Contracts also has a statement of additional
information.
The Fund may, in the future, offer its stock to other separate accounts
of other insurance companies supporting other variable annuity contracts or
variable life insurance polices and to qualified pension and retirement plans.
Terms appearing in this Statement of Additional Information that are
defined in the Prospectus have the same meaning as in the Prospectus.
-1-
<PAGE>
ADDITIONAL INVESTMENT POLICY INFORMATION
The Growth Portfolio seeks long-term capital growth. Common stock,
listed and unlisted, is the basic form of investment. Although the Portfolio
invests the majority of its assets in common stocks, the Portfolio may also
invest in: (i) debt securities and preferred stocks, having a call on common
stocks by means of a conversion privilege or attached warrants; and (ii)
warrants or other rights to purchase common stocks. Unless market conditions
would indicate otherwise, the Growth Portfolio will be invested primarily in
such equity-type securities. When in the judgment of Investment Services market
conditions warrant, the Growth Portfolio may, for temporary defensive purposes,
hold part or all of its assets in cash, debt or money market instruments.
SPECIAL INVESTMENT METHODS AND RISKS
-2-
<PAGE>
Restricted and Illiquid Securities
The Growth Portfolio may invest no more than 10% of its net assets in
restricted securities (securities that are not registered or are offered in an
exempt non-public offering under the Securities Act of 1933 (the "1933 Act")).
However, such restriction shall not apply to restricted securities offered and
sold to "qualified institutional buyers" under Rule 144A under the 1933 Act.
In addition, the Growth Portfolio will invest no more than 15% of its
net assets in illiquid investments, which includes most repurchase agreements
maturing in more than seven days, time deposits with a notice or demand period
of more than seven days, certain over-the-counter option contracts, real estate,
securities that are not readily marketable and restricted securities (unless
Investment Services determines, based upon a continuing review of the trading
markets for the specific restricted security, that such restricted securities
are eligible under Rule 144A and are liquid.)
The Board of Directors of the Fund has adopted guidelines and delegated
to Investment Services 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. 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 the Portfolio'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 the
Portfolio.
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 bear the expenses of registering the restricted securities and prevailing
supply and demand conditions.
Borrowing
The Portfolio may borrow money but only from banks and only for
temporary or short-term purposes. Such borrowings will not exceed 5% of the
value of the Portfolio's total assets. Temporary or short-term purposes may
include: (i) short-term ( i.e., no longer than five business days) credits for
clearance of portfolio transactions; (ii) borrowing in order to meet redemption
requests or to finance settlements of portfolio trades without immediately
liquidating portfolio securities or other assets; and (iii) borrowing in order
to fulfill commitments or plans to purchase additional securities pending the
anticipated sale of other portfolio securities or assets in the near future. The
Portfolio will not borrow for leveraging
-3-
<PAGE>
purposes. The Portfolio will maintain continuous asset coverage of at least 300%
(as defined in the 1940 Act) with respect to all of its borrowings. Should the
value of the Portfolio's assets decline to below 300% of borrowings, the
Portfolio may be required to sell portfolio securities within three days to
reduce the Portfolio's debt and restore 300% asset coverage.
Borrowing involves interest costs.
Other Investment Companies
The Growth Portfolio reserves the right to invest up to 10% of its
total assets, calculated at the time of purchase, in the securities of other
investment companies including business development companies and small business
investment companies. The Growth Portfolio may not invest more than 5% of its
total assets in the securities of any one investment company or in more than 3%
of the voting securities of any other investment company. The Portfolio will
indirectly bear its proportionate share of any advisory fees paid by investment
companies in which it invests in addition to the management fee paid by the
Portfolio. Together with other investment companies advised by Transamerica, the
Portfolio will own no more than 10% of the outstanding voting stock of a
closed-end investment company.
Options on Securities and Securities Indices
The Growth Portfolio 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. The Growth Portfolio currently does not
intend to invest more than 5% of its net assets in options on securities and
securities indices. The Growth Portfolio would also be able to enter into
closing sale transactions in order to realize gains or minimize losses on
options it had purchased.
The Growth Portfolio 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 the Portfolio,
in turn for the premium paid, to purchase specified securities at a specified
price during the option period. The Portfolio 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 Growth
Portfolio would realize a loss on the purchase of a call option.
The Growth Portfolio would normally purchase put options in
anticipation of a decline in the market value of securities in its portfolio
("protective puts") or in securities in which it may invest. The purchase of a
put option would entitle the Portfolio, 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 the Portfolio's securities. Put options may also be
purchased by the Portfolio for the purpose of affirmatively benefiting from a
decline in the price of securities which it does not own. The Growth Portfolio
would ordinarily realize a gain if, during the option period, the
-4-
<PAGE>
value of the underlying securities decreased below the exercise price
sufficiently to cover the premium and transaction costs; otherwise the Portfolio
would realize a loss on the purchase of a put option. Gains and losses on the
purchase of protective put options would tend to be offset by countervailing
changes in the value of the underlying portfolio securities.
The Growth Portfolio would purchase put and call options on securities
indices 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 the Portfolio 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.
Possible 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.
The Growth Portfolio may purchase options that are traded on United
States and foreign 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, the Growth Portfolio 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 and that the amount of illiquid securities may be
calculated with reference to the formula.
Transactions by the Growth Portfolio in options on securities and stock
indices 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 purchased by a single investor or group of
investors acting in concert. Thus, the number of options which the Portfolio may
purchase may be affected by options written or purchased by other
-5-
<PAGE>
investment advisory clients of Investment Services. 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 purchase of options is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. The successful use of protective puts for
hedging purposes depends in part on Investment Services's ability to predict
future price fluctuations and the degree of correlation between the options and
securities markets.
Warrants and Rights
The Growth Portfolio may invest in warrants which entitle the holder to
buy equity securities at a specific price for a specific period of time but will
do so only if such equity securities are deemed appropriate by Investment
Services for investment by the Portfolio. Warrants have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
Repurchase Agreements
Repurchase agreement have the characteristics of loans by the Portfolio
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 Portfolio 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 seller to deposit with the Portfolio 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 Portfolio 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 Investment Services
under procedures established by the Board of Directors 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 Portfolio may otherwise invest.
If the seller of a repurchase agreement defaults and does not
repurchase the security subject to the agreement, the Portfolio would look to
the collateral security underlying the seller's agreement, including the
securities subject to the repurchase agreement, for satisfaction of the seller's
obligations to the Portfolio. In such event, the Portfolio might incur
disposition costs in liquidating the collateral and might suffer a loss if the
value of the
-6-
<PAGE>
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.
High-Yield ("Junk") Bonds
The total return and yield of lower quality, high yield bonds, commonly
referred to as "junk bonds," can be expected to fluctuate more than the total
return and yield of higher quality bonds but not as much as common stocks. Junk
bonds are regarded as predominately speculative with respect to the issuer's
continuing ability to meet principal and interest payments. Successful
investment in low and lower-medium quality bonds involves greater investment
risk and is highly dependent on Investment Services' credit analysis. A real or
perceived economic downturn or higher interest rates could cause a decline in
high yield bond prices, because such events could lessen the ability of issuers
to make principal and interest payments. These bonds are often thinly-traded and
can be more difficult to sell and value accurately than high-quality bonds.
Because objective pricing data may be less available, judgment may plan a
greater role in the valuation process. In addition, the entire junk bond market
can experience sudden and sharp price swings due to a variety of factors,
including changes in economic forecasts, stock market activity, large or
sustained sales by major investors, a high-profile default, or just a change in
the market's psychology. This type of volatility is usually associated more with
stocks than bonds, but junk bond investors should be prepared for it.
The Portfolio will not purchase a non-investment grade debt security
(or "junk bond") if immediately after such purchase the Portfolio would have
more than 10% of its total assets invested in such securities.
Foreign Securities
The Growth Portfolio may invest in the securities of foreign issuers
through the purchase of American Depository Receipts ("ADRs"). ADR's are
dollar-denominated securities that are issued by domestic banks or securities
firms and are traded on the U.S.
securities markets.
ADRs represent the right to receive securities of foreign issuers
deposited in a domestic bank or a foreign correspondent bank. Prices of ADRs are
quoted in U.S. dollars, and ADRs are traded in the United States on exchanges or
over-the-counter and are sponsored and issued by domestic banks. ADRs do not
eliminate all the risk inherent in investing in the securities of foreign
issuers. To the extent that the Portfolio acquires ADRs through banks which do
not have a contractual relationship with the foreign issuer of the security
underlying the ADR to issue and service such ADRs, there may be an increased
possibility that the Portfolio would not become aware of and be able to respond
to corporate actions such as stock splits or rights offerings involving the
foreign issuer in a timely manner. In addition, the lack of information may
result in inefficiencies in the valuation of such instruments. However, by
investing in ADRs rather than directly in the stock of foreign issuers, the
-7-
<PAGE>
Portfolio will avoid currency risks during the settlement period for either
purchases or sales. In general, there is a large, liquid market in the United
States for ADRs quoted on a national securities exchange or the NASD's national
market system. The information available for ADRs is subject to the accounting,
auditing and financial reporting standards of the domestic market or exchange on
which they are traded, which standards are more uniform and more exacting than
those to which many foreign issuers may be subject.
INVESTMENT RESTRICTIONS
Fundamental Policies and Restrictions
Certain investment restrictions and policies have been adopted by the
Fund as fundamental policies for the Portfolio. It is fundamental that the
Portfolio operate as a "diversified company" within the meaning of the
Investment Company Act of 1940. The investment objective of the Portfolio is
also a fundamental policy. See "Investment Objective and Policies" in the
Portfolio's Prospectus.
A fundamental policy is one that cannot be changed without the
affirmative vote of the holders of a majority (as defined in the 1940 Act) of
the outstanding votes attributable to the shares of the Portfolio. For purposes
of the 1940 Act, "majority" means the lesser of: (a) 67% or more of the votes
attributable to shares of the Portfolio present at a meeting, if the holders of
more than 50% of such votes are present or represented by proxy; or (b) more
than 50% of the votes attributable to shares of the Portfolio.
The Portfolio's fundamental policies and restrictions are:
1. 5% Fund Rule With respect to 75% of total assets, the Portfolio may
not purchase securities of any issuer if, as a result of the purchase, more than
5% of the Portfolio's total assets would be invested in the securities of the
issuer. This limitation does not apply to securities issued or guaranteed by the
United States government, its agencies or instrumentalities ("Government
Securities").
2. 10% Issuer Rule With respect to 75% of total assets, the
Portfolio may not purchase more than 10% of the voting securities of any one
issuer.
3. 25% Industry Rule The Portfolio may not invest more than 25%
of the value of its total assets in securities issued by companies engaged in
any one industry. This limitation does not apply to investments in Government
Securities.
4. Borrowing The Portfolio may borrow from banks for temporary or
emergency (not leveraging) purposes, including the meeting of redemption
requests and cash payments of dividends and distributions, provided such
borrowings do not exceed 5% of the value of the Portfolio's total assets.
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5. Lending The Portfolio may not lend its assets or money to other
persons, except through: (a) the acquisition of all or a portion of an issue of
bonds, debentures or other evidence of indebtedness of a type customarily
purchased for investment by institutional investors, whether publicly or
privately distributed. (The Portfolio does not presently intend to invest more
than 10% of the value of the Portfolio in privately distributed loans. It is
possible that the acquisition of an entire issue may cause the Portfolio to be
deemed an "underwriter" for purposes of the Securities Act of 1933); (b) lending
securities, provided that any such loan is collateralized with cash equal to or
in excess of the market value of such securities. (The Portfolio does not
presently intend to engage in the lending of securities); and (c) entering into
repurchase agreements.
6. Underwriting The Portfolio may not underwrite any issue of
securities, except to the extent that the sale of securities in accordance with
the Portfolio's investment objective, policies and limitations may be deemed to
be an underwriting, and except that the Portfolio may acquire securities under
circumstances in which, if the securities were sold, the Portfolio might be
deemed to be an underwriter for purposes of the Securities Act of 1933, as
amended.
