See notes to financial statements
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Schedule of Investments -- December 31, 1997
<TABLE>
<CAPTION>
Shares or
Market Principal Market
Shares Value Amount Value
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS -- 96.2%
- -------------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES -- 4.1%
First Data Corporation 65,000 $ 1,901,250
- -------------------------------------------------------------------------------------------------------------------------------
CHEMICALS -- 7.4%
BetzDearborn, Inc. 30,000 1,831,875
W.R. Grace & Company 20,000 1,608,750
- -------------------------------------------------------------------------------------------------------------------------------
3,440,625
- -------------------------------------------------------------------------------------------------------------------------------
COMPUTERS & BUSINESS EQUIPMENT -- 10.9%
Dell Computer Corporation (a) 60,000 5,040,000
- -------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES -- 4.3%
Gillette Company 20,000 2,008,750
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 2.6%
Millipore Corporation 35,000 1,187,813
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS -- 11.5%
Applied Materials, Inc. (a) 70,000 2,108,750
Intel Corporation 46,000 3,231,500
- -------------------------------------------------------------------------------------------------------------------------------
5,340,250
- -------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES -- 16.9%
Charles Schwab Corporation 82,500 3,459,844
Franklin Resources, Inc. 33,000 2,868,937
MoneyGram Payment Systems, Inc. (a) 140,000 1,505,000
- -------------------------------------------------------------------------------------------------------------------------------
7,833,781
- -------------------------------------------------------------------------------------------------------------------------------
HOTELS & RESTAURANTS -- 6.9%
Host Marriott Corp. (a) 70,000 1,373,750
Mirage Resorts, Incorporated (a) 80,000 1,820,000
- -------------------------------------------------------------------------------------------------------------------------------
3,193,750
- -------------------------------------------------------------------------------------------------------------------------------
LEISURE TIME -- 6.6%
Pixar, Inc. (a) 50,000 1,081,250
The Walt Disney Company 20,000 1,981,250
- -------------------------------------------------------------------------------------------------------------------------------
3,062,500
- -------------------------------------------------------------------------------------------------------------------------------
CONTAINERS AND PACKAGING -- 2.7%
Sealed Air Corporation (a) 20,000 1,235,000
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE OPERATIONS -- 3.8%
CCA Prison Realty Trust 40,000 $ 1,785,000
- -------------------------------------------------------------------------------------------------------------------------------
RETAIL -- 8.6%
Fred Meyer, Inc. (a) 109,200 3,972,150
- -------------------------------------------------------------------------------------------------------------------------------
SOFTWARE -- 9.9%
Microsoft Corporation (a) 24,000 3,102,000
Transaction Systems Architects, Inc. (a) 40,000 1,520,000
- -------------------------------------------------------------------------------------------------------------------------------
4,622,000
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(cost $18,047,300) 44,622,869
- -------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.9%
- -------------------------------------------------------------------------------------------------------------------------------
State Street Bank and Trust Company 4.75%, due 01/02/98, (collateralized by
$1,830,000 par value U.S. Treasury Notes, 5.875%, due 10/31/98, with a value
of
$1,850,690, cost $1,812,000) 1,812,000 1,812,000
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.1%
(cost $19,859,300)* 46,434,869
LIABILITIES IN EXCESS OF OTHER
ASSETS - (0.1)% (56,462)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS-- 100.0% $46,378,407
===============================================================================================================================
</TABLE>
(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 $26,994,664 and $419,095,
respectively. Net unrealized appreciation for tax purposes is $26,575,569.
<PAGE>
See notes to financial statements
.