7. Real Estate The Portfolio reserves the right to invest up to 10% of
the value of its assets in real properties, including property acquired in
satisfaction of obligations previously held or received in part payment on the
sale of other real property owned. The purchase and sale of real estate or
interests in real estate is not intended to be a principal activity of the
Portfolio. The Portfolio currently does not intend to invest more than 5% of its
net assets in real estate.
8. Commodities The Portfolio may not purchase or sell commodities or
commodities contracts.
9. Senior Securities The Portfolio may not issue senior securities.
All other investment policies and restrictions of the Portfolio are
considered by the Fund not to be fundamental and accordingly may be changed by
the Board of Directors without shareholder approval.
Non-Fundamental Restrictions
Non-fundamental restrictions represent the current intentions of the
Board of Directors, and they differ from fundamental investment restrictions in
that they may be changed or amended by the Board of Directors without prior
notice to or approval of shareholders.
The Portfolio's non-fundamental restrictions are:
1. Restricted and Illiquid Securities Purchases or acquisitions may
be made of securities which are not readily marketable by reason of the fact
that they are subject to the
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registration requirements of the Securities Act of 1933 or the salability of
which is otherwise conditioned, including real estate and certain repurchase
agreements or time deposits maturing in more than seven days ("restricted
securities"), as long as any such purchase or acquisition will not immediately
result in the value of all such restricted securities exceeding 15% of the value
of the Portfolio's total assets.
2. Securities of Other Investment Companies The Growth Portfolio does
not currently intend to make investments in the securities of other investment
companies. The Growth Portfolio does reserve the right to purchase such
securities, provided the purchase of such securities does not cause: (1) more
than 10% of the value of the total assets of the Portfolio to be invested in
securities of registered investment companies; or (2) the Portfolio to own more
than 3% of the total outstanding voting stock of any one investment company; or
(3) the Portfolio to own securities of any one investment company that have a
total value greater than 5% of the value of the total assets of the Portfolio;
or (4) together with other investment companies advised by Transamerica, the
Growth Portfolio to own more than 10% of the outstanding voting stock of a
closed-end investment company.
3. Short Sales The Portfolio may not make short sales of securities or
maintain a short position, unless at all times when the short position is open,
the Portfolio owns an equal amount of such securities or securities currently
exchangeable, without payment of any further consideration, for securities of
the same issue as, and at least equal in amount to, the securities sold short
(generally called a "short sale against the box") and unless not more than 10%
of the value of the Portfolio's net assets is deposited or pledged as collateral
for such sales at any one time.
4. Margin Purchases The Portfolio may not purchase securities on
margin, except that the Portfolio 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 options on securities will not be deemed to be a purchase of securities on
margin by the Portfolio.
5. Invest for Control The Portfolio may not invest in companies
for the purpose of exercising management or control in that company.
6.Put and Call Options The Portfolio may not write put and call options.
Interpretive Rules
For purposes of the foregoing restrictions, any limitation which
involves a maximum percentage will not be violated unless an excess over the
percentage occurs immediately after, and is caused by, an acquisition or
encumbrance of securities or assets of, or borrowings by, the Portfolio. In
addition, with regard to exceptions recited in a restriction, the Portfolio may
only rely on an exception if its investment objective(s) or policies (as
disclosed in the Prospectus) otherwise permit it to rely on the exception.
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INVESTMENT ADVISER
Transamerica is the investment adviser of the Fund and its Portfolio.
It will oversee the management of the assets of the Portfolio by Investment
Services. In turn, Investment Services is responsible for the day-to-day
management of Portfolio.
Investment Advisory Agreement
The investment adviser, Transamerica, has entered into an Investment
Advisory Agreement with the Fund under which Transamerica assumes overall
responsibility, subject to the supervision of the Board of Directors, for
administering all operations of the Fund and for monitoring and evaluating the
management of the assets of the Portfolio by Investment Services on an ongoing
basis. Transamerica provides or arranges for the provision of the overall
business management and administrative services necessary for the Fund's
operations and furnishes or procures any other services and information
necessary for the proper conduct of the Fund's business. Transamerica also acts
as liaison among, and supervisor of, the various service providers to the Fund.
Transamerica is also responsible for overseeing the Fund's compliance with the
requirements of applicable law and conformity with the Portfolio's investment
objective(s), policies and restrictions, including oversight of Investment
Services.
For its services to the Fund, Transamerica receives an advisory fee of
0.75% of the average daily net assets of the Portfolio. The fee is deducted
daily from the assets of the Portfolio and paid to Transamerica periodically.
Transamerica or its affiliates pays the salaries and fees, if any, of all
officers and directors of the Fund who are "interested persons" (as defined in
the 1940 Act) of Transamerica and of all personnel of Transamerica performing
services relating to research, statistical and investment activities and the
fees of the Sub-Adviser.
The Fund pays all of its expenses not assumed by Transamerica,
including custodian fees, legal and auditing fees, registration fees and
expenses, and fees and expenses of directors unaffiliated with Transamerica.
The Investment Advisory Agreement does not place limits on the
operating expenses of the Fund or of any Portfolio. However, Transamerica has
voluntarily undertaken to pay any such expenses (but not including brokerage or
other portfolio transaction expenses or expenses of litigation, indemnification,
taxes or other extraordinary expenses) to the extent that such expenses, as
accrued for the Portfolio, exceed 0.10% of the Portfolio's estimated average
daily net assets on an annualized basis.
The total dollar amounts paid by the Portfolio, and/or its predecessor
Separate Account Fund C, to Transamerica under the applicable investment
advisory contract for the last three fiscal years are as follows: Separate
Account Fund C paid $49,280 in 1994, Separate
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Account Fund C paid $67,198 in 1995, and Separate Account Fund C and the
Portfolio together paid $66,831 in 1996.
The Investment Advisory Agreement provides that Transamerica may render
similar services to others so long as the services that it provides to the Fund
are not impaired thereby. The investment advisory agreement also provides that
Transamerica shall not be liable for any error of judgment or mistake of law or
for any loss arising out of any investment or for any act or omission in the
management of the Fund, except for: (i) willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its duties or obligations under the investment advisory agreement; and (ii)
to the extent specified in Section 36(b) of the 1940 Act concerning loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation.
The Investment Advisory Agreement was approved for the Portfolio by the
Board of Directors, including a majority of the Directors who are not parties to
the investment advisory agreement or "interested persons" (as such term is
defined in the 1940 Act) of any party thereto (the "non-interested Directors"),
on July 24, 1996, and by the Contract Owners of Separate Account Fund C at a
Contract Owners meeting held on October 30, 1996. The investment advisory
agreement will remain in effect from year to year provided such continuance is
specifically approved as to the Portfolio at least annually by: (a) the Board of
Directors or the vote of a majority of the votes attributable to shares of the
Portfolio; and (b) the vote of a majority of the non-interested Directors, cast
in person at a meeting called for the purpose of voting on such approval. The
investment advisory agreement will terminate automatically if assigned (as
defined in the 1940 Act). The investment advisory agreement is also terminable
as to any Portfolio at any time by the Board of Directors or by vote of a
majority of the votes attributable to outstanding voting securities of the
applicable Portfolio (a) without penalty and (b) on 60 days' written notice to
Transamerica.
Investment Sub-Advisory Agreement
Transamerica has contracted with Transamerica Investment Services, Inc.
("Investment Services"), a wholly-owned subsidiary of Transamerica Corporation,
to render investment services to the Fund. Investment Services has been in
existence since 1967 and has provided investment services to investment
companies since 1968 and the Transamerica Life Companies since 1981. Investment
Services is located at 1150 South Olive Street, Los Angeles, California
90015-2211. Transamerica has agreed to pay Investment Services a monthly fee at
the annual rate of 0.30% of the first $50 million of the Portfolio's average
daily net assets, 0.25% of the next $150 million, and 0.20% of assets in excess
of $200 million. Investment Services will provide recommendations on the
management of Fund assets, provide investment research reports and information,
supervise and manage the investments of the Portfolio, and direct the purchase
and sale of Portfolio investments. Investment decisions regarding the
composition of the Portfolio and the nature and timing of changes in the
Portfolio are subject to the control of the Board of Directors of the Fund.
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<PAGE>
The investment sub-advisory agreement was approved for the Portfolio by
the Board of Directors, including a majority of the Directors who are not
parties to the investment sub-advisory agreement or "interested persons" (as
such term is defined in the 1940 Act) of any party thereto (the "non-interested
Directors"), on July 24, 1996, and by the Contract Owners of Separate Account
Fund C at a Contract Owners meeting held on October 30, 1996. The investment
sub-advisory agreement will remain in effect from year to year provided such
continuance is specifically approved as to the Portfolio at least annually by:
(a) the Board of Directors or the vote of a majority of the votes attributable
to shares of the Portfolio; and (b) the vote of a majority of the non-interested
Directors, cast in person at a meeting called for the purpose of voting on such
approval. The investment sub-advisory agreement will terminate automatically if
assigned (as defined in the 1940 Act). The investment sub-advisory agreement is
also terminable at any time by the Board of Directors or by vote of a majority
of the votes attributable to outstanding voting securities of the Portfolio (a)
without penalty and (b) on 30 days written notice to Investment Services.
PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND BROKERAGE
Investment Services is responsible for decisions to buy and sell
securities for the Portfolio, the selection of brokers and dealers to effect the
transactions and the negotiation of brokerage commissions, if any. Purchases and
sales of securities on a securities exchange are effected through brokers who
charge a negotiated commission for their services. Orders may be directed to any
broker including, to the extent and in the manner permitted by applicable law,
affiliates of Transamerica or Investment Services.
In placing orders for portfolio securities of the Portfolio, Investment
Services is required to give primary consideration to obtaining the most
favorable price and efficient execution. This means that Investment Services
will seek to execute each transaction at a price and commission, if any, which
provide the most favorable total cost or proceeds reasonably attainable in the
circumstances. While Investment Services generally seeks reasonably competitive
spreads or commissions, the Portfolio will not necessarily be paying the lowest
spread or commission available. Within the framework of this policy, Investment
Services will consider research and investment services provided by brokers or
dealers who effect or are parties to portfolio transactions of the Portfolio,
Investment Services and its affiliates, or other clients of Investment Services
or its affiliates. Such research and investment services include statistical and
economic data and research reports on particular companies and industries. Such
services are used by Investment Services in connection with all of its
investment activities, and some of such services obtained in connection with the
execution of transactions for the Portfolio may be used in managing other
investment accounts. Conversely, brokers furnishing such services may be
selected for the execution of transactions of such other accounts, whose
aggregate assets are far larger than those of the Portfolio, and the services
furnished by such brokers may be used by Investment Services in providing
investment sub-advisory services for the Portfolio. For the three most recent
fiscal years, the aggregate dollar amounts of the brokerage commissions paid
with respect to portfolio transactions of the Portfolio by Investment Services
as sub-adviser to Separate
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Account Fund C (the Portfolio's predecessor) were $10,4200 for 1994, $7,253 for
1995, and $19,115 for the first ten months of 1996. The aggregate dollar amount
of brokerage commissions paid by the Portfolio after the reorganization, during
November and December 1996, was $5,550; so that the total paid during 1996 was
$24,665 The brokerage commissions for 1996 were higher than the previous two
years because at the end of 1996 the Portfolio acquired shares available through
an initial public offering for which brokerage commissions are usually higher
than standard commissions.
On occasions when Investment Services deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as its other
advisory clients (including any other fund or other investment company or
advisory account for which Investment Services or an affiliate acts as
investment adviser), Investment Services, to the extent permitted by applicable
laws and regulations, may aggregate the securities to be sold or purchased for
the Portfolio with those to be sold or purchased for such other customers in
order to obtain the best net price and most favorable execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by Investment Services in the manner
it considers to be most equitable as to each customer and consistent with its
fiduciary obligations to the Portfolio and such other customers. In some
instances, this procedure may adversely affect the price and size of the
position obtainable for the Portfolio.
Commission rates are established pursuant to negotiations with the
broker based on the quality and quantity of execution services provided by the
booker in the light of generally prevailing rates. The allocation of orders
among brokers and the commission rates paid are reviewed periodically by the
Board of Directors.
Changes will be made in the assets of the Portfolio if such changes are
considered advisable to better achieve the Portfolio's investment objectives. It
is anticipated that the annual portfolio turnover should not exceed 75%. The
portfolio turnover rates for Separate Account Fund C (the Portfolio's
predecessor) for 1995 was 30.84%, the portfolio turnover rate for 1996, when
combining the experience of Separate Account Fund C through October 31, 1996,
and the Portfolio's experience for November and December 1996 was 34.58%.
DETERMINATION OF NET ASSET VALUE
Under the 1940 Act, the Board of Directors is responsible for
determining in good faith the fair value of securities of the Portfolio. In
accordance with procedures adopted by
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the Board of Directors, the net asset value per share is calculated by
determining the net worth of the Portfolio (assets, including securities at
market value or amortized cost value, minus liabilities) divided by the number
of the Portfolio's outstanding shares. All securities are valued as of the close
of regular trading on the New York Stock Exchange. The Portfolio will compute
its net asset value once daily at the close of such trading (normally 4:00 p.m.
New York time), on each day (as described in the Prospectus) that the Fund is
open for business.
In the event that the New York Stock Exchange or the national
securities exchange on which stock options are traded adopt different trading
hours on either a permanent or temporary basis, the Board of Directors will
reconsider the time at which net asset value is computed. In addition, the
Portfolio may compute its net asset value as of any time permitted pursuant to
any exemption, order or statement of the SEC or its staff.
Portfolio assets of the Growth Portfolio are valued as follows:
(a) equity securities and other similar investments ("Equities")
listed on any U.S. stock market 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;
(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 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 Investment Services and approved
by the Board of Directors;
(d) options and futures contracts are valued at the last sale
price on the market
where any such option contracts are 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) all other securities and other assets, including those for
which a pricing service supplies no quotations or quotations
are not deemed by Investment Services 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 of Directors; and
(g) 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 are
valued at the last sale price on each business day at the close of the exchange
representing the principal market for such securities. If such quotations are
not available, the price will be determined in good faith by or under procedures
established by the Board of Directors.
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PERFORMANCE INFORMATION
The Fund may from time to time quote or otherwise use average annual
total return information for the Portfolio in advertisements, shareholder
reports or sales literature. Average annual total return quotations are computed
by finding the average annual compounded rates of return over one, five and ten
year periods that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the one, five or
ten-year period at the end of the one, five, or
ten-year period (or fractional portion thereof).
Any performance data quoted for the Portfolio 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.
The Growth Portfolio is the successor to Transamerica Occidental's
Separate Account Fund C. Separate Account Fund C had been a separate account of
Transamerica registered under the 1940 Act on Form N-3 as an open-end,
diversified, management investment company. The reorganization of Separate
Account Fund C from a management investment company into a unit investment trust
called Separate Account C, was approved at a meeting of the Contract owners held
on October 30, 1996. The assets of Separate Account Fund C, as of close of
business October 31, 1996, were transferred intact to the Growth Portfolio of
the Fund in exchange for shares in the Growth Portfolio which will be held by
Separate Account C. As the successor to Separate Account Fund C, the Growth
Portfolio treats the historical performance data of Separate Account Fund C as
its own for periods prior to the reorganization.
In computing its standardized total returns for periods prior to the
reorganization, the Portfolio assumes that the charges currently imposed by the
Portfolio were in effect through each of the periods for which the standardized
returns are presented. The Growth Portfolio's performance data does not reflect
any sales or insurance charges, or any other separate account or contract level
charges, that were imposed under the annuity contracts issued through Separate
Account Fund C.
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Any performance data quoted for the Portfolio represents 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. Performance data for the Portfolio does not reflect charges
deducted under the variable annuity contracts. If contract charges are taken
into account, such performance data would reflect lower returns. Accordingly,
any advertisement that includes performance data for the Portfolio will also
include performance data for the variable annuity contracts.
From time to time the Fund may disclose cumulative total returns in
conjunction with the standard format described above. The cumulative total
returns will be calculated using the following formula:
CTR = (ERV/P) - 1
Where:
CTR = The cumulative total return net of
Portfolio recurring charges for the
period.
ERV = The ending redeemable value of the
hypothetical investment at the
end of the period.
P = A hypothetical single payment of $1,000.
From time to time the Fund may publish an indication of the Portfolio'
past performance as measured by independent sources such as (but not limited to)
Lipper Analytical Services, Weisenberger Investment Companies Service,
Donoghue's Money Portfolio 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 Fund may also advertise
information which has been provided to the NASD for publication in regional and
local newspapers. In addition, the Fund may from time to time advertise its
performance relative to certain indices and benchmark investments, including
(but not limited to): (a) the Lipper Analytical Services, Inc. Mutual Portfolio
Performance Analysis, Fixed-Income Analysis and Mutual Portfolio Indices (which
measure total return and average current yield for the mutual fund industry and
rank mutual fund performance); (b) the CDA Mutual Portfolio Report published by
CDA Investment Technologies, Inc. (which analyzes price, risk and various
measures of return for the mutual fund industry); (c) the Consumer Price Index
published by the U.S. Bureau of Labor Statistics (which measures changes in the
price of goods and services); (d) Stocks, Bonds, Bills and Inflation published
by Ibbotson Associates (which provides historical performance figures for
stocks, government securities and inflation); (e) the Hambrecht & Quist Growth
Stock Index; (f) the NASDAQ OTC Composite Prime Return; (g) the Russell Midcap
Index; (h) the Russell 2000 Index - Total Return; (i) the ValueLine
Composite-Price Return; (j) the Wilshire 5000 Index; (k) the Salomon Brothers
World Bond Index (which measures the total return in U.S. dollar terms of
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government bonds, Eurobonds and foreign bonds of ten countries, with all such
bonds having a minimum maturity of five years); (l) the Shearson Lehman Brothers
Aggregate Bond Index or its component indices (the Aggregate Bond Index measures
the performance of Treasury, U.S. Government agencies, mortgage and Yankee
bonds); (m) the S&P Bond indices (which measure yield and price of corporate,
municipal and U.S. Government bonds); (n) the J.P. Morgan Global Government Bond
Index; (o) Donoghue's Money Market Portfolio Report (which provides industry
averages of 7-day annualized and compounded yields of taxable, tax-free and U.S.
Government money market funds); (p) other taxable investments including
certificates of deposit, money market deposit accounts, checking accounts,
savings accounts, money market mutual funds and repurchase agreements; (q)
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; (r) the FT-Actuaries Europe and Pacific Index; (s)
mutual fund performance indices published by Variable Annuity Research & Data
Service; (t) S&P 500 Index; and (u) mutual fund performance indices published by
Morningstar, Inc. The composition of the investments in such indices and the
characteristics of such benchmark investments are not identical to, and in some
cases are very different from, those of the Portfolio's investments. These
indices and averages are generally unmanaged and the items included in the
calculations of such indices and averages may be different from those of the
equations used by the Fund to calculate the Portfolio's performance figures.
The Fund may from time to time summarize the substance of discussions
contained in shareholder reports in advertisements and publish Investment
Services' views as to markets, the rationale for the Portfolio's investments and
discussions of the Portfolio'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
Portfolio. 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 is based on historical results and is not intended
to indicate future performance. The total return of the Portfolio varies based
on market conditions, portfolio expenses, portfolio investments and other
factors. The value of the Portfolio's shares fluctuates and an investor's shares
may be worth more or less than their original cost upon redemption. The Fund may
also, at its discretion, from time to time make a list of the Portfolio's
holdings available to investors upon request.
FEDERAL TAX MATTERS
The Portfolio intends to qualify and to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). In order to qualify for that treatment, the Portfolio must
distribute to its
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shareholders for each taxable year at least 90% of its investment company
taxable income, consisting of net investment income, net short-term capital gain
and net gains from certain foreign currency transactions.
Sources of Gross Income. To qualify for treatment as a regulated
investment company, the Portfolio must also, among other things, derive its
income from certain sources. Specifically, in each taxable year, the Portfolio
must generally derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of securities or foreign currencies, or other income (including, but
not limited to, gains from options, futures or forward contracts) derived with
respect to its business of investing in securities, or these currencies. The
Portfolio must also generally derive less than 30% of its gross income each
taxable year from the sale or other disposition of any of the following which
was held for less than three months: (1) stock or securities, (2) options,
futures, or forward contracts (other than options, futures, or forward contracts
on foreign currencies), or (3) foreign currencies (or options, futures, or
forward contracts on foreign currencies) that are not directly related to the
Portfolio's principal business of investing in stock or securities (or options
and futures with respect to stock or securities). For purposes of these tests,
gross income generally is determined without regard to losses from the sale or
other disposition of stock or securities or other Portfolio assets.
Diversification of Assets. To qualify for treatment as a regulated
investment company, the Portfolio must also satisfy certain tax requirements
with respect to the diversification of its assets. The Portfolio must have, at
the close of each quarter of the Portfolio's taxable year, at least 50% of the
value of its total assets represented by cash, cash items, United States
Government securities, securities of other regulated investment companies, and
other securities which, in respect of any one issuer, do not exceed 5% of the
value of the Portfolio's total assets and that do not represent more than 10% of
the outstanding voting securities of the issuer. In addition, not more than 25%
of the value of the Portfolio's total assets may be invested in securities
(other than United States Government securities or the securities of other
regulated investment companies) of any one issuer, or of two or more issuers
which the Portfolio controls and which are engaged in the same or similar trades
or businesses or related trades or businesses. For purposes of the Portfolio's
requirements to maintain diversification for tax purposes, the issuer of a loan
participation will be the underlying borrower. In cases where the Portfolio does
not have recourse directly against the borrower, both the borrower and each
agent bank and co-lender interposed between the Portfolio and the borrower will
be deemed issuers of the loan participation for tax diversification purposes.
The Portfolio's investments in U.S. Government Securities are not subject to
these limitations. The foregoing diversification requirements are in addition to
those imposed by the Investment Company Act of 1940 (the "1940 Act").
Because the Fund is established as an investment medium for variable
annuity contracts, Section 817(h) of the Code imposes additional diversification
requirements on the Portfolio. These requirements which are in addition to the
diversification requirements mentioned above, place certain limitations on the
proportion of the Portfolio's assets that may be represented by
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any single investment. In general, no more than 55% of the value of the assets
of the Portfolio may be represented by any one investment; no more than 70% by
any two investments; no more than 80% by any three investments; and no more than
90% by any four investments. For these purposes, all securities of the same
issuer are treated as a single investment and each United States government
agency or instrumentality is treated as a separate issuer.
Additional Tax Considerations. The Portfolio will not be subject to the 4%
Federal excise tax imposed on amounts not distributed to shareholders on a
timely basis because the Portfolio intends to make sufficient distributions to
avoid such excise tax. If the Portfolio failed to qualify as a regulated
investment company, owners of Contracts based on the Portfolio: (1) might be
taxed currently on the investment earnings under their Contracts and thereby
lose the benefit of tax deferral; and (2) the Portfolio might incur additional
taxes. In addition, if the Portfolio failed to qualify as a regulated investment
company, or if the Portfolio failed to comply with the diversification
requirements of Section 817(h) of the Code, owners of Contracts based on the
Portfolio would be taxed on the investment earnings under their Contracts and
thereby lose the benefit of tax deferral. Accordingly, compliance with the above
rules is carefully monitored by Investment Services and it is intended that the
Portfolio will comply with these rules as they exist or as they may be modified
from time to time. Compliance with the tax requirements described above may
result in a reduction in the return under the Portfolio, since, to comply with
the above rules, the investments utilized (and the time at which such
investments are entered into and closed out) may be different from that
Investment Services might otherwise believe to be desirable.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations currently in effect. It is not
intended to be a complete explanation or a substitute for consultation with
individual tax advisers. For the complete provisions, reference should be made
to the pertinent Code sections and the Treasury Regulations promulgated
thereunder. The Code and Regulations are subject to change.