<PAGE>
See notes to financial statements
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments, at value (cost $19,859,300) $ 46,434,869
Cash 842
Dividends and interest receivable 25,339
Due from Adviser 6,202
-------------
46,467,252
LIABILITIES
Directors fees payable 3,000
Advisory fees payable 29,359
Accrued expenses 56,486
-------------
88,845
TOTAL NET ASSETS $ 46,378,407
=============
NET ASSETS CONSIST OF:
Paid in capital $ 18,348,425
Accumulated net realized gain on investments 1,454,413
Net unrealized appreciation of investments 26,575,569
-------------
TOTAL NET ASSETS $ 46,378,407
=============
Shares outstanding 3,144,213
Net asset value per share $ 14.75
</TABLE>
<PAGE>
See notes to financial statements
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Statement of Operations
For the year ended December 31, 1997
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income $ 30,935
Dividend income 163,094
-------------
194,029
EXPENSES
Investment Adviser fee 313,749
Custodian fees 32,536
Administration fees 43,165
Audit fees 15,000
Directors' fees and expenses 3,000
Printing expenses 2,000
Other 264
-------------
Operating expenses before fee waiver 409,714
Fees waived and expenses reimbursed (54,131)
--------------
355,583
NET INVESTMENT LOSS (161,554)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 5,194,303
Net change in unrealized appreciation of investments 9,864,234
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 15,058,537
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 14,896,983
=============
</TABLE>
<PAGE>
See notes to financial statements
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996
---- ----
INCREASE IN NET ASSETS
From operations:
<S> <C> <C>
Net investment loss $ (161,554) $ (190,588)
Net realized gain on investments 5,194,303 3,186,767
Net change in unrealized appreciation of investments 9,864,234 3,967,540
------------- -------------
Net increase in net assets resulting from operations 14,896,983 6,963,719
Dividends and distributions to shareholders from:
Net realized gains (3,656,425) -
Net fund share transactions 2,899,412 (463,327)
------------- ----------------
Increase in net assets 14,139,970 6,500,392
NET ASSETS
Beginning of period 32,238,437 25,738,045
------------- -------------
End of period $ 46,378,407 $ 32,238,437
============= =============
</TABLE>
<PAGE>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Financial Highlights
Selected data for a share outstanding throughout each period are as follows*
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------
---------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 10.93 $ 8.582 $ 5.615 $ 5.239 $ 4.287
-----------------------------------------------------------------------------
Investment Operations
Net investment income (loss) (0.05) (0.065) (0.069) (0.042) (0.030)
Net realized and unrealized gain 5.13 2.413 3.036 0.418 0.982
--------------------------------------------------------------
---------------
Total from investment operations ........5.08 2.348 2.967 0.376 0.952
Distributions to Shareholders from:
Net realized gains (1.26) - - - -
-----------------------------------------------------------------------------
Total distributions (1.26) - - - -
-----------------------------------------------------------------------------
Net Asset Value, end of period $ 14.75 $ 10.930 $ 8.582 $ 5.615 $ 5.239
==============================================================
===============
Total Return 46.50% 27.36% 52.84% 7.19% 22.20%
=============================================================================
Ratios and Supplemental Data:
Expenses to average net assets (1) 0.85% 1.27% 1.41% 1.43% 1.43%
Net investment income (loss)
to average net assets (2) (0.39%) (0.68%) (0.94%) (0.80%) (0.65%)
Portfolio turnover rate 20.54% 34.58% 18.11% 30.84% 42.04%
Average commission rate (3) $0.0575 $0.0700 - - -
Net Assets, end of period (in
thousands) $46,378 $32,238 $25,738 $17,267 $16,584
</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 Adviser had not waived expenses, the ratio of operating
expenses to average net assets would have been 0.98% and 1.34% for the
years ended December 31, 1997 and 1996, respectively.
(2) If the Investment Adviser had not waived expenses, the ratio of net
investment loss to average net assets would have been (0.52%) and (0.75%)
for the years ended December 31, 1997 and 1996, respectively.
(3) Represents the average commission rate paid on equity security transactions
on which commissions are charged.
<PAGE>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Notes to Financial Statements
December 31, 1997
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 currently consists of two investment portfolios, the Growth
Portfolio and the Money Market Portfolio (the "Portfolios"). The Growth
Portfolio's investment objective is long-term capital growth and the Money
Market Portfolio's investment objective is to maximize current income. The Money
Market Portfolio commenced operations on January 2, 1998. These financial
statements pertain only to the Growth 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 Growth 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 account 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 in net assets resulting from operations $4,217,192
=================
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 Portfolios may enter into repurchase agreements
with Federal Reserve System member banks or U.S. securities dealers. A
repurchase agreement occurs when the Portfolios purchase 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 for the Growth Portfolio were $8,374,876 and
$10,662,938 respectively, for the year ended December 31, 1997.
<PAGE>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Notes to Financial Statements
December 31, 1997
(D) Dividends and Distributions - The Growth Portfolio distributes
substantially all of its net investment income and capital gains, if any,
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 applicable to regulated
investment companies and to distribute all of 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 Growth
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, at 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 0.85% of the average daily net assets of the
Portfolio.
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, however they receive no compensation from the
Fund.
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, 1997, the Growth Portfolio was authorized to issue two hundred
million shares.
<TABLE>
<CAPTION>
Year ended December 31, 1997 Year ended December 31, 1996
---------------------------- ----------------------------
Shares Amount Shares Amount
---------------------------------------- ---------------- ----------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Capital stock sold - $ $ 13,223
- 1,200
Separate Account Deposits* - -
Separate Account Annuity Payments* - 36,216
(424,375)
Capital stock issued upon
reinvestment of dividends and
distributions
247,893 3,656,425
Capital stock redeemed
(53,456) (757,013) (7,540) (88,391)
---------------------------------------- ---------------- ----------------- ---------------- ------------------
Net increase (decrease) 194,437 $2,899,412 $ (463,327)
(6,340)
---------------------------------------- ---------------- ----------------- ---------------- ------------------
</TABLE>
<PAGE>
GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Notes to Financial Statements
December 31, 1997
*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. These transactions are classified as fund share transactions in the
Statements of Changes in Net Assets.
4. Federal Income Tax
Net investment income distributions and capital gains distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales, net operating losses and
capital loss carryforwards. For the year ended December 31, 1997, the Growth
Portfolio increased accumulated net investment loss by $195,061, decreased
accumulated net realized gain on investments by $49,556 and decreased paid in
capital by $145,505.