SHARES OF STOCK
Each issued and outstanding share of the Portfolio is entitled to
participate equally in dividends and distributions declared for the Portfolio's
stock and, upon liquidation or dissolution, in the Portfolio's net assets
remaining after satisfaction of outstanding liabilities. The shares of the
Portfolio, when issued, are fully paid and non-assessable and have no preemptive
or conversion rights.
As the designated successor to Separate Account Fund C, the Growth
Portfolio of the Fund received the assets of Separate Account Fund C. In
exchange, the Fund provided Separate Account C with shares in the Growth
Portfolio.
Under normal circumstances, subject to the reservation of rights explained
below, the Fund will redeem shares of the Portfolio in cash within 7 days.
However, the right of a
-21-
<PAGE>
shareholder to redeem shares and the date of payment by the Fund may be
suspended for more than seven days for any period during which the New York
Stock Exchange is closed, other than the customary weekends or holidays, or when
trading on such Exchange is restricted as determined by the SEC; or during any
emergency, as determined by the SEC, as a result of which it is not reasonably
practicable for the Portfolio to dispose of securities owned by it or fairly to
determine the value of its net assets; or for such other period as the SEC may
by order permit for the protection of shareholders.
Under Maryland law, the Fund is not required to hold annual shareholder
meetings and does not intend to do so.
CUSTODY OF ASSETS
Pursuant to a Custodian Agreement with the Fund, State Street Bank and
Trust Company ("State Street") 225 Franklin Street, Boston, Massachusetts 02110
holds the cash and portfolio securities of the Fund as custodian.
State Street is responsible for holding all securities and cash of the
Portfolio, receiving and paying for securities purchased, delivering against
payment securities sold, and receiving and collecting income from investments,
making all payments covering expenses of the Fund, all as directed by persons
authorized by the Fund. State Street does not exercise any supervisory function
in such matters as the purchase and sale of portfolio securities, payment of
dividends, or payment of expenses of the Portfolio or the Fund. Portfolio
securities of the Portfolio purchased domestically are maintained in the custody
of State Street and may be entered into the Federal Reserve, Depository Trust
Company, or Participants Trust Company book entry systems.
DIRECTORS AND OFFICERS
The Directors and officers of the Fund are listed below together with
their respective positions with the Fund and a brief statement of their
principal occupations during the past five years.
<TABLE>
<CAPTION>
Positions and Offices
Name, Age and Address** with the Fund Principal Occupation During the Past Five Years
- ----------------------- ------------- -----------------------------------------------
<S> <C> <C> <C>
Donald E. Cantlay ( 75) Board of Directors Director, Managing General Partner of Cee 'n' Tee
Company; Director of California Trucking Association
and Western Highway Institute; Director of FPA
Capital Fund and FPA New Income Fund.
<PAGE>
Richard N. Latzer ( 60)* Board of Directors President, Chief Executive Officer and Director of
Transamerica Investment Services, Inc.; Senior Vice
President and Chief Investment Officer of
Transamerica Corporation. Director and Chief
Investment Officer of Transamerica Occidental Life
Insurance Company.
DeWayne W. Moore ( 83) Board of Directors Retired Senior Vice President, Chief Financial Officer
and Director of Guy F. Atkinson Company of
California; Director of FPA Capital Fund and FPA
New Income Fund.
Gary U. Rolle ( 56)* Chairman, Board of Director,
Directors Executive Vice President and Chief Investment
Officer of
Transamerica
Investment
Services, Inc.;
Director and Chief
Investment Officer
of Transamerica
Occidental Life
Insurance Company.
Peter J. Sodini ( 56) Board of Directors Associate, Freeman Spogli & Co. (a private investor);
President, Chief Executive Officer and Director,
The Pantry, Inc. (a supermarket).
Director Pamida
Holdings Corp. (a retail merchandiser) and Buttrey
Food and Drug Co. (a supermarket).
Barbara A. Kelley ( 44) President President, Chief Operating Officer and Director of
Transamerica Financial Resources, Inc. and President
and Director of Transamerica Securities Sales
Corporation, Transamerica Advisors, Inc.,
Transamerica Product, Inc., Transamerica Product,
Inc. I, Transamerica Product, Inc. II, Transamerica
Product, Inc. IV, and Transamerica Leasing Ventures,
Inc.
Matt Coben ( 36)*** Vice President Vice President, Broker/Dealer Channel of the
Institutional Marketing Services Division of
Transamerica Life Insurance and Annuity Company
and prior to 1994, Vice President and National Sales
Manager of the Dreyfus Service Organization .
Sally S. Yamada ( 46) Treasurer and Vice President and Treasurer of Transamerica
Assistant Secretary Occidental Life Insurance Company and Treasurer of
Transamerica Life Insurance and Annuity Company.
Regina M. Fink ( 41) Secretary Counsel for Transamerica Occidental Life Insurance
Company and prior to 1994 Counsel and Vice
President for Colonial Management Associates, Inc.
Thomas M. Adams ( 62) Assistant Secretary Partner in the law firm of Lanning , Adams &
Peterson.
</TABLE>
-23-
<PAGE>
* These members of the Board are interested persons as defined by
Section 2(a)(19) of the 1940 Act.
** Except as otherwise noted, the mailing address of each Board member
and officer is 1150 South
Olive, Los Angeles, California 90015.
*** The mailing address of this officer is 401 North Tryon Street Suite
700, Charlotte, North Carolina 28202.
The principal occupations listed above apply for the last five years. In
some instances, the occupation listed above is the current position; prior
positions with the same company or affiliate are not indicated.
Each of the officers and members of the Board of the Fund holds the
same position with Transamerica Occidental's Separate Account Fund B. The
members of the Board of Directors are also members of the Board of Directors of
Transamerica Income Shares, Inc., a closed-end management company advised by
Transamerica Investment Services, Inc.
Mr. Rolle is a director of Transamerica Investors, Inc.
Compensation
The following table shows the compensation expected to be paid by the
Fund and the Fund Complex during the current fiscal year ending December 31,
1997, to all Directors of the Fund.
<TABLE>
<CAPTION>
Total
Compensation
Total Pension or From Registrant
Aggregate Retirement Benefits and Fund
Compensation Accrued As Part of Complex Paid to
Name of Person From Fund1/ Fund Expenses2/ Directors3/
<S> <C> <C> <C>
Donald E. Cantlay $1,000 -0- $6,000
Richard N. Latzer -0- -0- -0-
DeWayne W. Moore -0- -0- $6,250
Gary U. Rolle -0- -0- -0-
Peter J. Sodini -0- -0- $4,750
</TABLE>
- ---------------------
1/ Beginning January 1, 1997, each director of the Fund will be compensated $250
for each meeting they attend. (The Board of the Fund plans to hold four
regularly scheduled board meetings each year; other meetings may be scheduled.)
This is the same compensation the directors received while members of the Board
of Managers of Separate Account Fund C.
2/ None of the members of the Board of Directors currently receives any pension
or retirement benefits due to services rendered to the Fund and thus will not
receive any benefits upon retirement from the Fund.
3/ During fiscal year 1996, each Board member was also a member of the Board of
Transamerica Occidental's Separate Account Fund B and of Transamerica Income
Shares, Inc., a closed-end management company advised
-24-
<PAGE>
by Transamerica Investment services, Inc. Mr. Rolle' is a director of
Transamerica Investors, Inc. These
registered investment companies comprise the "Fund Complex."
LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the Fund.
Transamerica is involved in various kinds of routine litigation which, in
management's judgment, are not of material importance to Transamerica's assets.
OTHER INFORMATION
Legal Counsel
Sutherland, Asbill & Brennan L.L.P., 1275 Pennsylvania Avenue, N.W.,
Washington, D.C. 20004-2404, has provided advice to the Fund with respect to
certain matters relating to federal securities laws.
Other Information
The Prospectus and this Statement do not contain all the information
included in the registration statement filed with the SEC under the 1933 Act
with respect to the securities offered by the Prospectus. Certain portions of
the registration statement have been omitted from the Prospectus and this
Statement pursuant to the rules and regulations of the SEC. The registration
statement including the exhibits filed therewith may be examined at the office
of the SEC in Washington, D.C.
Statements contained in the Prospectus or in this Statement as to the
contents of any contract or other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the registration statement of which the
Prospectus and this Statement form parts, each such statement being qualified in
all respects by such reference.
Independent Auditors
Ernst & Young LLP, 515 South Flower Street, Los Angeles, California
90071, will act as the Fund's independent auditors.
Financial Statements
Audited financial statements for the Growth Portfolio of Transamerica Variable
-25-
<PAGE>
Insurance Fund, Inc. dated December 31, 1996, follow.
-26-
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS1
A. Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa 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 or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A 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 which are rated Baa are considered a 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 maybe characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements
and their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safe-guarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract
- --------
1The rating systems described herein are believed to be the most recent ratings
systems available from Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P") at the date of this Statement of Additional
Information for the securities listed. Ratings are generally given to securities
at the time of issuance. While the rating agencies may from time to time revise
such ratings, they undertake no obligations to do so, and the ratings indicated
do not necessarily represent ratings which will be given to these securities on
the date of the Fund's fiscal year end.
-27-
<PAGE>
over any long period of time may be small.
Caa:Bonds which are rated Caa are of poor standing.Such issues may be in default
or there may be present elements of danger with respect to principal or interest
principal or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Unrated: Where no rating has been assigned or where a rating has been
suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or
companies that are not
rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is
not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there is no
longer available reasonable up-to-date data to permit a judgment to be formed;
if a bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A and Baa groups which Moody's believe possess
the strongest investment attributes are designated by the symbols Aa1,
A1 and Baa1.
B. Standard & Poor's Corporations
AAA: Bonds rated AAA have the highest rating assigned by S&P.
Capacity to pay
interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to
pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened
-28-
<PAGE>
capacity to pay interest and repay principal for bonds in this category than in
higher rated categories.
BB--B--CCC--CC--C: Bonds rated BB, B, CCC, CC and C are regarded as
having predominantly speculative characteristics with respect to the issuer's
capacity to pay interest and repay principal. BB indicates the least degree of
speculation and C the highest. While such bonds will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
Unrated: Indicates that no public rating has been requested, that there
is insufficient information on which to base a rating, or that S&P does not rate
a particular type of obligation as a matter of policy.
Notes: Bonds which are unrated expose the investor to risks with respect to
capacity to pay interest or repay principal which are similar to the
risks of lower-rated speculative obligations. Investment Services' uses
its judgment, analysis and experience to evaluate such bonds.
-29-
<PAGE>
<PAGE>
See notes to financial statements.
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND
Schedule of Investments -- December 31, 1996
<PAGE>
Market
Shares Value
<PAGE>
- --------------------------------------------------------------
COMMON STOCKS -- 98.8%
- --------------------------------------------------------------
BANKING -- 4.2%
Wells Fargo & Company 5,000 $1,348,750
- --------------------------------------------------------------
BROADCASTING -- 2.6%
HSN Inc. (a) 35,000 831,250
- --------------------------------------------------------------
BUSINESS SERVICES -- 7.3%
First Data Corp. 64,718 2,362,207
- --------------------------------------------------------------
CHEMICALS -- 4.4%
Betzdearborn Inc. 24,000 1,404,000
- --------------------------------------------------------------
COMPUTERS & BUSINESS EQUIPMENT -- 12.5%
Applied Materials Inc. (a) 35,000 1,257,813
Dell Computer Corp. (a) 52,000 2,762,500
- --------------------------------------------------------------
4,020,313
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 3.6%
Millipore Corp. 28,000 1,158,500
- --------------------------------------------------------------
ELECTRONICS -- 12.2%
Intel Corp. 30,000 3,928,125
- --------------------------------------------------------------
FINANCIAL SERVICES -- 13.6%
Charles Schwab Corp. 55,000 1,760,000
Franklin Resources Inc. 22,000 1,504,250
Moneygram Payment Systems Inc. (a) 85,000 1,126,250
- --------------------------------------------------------------
4,390,500
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 4.8%
Gillette Company 20,000 1,555,000
- --------------------------------------------------------------
HOTELS & RESTAURANTS -- 8.8%
Host Marriott Corp. (a) 70,000 1,120,000
Mirage Resorts Inc. (a) 80,000 1,730,000
- --------------------------------------------------------------
2,850,000
- --------------------------------------------------------------
LEISURE TIME -- 4.3%
Walt Disney Company 20,000 1,392,500
- --------------------------------------------------------------
RETAIL GROCERY -- 4.8%
- --------------------------------------------------------------
SOFTWARE -- 15.7%
Broderbund Software Inc. (a) 40,000 $1,190,000
Intuit (a) 23,000 724,500
Microsoft Corp. (a) 24,000 1,983,000
Transaction Systems Architects Inc.(a) 35,000 1,163,750
- --------------------------------------------------------------
5,061,250
- --------------------------------------------------------------
TOTAL COMMON STOCKS
(cost $15,141,060) 31,852,395
- --------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.9%
- --------------------------------------------------------------
State Street Bank and Trust Company,
4.50%, due 01/2/97 (collateralized by $200,000 par value U.S. Treasury Bonds,
10.625%, due 08/15/15, with a value of $293,531,
cost $286,000)286,000 286,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.7%
(cost $15,427,060)* 32,138,395
OTHER ASSETS LESS LIABILITIES-- 0.3% 100,042
- -------------------------------------------------------------------------------
NET ASSETS-- 100.0% $ 32,238,437
=====================================================================
==========
(a) non-income producing security
* Aggregate cost for Federal tax purposes. Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax
cost and aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over value were $16,854,646 and $143,311,
respectively. Net unrealized appreciation for tax purposes is $16,711,335.
<PAGE>
=====================================================================
==========
=====================================================================
==========
Smith's Food & Drug Centers Inc. 50,000 1,550,000
- -------------------------------------------------------------------------------
<PAGE>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND,
INC.
Statement Of Assets And Liabilities
December 31, 1996
ASSETS
Investments, at value (cost $15,427,060) $ 32,138,395
Cash 4,651
Receivable for investments sold 152,370
Dividends and interest receivable 7,867
Due from Adviser (Note 2) 19,366
-------------
32,322,649
LIABILITIES
Payable for fund shares redeemed 19,526
Accrued expenses 64,686
84,212
TOTAL NET ASSETS $ 32,238,437
=============
NET ASSETS CONSIST OF:
Paid in capital $ 15,594,518
Undistributed net investment loss (Note 1)
(33,507)
Accumulated net realized loss on investments
(33,909)
Net unrealized appreciation of investments 16,711,335
-------------
TOTAL NET ASSETS $ 32,238,437
=============
Shares outstanding 2,949,776
Net asset value and offering and redemption
price per share $ 10.93
<PAGE>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND,
INC.
Statement Of Operations
For the year ended December 31, 1996
INVESTMENT INCOME
Interest income $ 33,420
Dividend income 133,189
-------------
166,609
EXPENSES
Mortality and expense risk management 245,046
Investment advisory fee 66,831
Management fees 39,988
Audit fees 15,000
Custodian fees 4,332
Administrative fees 3,199
Printing expenses 2,000
Other 167
-------------
Total operating expenses before reimbursement 376,563
Expenses reimbursed by Investment Adviser (Note 2) (19,366)
-------------
357,197
NET INVESTMENT LOSS (190,588)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 3,186,767
Net change in unrealized appreciation of investments
during the period 3,967,540
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 7,154,307
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 6,963,719
=============
<PAGE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND,
INC.
Statements Of Changes In Net Assets
For the years ended December 31,
1996
1995
---- ----
INCREASE IN NET ASSETS
From operations:
<S> <C> <C>
Net investment loss $ (190,588) $
(208,742)
Net realized gain on investments 3,186,767
1,213,189
Net change in unrealized appreciation of investments 3,967,540
8,056,995
-------------
- -------------
Net increase in net assets resulting from operations 6,963,719
9,061,442
Fund share transactions (Notes 1 and 3) (463,327)
(590,812)
-------------
- -------------
Increase in net assets 6,500,392
8,470,630
NET ASSETS
Beginning of year 25,738,045
17,267,415
-------------
- -------------
End of year (1) $ 32,238,437 $
25,738,045
=============
=============
(1) Includes undistributed net investment loss of: $ (33,507)
=============
$ -
===================
</TABLE>
<PAGE>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND,
INC.
Financial Highlights
<TABLE>
<CAPTION>
Selected data for a share* outstanding throughout each year are as follows:
1996 1995 1994
1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 8.582 $ 5.615 $ 5.239 $
4.287 $ 3.783
Investment Operations
Net investment income (loss)....................... (0.065) (0.069) (0.042)
(0.030) 0.012
Net realized and unrealized gain................... 2.413 3.036 0.418
0.982 0.492
- -----------------------------------------------------------------------------
Total from investment operations................... .....2.348 2.967 0.376
0.952 0.504
=====================================================================
========
Net asset value, end of year....................... $ 10.930 $ 8.582 $ 5.615 $
5.239 $ 4.287
=====================================================================
========
Total Return 27.36% 52.84% 7.19%
22.20% 13.32%
Ratios and Supplemental Data
Net assets, end of year (in thousands)............. $32,238 $25,738 $17,267
$16,584 $13,966
Expenses to average net assets .................... 1.27%(1) 1.41% 1.43%
1.43% 1.43%
Net investment income (loss)
to average net assets .............. (0.68%)(2) (0.94%) (0.80%)
(0.65%) 0.31%
Portfolio turnover rate............................ 34.58% 18.11% 30.84% 42.04%
43.07%
Average commission rate (3) $0.07 - -
- - -
</TABLE>
* Prior to November 1, 1996, activity represents accumulated unit values of the
Separate Account which have been converted to share
values for presentation purposes.
(1) If the Investment Advisor had not reimbursed expenses for the year
ended December 31, 1996, the ratio of
operating expenses
to average net assets would have been 1.34%.
(2) If the Investment Advisor had not reimbursed expenses for the year
ended December 31, 1996, the ratio of
net investment loss
to average net assets would have been (0.75%).
(3) This disclosure is required for fiscal periods beginning on or after
September 1, 1995.
<PAGE>
Transamerica Variable Insurance Fund, Inc.
Notes to Financial Statements
December 31, 1996
1. Organization and Summary of Significant Accounting Policies
Transamerica Variable Insurance Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as an open-end diversified management investment
company. The Fund's investment objective is long-term capital growth. The Fund
currently consists of one investment portfolio, the Growth Portfolio (the
"Portfolio").
The Fund was established as a Maryland Corporation on June 23, 1995, as the
successor to Transamerica Occidental's Separate Account Fund C (the "Separate
Account") which was organized as an open-end diversified management investment
company. On November 1, 1996, all investments held by the Separate Account with
a fair value of $29,567,077 and a cost basis of $15,661,836 were transferred to
the Portfolio of the Fund. In exchange for these investments, the Separate
Account received all of the outstanding shares (2,956,116) of the Fund. This
transaction was accounted for in a manner similar to a pooling of interests.
Thereafter, the Separate Account's only investment is an investment in the Fund.
As the Fund is treated as the successor to the Separate Account, all activity
prior to November 1, 1996 incorporates activity of the Separate Account.
Effective October 31, 1996, the net asset value of the Fund was re-priced at $10
per unit. All previous accumulation unit values of the Separate Account have
been restated for presentation purposes to reflect for this change. Selected
financial information for the ten month period ended October 31, 1996 is as
follows:
Investment income $154,796
Expenses (311,877)
Net investment loss (157,081)
Net realized and unrealized gain on investments 4,374,273
--------------
Net increase net assets resulting from $4,217,192
operations
==============
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements:
(A) Valuation of Securities - Equity securities traded on a national exchange,
NASDAQ and over-the-counter securities are valued at the last sale price.
Securities for which market quotations are not readily available are valued
at fair value as determined in good faith pursuant to procedures
established by the Fund's Board of Directors. Debt securities with a
maturity of 60 days or less are valued at amortized cost, which
approximates market value.
(B) Repurchase Agreements - The Portfolio may enter into repurchase agreements
with Federal Reserve System member banks or U.S. securities dealers. A
repurchase agreement occurs when the Portfolio purchases an
interest-bearing debt obligation and the seller agrees to repurchase the
debt obligation on a specified date in the future at an agreed-upon price.
If the seller is unable to make a timely repurchase, the Portfolio's
expected proceeds could be delayed, or the Portfolio could suffer a loss in
principal or current interest, or incur costs in liquidating the
collateral.
(C) Securities Transactions and Investment Income - Securities transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend
date and interest income is recorded daily on an accrual basis. Realized
gains and losses on investments are determined using the identified cost
method for both financial statement and Federal income tax purposes.
The aggregate cost of securities purchased (excluding short-term
investments) and proceeds from sales were $9,518,723 and $9,948,901,
respectively, in 1996.
<PAGE>
(D) Dividends and Distributions - The Portfolio distributes substantially all
of its net investment income in the form of dividends to its
shareholders. The Growth Portfolio declares its dividends and capital
gain distributions at least annually.
(E) Federal Income Taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all its taxable income
to its shareholders. Therefore, no federal income tax provision is
required.
(F) Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of financial statements and the reported amounts
of revenue and expenses during the period. Actual results could differ
from those estimates.
2. Investment Advisory Fees and Other Transactions With Affiliates
The Fund has entered into an Investment Advisory Agreement with Transamerica
Occidental Life Insurance Company (the "Adviser"), a wholly owned subsidiary of
Transamerica Insurance Corporation of California, which in turn is a wholly
owned subsidiary of Transamerica Corporation. For its services to the Portfolio,
the Adviser receives an annual advisory fee of 0.75% of the average daily net
assets of the Portfolio
The Adviser has contracted with Transamerica Investment Services, Inc., a wholly
owned subsidiary of Transamerica Corporation to provide investment advice to the
Portfolio. Transamerica Investment Services receives its fee directly from the
Adviser, and receives no compensation from the Portfolio.
The Adviser, in its discretion, has agreed to waive its fee and assume any other
operating expenses (other than certain extraordinary or non-recurring expenses)
of the Portfolio which exceed 0.10% of the average daily net assets of the
Portfolio.
Prior to November 1, 1996, Transamerica charged the Separate Account an
investment advisory fee of 0.30% and a mortality and expense risk fee of 1.10%.
Mortality and expense risk charges paid to Transamerica during 1996 (prior to
November 1, 1996) and 1995 were $245,046 and $246,377, respectively.
Certain directors and officers of the Fund are also directors and officers of
the Adviser, the Separate Account, Transamerica Investment Services, and other
affiliated Transamerica entities.
All shares of the Fund are owned by the Separate Account.
3. Capital Stock Transactions
The Fund has one billion shares of $0.001 par value stock authorized. As of
December 31, 1996, the Portfolio was authorized to issue two hundred million
shares. On October 31, 1996, 2,956,116 shares of the Portfolio were issued in
respect to the organization of the Fund (see Note 1). For the period of November
1, 1996 to December 31, 1996 1,200 shares were sold for $13,223 and 7,540 shares
were redeemed for $88,385.
Prior to November 1, 1996, the Separate Account received deposits from and made
certain annuity payments and distributions to unit holders of the Separate
Account. Total deposits from unit holders during 1996 and 1995 were $36,216 and
$31,581, respectively; total payments made to unit holders during 1996 and 1995
were $427,375 and $622,393, respectively. These transactions are classified as
fund share transactions in the Statements of Changes in Net Assets.
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Directors
Transamerica Variable Insurance Fund, Inc.
We have audited the accompanying statement of assets and liabilities including
the schedule of investments, of the Growth Portfolio of Transamerica Variable
Insurance Fund, Inc. (previously Transamerica Occidental's Separate Account Fund
C), as of December 31, 1996, the related statement of operations for the year
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Growth Portfolio of Transamerica Variable Insurance Fund, Inc., at December 31,
1996, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
Los Angeles, California
February 24, 1997
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in
Parts A or B of this Registration Statement.
(b) Exhibits
(1) Articles of Incorporation of Transamerica
Variable Insurance Fund, Inc. 1/
(2) Bylaws of Transamerica Variable Insurance
Fund, Inc. 1/
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Form of Investment Advisory Agreement
between Transamerica Variable
Insurance Fund, Inc. and Transamerica
Occidental Life Insurance Company. 2/
(b) Form of Investment Sub-Advisory Agreement
between Transamerica
Occidental Life Insurance Company and
Transamerica Investment Services,
Inc. 3/
(6) Participation Agreement between Transamerica
Variable Insurance
Fund, Inc. and Transamerica Occidental Lif
Insurance Company. 6/
(7) Not Applicable.
(8) Form of Custodial Contract between
Transamerica Variable Insurance Fund,
Inc. and State Street Bank and Trust
Company. 5/
(9) Form of Adminstrative Services Agreement between
Transamerica Variable Insurance Fund, Inc. and State Street Bank and Trust
Company6/
(10) Opinion and Consent of Counsel.
--
(11) (a) Consent of Sutherland, Asbill & Brennan, L.L.P. 6/
--
(b) Consent of Ernst & Young LLP. 6/
(12) No financial statements are omitted from Item 23.
(13) Form of Agreement and Plan of Reorganization. 1/
-
(14) Not Applicable.
<PAGE>
(15) Not Applicable.
(16) Performance Data Calculations. 6/
(17) Not Applicable.
(18) Not Applicable.
(19) Powers of Attorney.
(27) Financial Data Schedule
1/ Incorporated by reference to the like-numbered exhibit of the initial
filing of this Registration Statement
on Form N-1A, File No. 33-99016 (Nov. 3, 1995).
2/ Incorporated by reference to Exhibit D to Part A of the Registration
Statement on Form N-14 of
Transamerica Occidental's Separate Account Fund C, File No. 333-11599
(Sept. 9, 1996).
3/ Incorporated by reference to Exhibit E to Part A of the Registration
Statement on Form N-14 of
Transamerica Occidental's Separate Account Fund C, File No. 333-11599
(Sept. 9, 1996).
4/ Incorporated by reference to the like-numbered exhibit to Pre-Effective
Amendment No. 1 to this
Registration Statement on Form N-1A, File No. 33-99016 (Sept. 12, 1996).
5/ Incorporated by reference to the like-numbered exhibit to Post-
Effective Amendment No.
1 to this Registration Statement on Form N-1A, File No. 33-99016
(November 4, 1996).
6/ Filed herewith.
Item 25. Person Controlled by or Under Common Control With the Registrant.
The Registrant, Transamerica Variable Insurance Fund, 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:
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation
ARC Reinsurance Corporation - Hawaii
Inter-America Corporation - California
Mortgage Corporation of America - California
2
<PAGE>
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
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
3
<PAGE>
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
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
4
<PAGE>
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
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
Transamerica Products IV, Inc. - California
Transamerica Products I, Inc. - California
Transamerica Securities Sales Corporation - Maryland
Transamerica Service Company - Delaware
Transamerica International Holdings, Inc. - Delaware
Transamerica Investment Services, Inc. - Delaware
Transamerica Income Shares, Inc. (managed by TA Investment Services)
- Maryland
Transamerica LP Holdings Corp. - Delaware
Transamerica Properties, Inc. - Delaware
Transamerica Retirement Management Corporation - Delaware
5
<PAGE>
Transamerica Real Estate Tax Service (A Division of Transamerica
Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of TA Real Estate
Tax Service) - N/A
Transamerica Realty Services, Inc. - Delaware
Bankers Mortgage Company of California - California
Pyramid Investment Corporation - Delaware
The Gilwell Company - California
Transamerica Affordable Housing, Inc. - California
Transamerica Minerals Company - California
Transamerica Oakmont Corporation - California
Ventana Inn, Inc. - California
Transamerica Telecommunications Corporation - Delaware
6
<PAGE>
7
<PAGE>
8
<PAGE>
9
<PAGE>
*Designates INACTIVE COMPANIES
oA Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partne
Item 26. Numbers of Holders of Securities (as of March 31, 1997):
Title of Class Number of Record Holders
Growth One
Item 27. Indemnification
The Bylaws of Transamerica Variable Insurance Fund, Inc. provide in
Article VIII as follows:
ARTICLE VIII
Indemnification
Section 1. Every person who is or was a director, officer or
employee of the Corporation or of any other corporation which he served
at the request of the Corporation and in which the Corporation owns or
owned shares of capital stock or of which it is or was a creditor shall
have a right to be indemnified by the Corporation to the full extent
permitted by applicable law, against all liability, judgments, fines,
penalties, settlements and reasonable expenses incurred by him in
connection with or resulting from any threatened or actual claim,
action, suit or proceeding, whether criminal, civil, or administrative,
in which he may become involved as a party or otherwise by reason of
his being or having been a director, officer or employee, except as
provided in Article VIII, Sections 2 and 3 of these By-laws.
Section 2. Disabling Conduct. No such director, officer or
employee shall be indemnified for any liabilities or expenses arising
by reason of "disabling conduct," whether or not there is an
adjudication of liability. "Disabling conduct" means willful
misfeasance, active and deliberate dishonesty, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct
of office.
Whether any such liability arose out of disabling conduct
shall be determined: (a) by a final decision on the merits (including,
but not limited to, a dismissal for insufficient evidence of any
disabling conduct) by a court or other body, before whom the proceeding
was brought that the person to be indemnified ("indemnitee") was not
liable by reason of disabling conduct; or (b) in the absence of such a
decision, by a reasonable determination, based upon a review of the
facts, that such person was not liable by reason of disabling conduct,
(i) by the vote of a majority of a quorum of directors who are neither
interested persons of the Corporation nor parties to the action, suit,
or proceeding in question ("disinterested, non-party directors"), or
(ii) by independent legal counsel in a written opinion if a quorum of
disinterested, non-party directors so directs or if such quorum is not
obtainable, or (iii) by majority vote of the shareholders, or (iv) by
any other reasonable and fair means not inconsistent with any of the
10
<PAGE>
above.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that any
liability or expense arose by reason of disabling conduct.
Section 3. Directors' Standards of Conduct. No person who is
or was a director shall be indemnified under this Article VIII for any
liabilities or expenses incurred by reason of service in that capacity
if an act or omission of a director was material to the matter giving
rise to the threatened or actual claim, action, suit or proceeding; and
such act (a) was committed in bad faith; or (2) was the result of
active and deliberate dishonesty.
Section 4. Expenses Prior to Determination. Any liabilities or
expenses of the type described in Article VIII, Section 1 may be paid
by the Corporation in advance of the final disposition of the claim,
action, suit or proceeding, as authorized by the directors in the
specific case, (a) upon receipt of a written affirmation by the
indemnitee of his good faith belief that his conduct met the standard
of conduct necessary for indemnification as authorized by this Article
VIII, Section 2; (b) upon receipt of a written undertaking by or on
behalf of the indemnitee to repay the advance, unless it shall be
ultimately determined that such person is entitled to indemnification;
and (c) provided that (i) the indemnitee shall provide security for
that undertaking, or (ii) the Corporation shall be insured against
losses arising by reason of any lawful advances, or (iii) a majority of
a quorum of disinterested, non-party directors, or independent legal
counsel in a written opinion, shall determine, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that
there is reason to believe the indemnitee ultimately will be found
entitled to indemnification.
A determination pursuant to subparagraph (c)(iii) of this
Article VIII, Section 4 shall not prevent the recovery from any
indemnitee of any amount advanced to such person as indemnification if
such person is subsequently determined not to be entitled to
indemnification; nor shall a determination pursuant to said
subparagraph prevent the payment of indemnification if such person is
subsequently found to be entitled to indemnification.
Section 5. Provisions Not Exclusive. The indemnification
provided by this Article VIII shall not be deemed exclusive of any
rights to which those seeking indemnification may be entitled under any
law, agreement, vote of shareholders, or otherwise.
Section 6. General. No indemnification provided by this
Article shall be inconsistent
with the Investment Company Act of 1940 or the Securities Act of 1933.
Any indemnification provided by this Article shall continue as
to a person who has ceased to be a director, officer, or employee, and
shall inure to the benefit of the heirs, executors and administrators
of such person. In addition, no amendment, modification or repeal of
this Article shall adversely affect any right or protection of an
indemnitee that exists at the time of such amendment, modification or
repeal.
* * *
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
11
<PAGE>
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 Variable Insurance Fund,
Inc. are covered under a Directors and Officers liability program which includes
direct coverage to directors and officers and corporate reimbursement to
reimburse the Fund 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 their being directors and officers. The limit
of liability under the program is $5,000,000 for the period __ from the
effectiveness of this registration statement to 2/1/98. The primary policy under
the program is with ICI Mutual Insurance Company.
Item 28. Business and Other Connections of the Investment Adviser:
Transamerica Occidental Life Insurance Company ("Transamerica") and Transamerica
Investment Services, Inc. (the "Sub-Adviser") are registered investment
advisers. Transamerica is a wholly-owned subsidiary of Transamerica Insurance
Corporation of California, which in turn is a wholly-owned subsidiary of
Transamerica Corporation. The Sub-Adviser is a direct wholly-owned subsidiary of
Transamerica Corporation.
Information as to the officers and directors of the Sub-Adviser is included in
its Form ADV filed in 1997 with the Securities and Exchange Commission
(registration number 801-7740) and is incorporated herein by reference.
The names of the Directors and Executive Officers of Transamerica, their
positions and offices with the Company, and their other affiliations are as
follows. The address of Directors and Executive Officers is 1150 South Olive
Street, Los Angeles, California 90015-2211, unless indicated by asterisk.
<TABLE>
<CAPTION>
Other business and
business
address, profession, vocation
or
employment of a substantial
nature
engaged in for
Position and his own account during
last two
Name and Principal Position and Offices Offices with fiscal years or as
director, officer,
Business Address with Transamerica Old Account C employee,
partner or trustee
<S> <C> <C> <C>
Robert Abeles Director, Executive Vice None None
President & Chief
Financial Officer
Thomas J. Cusack Director, President & None Executive
Vice
President of
Chief Executive Officer Transamerica
Corporation
12
<PAGE>
James W. Dederer Director, Executive None None
Vice President, General
Counsel and Corporate
Secretary
John A. Fibiger Director and Chairman None None
Richard H. Finn* Director None Executive Vice
President of
Transamerica
Corporation;
Director, President and
Chief Executive Officer
of
Transamerica Finance
Group, Inc.
David E. Gooding Director, Executive None None
Vice President and
Chief Information Officer
Edgar H. Grubb* Director None Executive Vice
President,
and Chief Financial
Officer
of
Transamerica
Corporation
Frank C. Herringer* Director None Director,
President
and Chief Executive
Officer
of Transamerica
Corporation
Daniel E. Jund Director None President and
Chief
Executive Officer of
Transamerica Assurance
Company
Richard N. Latzer* Director Director Senior
Vice
President and Chief
Invesment Officer of
Transamerica
Corporation;
Director, President and
Chief
Executive Officer of
Transamerica
Investment
Services, Inc.
Karen O. MacDonald Director, Senior Vice None None
President and Corporate
Actuary
Gary U. Rolle Director and Chief Chairman, Executive
Vice President
Investment Officer Board of and Chief
Investment
13
<PAGE>
Managers Officer of
Transamerica
Investment Services,
Inc.
James B. Roszak Director and President, None None
Life Insurance Division
and Chief Marketing Officer
William E. Simms** Director and President, None None
Reinsurance Division
T. Desmond Sugrue Director and Executive None None
Vice President
Nooruddin S. Veerjee Director and President, None President of
Group Pension Division Transamerica Life
Insurance
and Annuity Company
Robert A. Watson* Director None Executive Vice
President of
Transamerica
Corporation
- --------------------
</TABLE>
* 600 Montgomery Street, San Francisco, California 94111
** 401 North Tryon Street, Suite 700, Charlotte, North Carolina 28202
List of Officers for Transamerica Occidental Life Insurance Company
<TABLE>
<CAPTION>
<S> <C>
Thomas J. Cusack President and Chief Executive Officer
John A. Fibiger, FSA Chairman
James B. Roszak President, Life Insurance Division and
Chief
Marketing Officer
William E. Simms President - Reinsurance Division
Robert Abeles Executive Vice President and
Chief Financial Officer
James W. Dederer, CLU Executive Vice President, General
Counsel and Corporate
Secretary
David E. Gooding Executive Vice President and Chief
Information Officer
Bruce Clark Senior Vice President and Chief
Actuary
Daniel E. Jund, FLMI Senior Vice President
Karen MacDonald Senior Vice President and Corporate
Actuary
Louise K. Neal Senior Vice President
William N. Scott, CLU, FLMI Senior Vice President
T. Desmond Sugrue Executive Vice President
Ron F. Wagley Senior Vice President and Chief
Agency Officer
14
<PAGE>
Nooruddin S. Veerjee, FSA President - Group Pension Division
Darrel K.S. Yuen
President-Asian Operations
Richard N. Latzer Chief Investment Officer
Gary U. Rolle', CFA Chief Investment Officer
Glen E. Bickerstaff Investment Officer
John M. Casparian Investment Officer
Heather E. Creeden Investment Officer
Colin Funai Investment Officer
William L. Griffin Investment Officer
Sharon K. Kilmer Investment Officer
Matthew W. Kuhns Investment Officer
Lyman Lokken Investment Officer
Michael F. Luongo Investment Officer
Matthew Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Dale S. Rathe-Aazam Investment Officer
Susan A. Silbert Investment Officer
Jeffrey S. Van Harte Investment Officer
Lennart H. Walin Investment Officer
Paul Wintermute Investment Officer
William D. Adams Vice President
Sandra Bailey-Whichard Vice President
Nicki Bair Senior Vice President
Dennis Barry Vice President
Laurie Bayless Vice President
Marsha Blackman Vice President
Thomas Briggle Vice President
Thomas Brimacombe Vice President
Roy Chong-Kit Senior Vice President and
Actuary
Alan T. Cunningham Vice President and Deputy General
Counsel
Aldo Davanzo Vice President and Assistant
Secretary
Daniel Demattos Vice President
Peter DeWolf Vice President
Mary J. Dinkel, CLU Vice President
Randy Dobo Vice President and Actuary
Thomas P. Dolan, FLMI Vice President
John V. Dohmen Vice President
Gail DuBois Vice President and Associate
Actuary
Ken Ellis Vice President
George Garcia Vice President and Chief
Medicare Officer
David M. Goldstein Vice President and Associate General
Counsel
John D. Haack Vice President
Paul Hankwitz, MD Vice President and Chief Medical
Director
Randall C. Hoiby Vice President and Associate General
Counsel
John W. Holowasko Vice President
William M. Hurst Vice President and Associate General
Counsel
James M. Jackson Vice President and Deputy General
Counsel
Allan H. Johnson, FSA Vice President and Actuary
15
<PAGE>
Ken Kilbane Vice President
James D. Lamb, FSA Vice President and Chief Actuary
Ronald G. Larson, FLMI Regional Vice President
Frank J. LaRusso Vice President and Chief Underwriting
Officer
Richard K. M. Lau, ASA Vice President
Thomas Liu Vice President
Katherine Lomeli Vice President and Assistant Secretary
Philip E. McHale, FLMI Vice President
Mark Madden Vice President
Vic Modugno Vice President and Associate
Actuary
Mischelle Mullin Vice President
Wayne Nakano, CPA Vice President and Controller
Paul Norris Vice President and Actuary
John W. Paige, FSA Vice President and Associate Actuary
Stephen W. Pinkham Vice President
Bruce Powell Vice President
Larry H. Roy Vice President
Joel D. Seigle Vice President
Sandra Smith Vice President
James O. Strand Vice President
Deborah Tatro Vice President
Lawrence Taylor Vice President
Claude W. Thau, FSA Senior Vice President
Kim A. Tursky Vice President and Assistant
Secretary
William R. Wellnitz, FSA Senior Vice President and Actuary
Anthony Wilkey Vice President
Thomas Winters Vice President
Ronald R. Wolfe Regional Vice President
Sally Yamada Vice President and Treasurer
Olisa Abaelu Second Vice President
Flora Bahaudin Second Vice President
David Barcellos Vice President
Michael C. Barnhart Regional Vice President
Dan Bass, ASA Second Vice President
Frank Beardsley Vice President
Esther Blount Second Vice President
Benjamin Bock Vice President
Art Bueno Second Vice President
Barry Buner Second Vice President
Beverly Cherry Second Vice President
Wonjoon Cho Second Vice President
Art Cohen Second Vice President
Rose Corlew Second Vice President
Dave Costanza Second Vice President
Gloria Durosko Second Vice President
Reid A. Evers Vice President and Associate
General Counsel
David Fairhall Second Vice President and
Associate Actuary
Selma Fox Second Vice President
Jerry Gable, FSA Second Vice President
Roger Hagopian Second Vice President
Sharon Haley Second Vice President
Zahid Hussain Vice President and
Associate Actuary
Ahmad Kamil, FIA, MAAA Vice President and Associate Actuary
16
<PAGE>
Ronald G. Keller Second Vice President
Ken Kiefer Second Vice President
Joan Klubnik Second Vice President
Lynette Lawson Second Vice President
Dean LeCesne Second Vice President
Marilyn McCullough Vice President and Chief Reinsurance
Underwriter
Richard MacKenzie Second Vice President
Carl Marcero Vice President and Chief
Reinsurance Underwriter
Lisa Moriyama Second Vice President
Joseph K. Nelson Second Vice President
John Oliver Second Vice President
Susan O'Brien Second Vice President
Daragh O'Sullivan Second Vice President
Stephanie Quincey Second Vice President
James R. Robinson Second Vice President
John J. Romer Vice President
Thomas M. Ronce Second Vice President and Assistant
General Counsel
Hugh Shellenberger Second Vice President
Mary Spence Second Vice President
Jean Stefaniak Second Vice President
Michael S. Stein Second Vice President
Christina Stiver Vice President
David Stone Second Vice President
Suzette Stover-Hoyt Second Vice President
John Tillotson Second Vice President
Janet Unruh Second Vice President and
Assistant General Counsel
Colleen Vandermark Vice President
Susan Viator Second Vice President
Richard T. Wang Second Vice President
James B. Watson Second Vice President and Assistant
General Counsel
Joanne E. Whitaker Second Vice President
Sheila Wickens, MD Second Vice President and Medical
Director
William Wojciechowski Second Vice President
Michael B. Wolfe Vice President
Wilbur L. Fulmer Tax Officer
James Wolfenden Statement Officer
</TABLE>
Item 29. Principal Underwriter
Not applicable.There is no principal underwriter, the Fund is self-distributing.
17
<PAGE>
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; or at State Street Bank and Trust Company, Registrant's custodian,
located at 225 Franklin Street, Boston, Massachusetts 02110.
Item 31. Management Services
All management contracts are discussed in Parts A or B.
Items 32. Undertakings
(a) Not Applicable.
(b) Registrant undertakes that it will file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of this registration statement.
(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 shareholders of at least 10% of the Fund's
outstanding shares, and to assist in communication with other shareholders as
required by Section 16(c).
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Transamerica Variable Insurance Fund, Inc.
certifies that this Post-Effective Amendment meets all of the requirements for
effectiveness of this registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and that it has duly caused this Post-Effective Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned in the City of Los Angeles, and State of California on this______
day of April, 1997.
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
By: __________________________*
Barbara A. Kelley
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C>
______________________* President April 15,
1997
Barbara A. Kelley
______________________* Treasurer April 15,
1997
Sally S. Yamada
______________________* Director April15,
1997
Donald E. Cantlay
______________________* Director April15,
1997
Richard N. Latzer
______________________* Director April15,
1997
DeWayne W. Moore
______________________* Director April15,
1997
Gary U. Rolle'
______________________* Director April15,
1997
</TABLE>
19
<PAGE>
Peter J. Sodini
On April 15, 1997 as Attorney-in-Fact pursuant to
powers of
*By: Regina M. Fink attorney filed with the initial registration
statement.
20
<PAGE>
EXHIBIT INDEX
Exhibit Description
No. of Exhibit
(9) Form of Adminstrative Services Agreement between
Transamerica Variable Insurance
Fund, Inc. and State Street Bank and Trust Company
(11)(a) Consent of Sutherland, Asbill & Brennan, L.L.P.
(11)(b) Consent of Ernst & Young LLP.
(27) Financial Data Schedule
<PAGE>
Exhibit 9
Form of Administrative Services Agreement
between
Transamerica Variable Insurance Fund, Inc.
and
State Street Bank and Trust Company
<PAGE>
ADMINISTRATION AGREEMENT
Agreement dated as of October 31, 1996 by and between State
Street Bank and Trust Company, a Massachusetts trust company (the
"Administrator"), and Transamerica Variable Insurance Fund, Inc. (the "Fund").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund desires to retain the Administrator to
furnish certain administrative services to the Fund, and the Administrator is
willing to furnish such services, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as
administrator with respect to the Fund for purposes of providing certain
administrative services for the period and on the terms set forth in this
Agreement. The Administrator accepts such appointment and agrees to render the
services stated herein.
The Fund will initially consist of the portfolio(s) and/or
class(es) of shares (each an "Investment Fund") listed in Schedule A to this
Agreement. In the event that the Fund establishes one or more additional
Investment Funds with respect to which it wishes to retain the Administrator to
act as administrator hereunder, the Fund shall notify the Administrator in
writing. Upon written acceptance by the Administrator, such Investment Fund
shall become subject to the provisions of this Agreement to the same extent as
the existing Investment Funds, except to the extent that such provisions
(including those relating to the compensation and expenses payable by the Fund
and its Investment Funds) may be modified with respect to each additional
Investment Fund in writing by the Fund and the Administrator at the time of the
addition of the Investment Fund.
2. DELIVERY OF DOCUMENTS
The Fund will promptly deliver to the Administrator copies of
each of the following documents and all future amendments and supplements, if
any:
a. The Fund's charter document and by-laws;
b. The Fund's currently effective registration statement
under the Securities Act of 1933, as amended (the
"1933 Act"), and the 1940 Act and the Fund's
Prospectus(es) and Statement(s) of Additional
Information relating to all Investment Funds and all
amendments and supplements thereto as in effect from
time to time;
c. Certified copies of the resolutions of the Board of
Directors of the Fund (the "Board") authorizing (1)
the Fund to enter into this Agreement and (2) certain
individuals on behalf of the Fund to (a) give
instructions to the Administrator pursuant to this
Agreement and (b) sign checks and pay expenses;
d. A copy of the investment advisory agreement
between the Fund and its investment
adviser; and
e. Such other certificates, documents or opinions
which the Administrator may, in its
reasonable discretion, deem necessary or
appropriate in the proper performance of its
duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly
organized, existing and in good standing
under the laws of The Commonwealth of Massachusetts;
b. It has the corporate power and authority to carry
on its business in The Commonwealth
of Massachusetts;
c. All requisite corporate proceedings have been
taken to authorize it to enter into and
perform this Agreement;
d. No legal or administrative proceedings have been
instituted or threatened which would
impair the Administrator's ability to perform its
duties and obligations under this
Agreement; and
e. Its entrance into this Agreement shall not cause a
material breach or be in material conflict with any
other agreement or obligation of the Administrator or
any law or regulation applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a corporation, duly organized and existing
and in good standing under the laws
of Maryland;
b. It has the corporate power and authority under
applicable laws and by its charter and
by-laws to enter into and perform this Agreement;
c. All requisite proceedings have been taken to
authorize it to enter into and perform
this Agreement;
d. It is an investment company properly registered under
the 1940 Act;
e. A registration statement under the 1933 Act and the
1940 Act has been filed and will be effective and
remain effective during the term of this Agreement.
The Fund also warrants to the Administrator that all
necessary filings under the securities laws of the
states in which the Fund offers or sells its shares
will have been made and will be current during the
term of this Agreement;
f. No legal or administrative proceedings have been
instituted or threatened which would
impair the Fund's ability to perform its duties and
obligations under this Agreement;
g. Its entrance into this Agreement shall not cause
a material breach or be in material
conflict with any other agreement or obligation
of the Fund or any law or regulation
applicable to it; and
h. As of the close of business on the date following the
date of this Agreement, the Fund is authorized to
issue shares of capital stock in the authorized
amounts as set forth in Schedule A to this Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in
each case, subject to the control, supervision and direction of the Fund and the
review and comment by the Fund's auditors and legal counsel and in accordance
with procedures which may be established from time to time between the Fund and
the Administrator:
a. Oversee the determination and publication of the
Fund's net asset value in accordance
with the Fund's policy as adopted from time to time
by the Board;
b. Oversee the maintenance by the Fund's custodian
of certain books and records of the
Fund as required under Rule 31a-1(b) of the 1940 Act;
c. Prepare the Fund's federal, state and local
income tax returns for review by the
Fund's independent accountants and filing by the
Fund's treasurer;
d. Review calculation, submit for approval by
officers of the Fund and arrange for
payment of the Fund's expenses;
e. Prepare for review and approval by officers of the
Fund financial information for the Fund's semi-annual
and annual reports, proxy statements and other
communications required or otherwise to be sent to
Fund shareholders, and arrange for the printing and
dissemination of such reports and communications to
shareholders;
f. Prepare for review by an officer of and legal counsel
for the Fund the Fund's periodic financial reports
required to be filed with the Securities and Exchange
Commission ("SEC") on Form N-SAR and financial
information required by Form N-1A and such other
reports, forms or filings as may be mutually agreed
upon;
g. Prepare reports relating to the business and
affairs of the Fund as may be mutually
agreed upon and not otherwise prepared by the
Fund's investment adviser, custodian,
legal counsel or independent accountants;
h. Make such reports and recommendations to the Board
concerning the performance of the
independent accountants as the Board may reasonably
request;
i. Make such reports and recommendations to the Board
concerning the performance and fees
of the Fund's custodian as the Board may reasonably
request or deems appropriate;
j. Oversee and review calculations of fees paid to
the Fund's investment adviser and
custodian;
k. Consult with the Fund's officers, independent
accountants, legal counsel and custodian
in establishing the accounting policies of the Fund;
l. Review implementation of any dividend reinvestment
programs authorized by the Board;
m. Respond to, or refer to the Fund's officers,
shareholder inquiries relating to the
Fund;
n. Provide periodic testing of portfolios to assist the
Fund's investment adviser in complying with Internal
Revenue Code mandatory qualification requirements,
the requirements of the 1940 Act and Fund prospectus
limitations as may be mutually agreed upon;
o. Prepare and file with the SEC Rule 24f-2 notices.
The Administrator shall provide the office facilities and the personnel required
by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund such
compensation for the Administrator's services provided pursuant to this
Agreement as may be agreed to from time to time in a written fee schedule
approved by the parties and initially set forth in Schedule B to this Agreement.
The fees are accrued daily and billed monthly and shall be due and payable upon
receipt of the invoice. Upon the termination of this Agreement before the end of
any month, the fee for the part of the month before such termination shall be
prorated according to the proportion which such part bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. In
addition, the Fund shall reimburse the Administrator for its reasonable and
necessary out-of-pocket costs incurred in connection with this Agreement.
The Fund agrees promptly to reimburse the Administrator for
any equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Fund's behalf at the Fund's request or with
the Fund's consent.
The Fund will bear all expenses that are incurred in its
operation and not specifically assumed by the Administrator. Expenses to be
borne by the Fund, include, but are not limited to: organizational expenses;
cost of services of independent accountants and legal and tax counsel (including
such counsel's review of the Fund's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Fund directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Fund; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director\trustee or
employee of the Fund; costs incidental to the preparation, printing and
distribution of the Fund's registration statements and any amendments thereto
and shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation (other than the preparation specified in Section 5 of this
Agreement) and filing of the Fund's tax returns, Form N-1A or N-2 and Form
N-SAR, and all notices, registrations and amendments associated with applicable
federal and state tax and securities laws; all applicable registration fees and
filing fees required under federal and state securities laws; fidelity bond and
directors' and officers' liability insurance; and cost of independent pricing
services used in computing the Fund's net asset value.
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided,however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Fund for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the
Fund for instructions and may consult with legal counsel (which shall be counsel
for the Fund or counsel approved by the Fund) or the independent accountants for
the Fund at the expense of the Fund, with respect to any matter arising in
connection with the services to be performed by the Administrator under this
Agreement. The Administrator shall not be liable, and shall be indemnified by
the Fund, for any action taken or omitted by it in good faith in reliance upon
any such instructions or advice or upon any paper or document believed by it to
be genuine and to have been signed by the proper person or persons. The
Administrator shall not be held to have notice of any change of authority of any
person until receipt of written notice thereof from the Fund. Nothing in this
paragraph shall be construed as imposing upon the Administrator any obligation
to seek such instructions or advice, or to act in accordance with such advice
when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of
only such duties as are set forth in this Agreement and, except as otherwise
provided under Section 6, shall have no responsibility for the actions or
activities of any other party, including other service providers. The
Administrator shall have no liability for any error of judgement or mistake of
law or for any loss or damage resulting from the performance or nonperformance
of its duties hereunder unless solely caused by or resulting from the negligence
or willful misconduct of the Administrator, its officers or employees. The
Administrator shall not be liable for any special, indirect, incidental, or
consequential damages of any kind whatsoever (including, without limitation,
attorneys' fees) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder. In any event, the
Administrator's liability under this Agreement shall be limited to its total
annual compensation earned and fees paid hereunder during the preceding twelve
months for any liability or loss suffered by the Fund including, but not limited
to, any liability relating to qualification of the Fund as a regulated
investment company or any liability relating to the Fund's compliance with any
federal or state tax or securities statute, regulation or ruling.
The Administrator shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption, nor shall any such failure or delay give the Fund the right to
terminate this Agreement.
The Fund shall indemnify and hold the Administrator harmless
from all loss, cost, damage and expense, including reasonable fees and expenses
for counsel, incurred by the Administrator resulting from any claim, demand,
action or suit in connection with the Administrator's acceptance of this
Agreement, any action or omission by it in the performance of its duties
hereunder, or as a result of acting upon any instructions reasonably believed by
it to have been duly authorized by the Fund, provided that this indemnification
shall not apply to actions or omissions of the Administrator, its officers or
employees in cases of its or their own negligence or willful misconduct.
The Fund will be entitled to participate at its own expense in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain counsel,
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Fund shall have specifically
authorized the retaining of such counsel or (ii) the Administrator shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
The indemnification contained herein shall survive the
termination of this Agreement.
<PAGE>
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by
law or in connection with any required disclosure to a banking or other
regulatory authority, it will keep confidential all records and information in
its possession relating to the Fund or its shareholders or shareholder accounts
and will not disclose the same to any person except at the request or with the
written consent of the Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS;
RECORDS
The Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Administrator agrees that all records which it maintains for the
Fund shall at all times remain the property of the Fund, shall be readily
accessible during normal business hours, and shall be promptly surrendered upon
the termination of the Agreement or otherwise on written request. The
Administrator further agrees that all records which it maintains for the Fund
pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods
prescribed by Rule 31a-2 under the 1940 Act unless any such records are earlier
surrendered as provided above. Records shall be surrendered in usable
machine-readable form or in any other reasonable form requested by the Fund.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be
deemed exclusive, and the Administrator shall be free to render similar services
to others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Fund from
time to time, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on the date first
written above. The Agreement shall remain in effect for a period of one year
from the date the Fund first accepts money for investment, and shall
automatically continue in effect thereafter with respect to the Fund unless
terminated in writing by either party at the end of such period or thereafter on
sixty (60) days' prior written notice given by either party to the other party.
Termination of this Agreement with respect to any given Investment Fund shall in
no way affect the continued validity of this Agreement with respect to any other
Investment Fund. Upon termination of this Agreement, the Fund shall pay to the
Administrator such compensation and any reimbursable expenses as may be due
under the terms hereof as of the date of such termination, including reasonable
out-of-pocket expenses associated with such termination. This Agreement may be
modified or amended from time to time by mutual written agreement of the parties
hereto.
13. NOTICES
Any notice or other communication authorized or required
by this Agreement to be given to
either party shall be in writing and deemed to have been given when
delivered in person or by confirmed
facsimile, or posted by certified mail, return receipt requested, to the
following address (or such other address
as a party may specify by written notice to the other): if to the Fund:
William Simms, President, Institutional
Marketing Services Division, Transamerica Occidental Life, 101 North
Tryon Street, Charlotte, North Carolina
28246, fax: 704-344-2900; with a copy to: Regina M. Fink, Counsel,
Transamerica Occidental Life 1150 South Olive
Street, Suite 2100, Los Angeles, California 90015, fax: 213-741-6623;
if to the Administrator: State Street
Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts
02171, Attn: Sharon B. Morin, Vice
President and Counsel, fax: (617) 985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto
without the prior consent in writing of the other party, except that the
Administrator may assign this Agreement to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by or under
common control with the Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the
benefit of the Fund and the Administrator and their respective successors and
permitted assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
previous representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
20. REPRODUCTION OF DOCUMENTS
This Contract and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By:
Name:
Title:
<PAGE>
ADMINISTRATION AGREEMENT
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
SCHEDULE A
Listing of Investment Funds and Authorized Shares
Investment Fund Authorized Shares
Growth Portfolio $1,000,000,000
<PAGE>
Exhibit 11(a)
Consent of Sutherland, Asbill & Brennan, L.L.P.
<PAGE>
Sutherland Asbill & Brennan, L.L.P.
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
April 17, 1997
Transamerica Variable Insurance Fund, Inc.
1150 South Olive
Los Angeles, CA 90015-2211
Gentlemen:
We hereby consent to the reference to our namce under the caption "Legal
Matters" in the Prospectus filed as part of the POst-Effective Amendment No. 2
to the Registration Statmenet on Form N-1A filed by Transamerica Variable
Insurance Fund, Inc. (File No. 33-99016). In giving this consent, we do not
admit that we are in the category of person whose consent is required under
Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN, L.L.P.
BY: /s/ Frederick R. Bellamy
<PAGE>
Exhibit 11(b)
Consent of Ernst & Young LLP
<PAGE>
We consent to the reference to our firm under the caption "Condensed Financial
Information" in the Prospectus and to the reference of our name under the
caption "Other Information" and to the use of our report dated February 24,
1997, with respect to the financial statements of the Growth Portfolio of the
Transamerica Variable Insurance Fund, Inc. included in the Statement of
Additional information, included in the Post-Effective Amendment No. 2 under the
Securities Act of 1933 and Amendment No. 3 under the Investment Company Act of
1940 to the Form N-1A (Nos. 33-99016, 811-9126) for Transamerica Variable
Insurance Fund, Inc. to be filed with the Securities and Exchange Commission on
April 15, 1997.
/s/ Ernst & Young LLP
Los Angeles, California
April 17, 1997
35
<PAGE>
Exhibit 27 Financial Data Schedule
36
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001002786
<NAME> TRANSAMERICA VARIABLE INSURANCE FUND, INC.
<SERIES>
<NUMBER> 1
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 15,424,060
<INVESTMENTS-AT-VALUE> 32,138,396
<RECEIVABLES> 160,237
<ASSETS-OTHER> 24,017
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,322,649
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84,212
<TOTAL-LIABILITIES> 84,212
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,594,518
<SHARES-COMMON-STOCK> 2,949,776
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (33,507)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (33,909)
<ACCUM-APPREC-OR-DEPREC> 16,711,335
<NET-ASSETS> 32,238,437
<DIVIDEND-INCOME> 133,199
<INTEREST-INCOME> 33,420
<OTHER-INCOME> 0
<EXPENSES-NET> (357,197)
<NET-INVESTMENT-INCOME> (190,588)
<REALIZED-GAINS-CURRENT> 3,186,767
<APPREC-INCREASE-CURRENT> 3,967,540
<NET-CHANGE-FROM-OPS> 6,963,719
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 49,439
<NUMBER-OF-SHARES-REDEEMED> 512,766
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,500,392
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 351,866
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 376,563
<AVERAGE-NET-ASSETS> 28,165,794
<PER-SHARE-NAV-BEGIN> 8.58
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 2.41
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.93
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
