Transamerica Variable Insurance Fund, Inc.
Prospectus: May 1, 1999
(Revised September 7, 1999)
Portfolios
Growth Portfolio
Money Market Portfolio
We do not offer these portfolios for sale directly to the public. Insurance
companies purchase shares of the portfolios and offer them as investment options
in their variable annuity contracts and variable life insurance policies. We do
not completely describe the portfolio fees and expenses in this prospectus. You
must read the attached variable insurance contract prospectus for information
regarding portfolio fees and expenses, additional variable insurance contract
charges, and any restrictions on purchases or allocations.
This prospectus should be read in conjunction with the prospectus for the
variable insurance contract.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
Table of Contents
The Portfolios at a Glance 2
Sub-Adviser's Performance on Similar Funds 4
The Portfolios in Detail 5
Growth Portfolio 5
Money Market Portfolio 5
Investment Adviser & Sub-Adviser 6
Determination of Net Asset Value 7
Offering, Purchase and Redemption of Shares 7
Income, Dividends and Capital Gains Distributions 8
Taxes 8
Year 2000 Issue 8
Financial Highlights 9
Additional Information and Assistance Back Cover
The Portfolios at a Glance
The following is a summary of each portfolio's goals, strategies, risks,
intended investors and performance. We cannot guarantee that the investment
goals will be achieved. The portfolios are managed by Transamerica Investment
Services, Inc., or TIS. TIS has been managing funds for employee pension plans
since 1967 and is currently managing over $40 billion.
The performance shown for each portfolio assumes reinvestment of dividends. The
portfolios are only available through the purchase or variable annuity and
variable life insurance contracts. The performance of the portfolios do not
reflect any expenses or charges applicable to these variable insurance
contracts. We compare a portfolio's performance to a broad-based securities
market index. Performance figures for these indices do not reflect any
commissions or fees, which you would pay if you purchased the securities
represented by the indices. You cannot invest directly in these indices. The
performance data for the indices do not indicate the past or future performance
of any portfolio.
<PAGE>
Growth Portfolio
The portfolio seeks to maximize long-term growth.
It invests at least 65% of its assets in a diversified selection of equity
securities of domestic growth companies of any size. We look for companies we
consider to be premier companies that are under-valued in the stock market.
Your principal risk in investing in this portfolio is you could lose money. The
value of equity securities can fall due to the issuing company's poor financial
condition or bad general economic or market conditions. Since this portfolio
invests in equities, its performance may vary more than fixed income portfolios
over short periods.
The portfolio is intended for long-term investors who have the perspective,
patience, and financial ability to take on above-average stock market
volatility.
The following performance information provides some indication of the risks of
investing in the portfolio. We show annual returns, best and worst quarters, and
average annual total returns over the life of the portfolio. This portfolio is
the successor to Transamerica Occidental's Separate Account Fund C, a management
investment company funding variable annuities, through a reorganization on
November 1, 1996. Performance prior to November 1, 1996 is Transamerica
Occidental's Separate Account Fund C performance. Past performance is no
guarantee of future results.
[GRAPHIC OMITTED]
Best calendar quarter: 29.84% for quarter ending 6/30/97
Worst calendar quarter: -20.51% for quarter ending 9/30/90
Average Annual Total Returns (as of 12/31/98)
1 year 5 years 10 years
- ---------------------------------------------------------
Growth Portfolio 43.28% 34.37% 26.05%
S&P 500 Index * 28.58% 24.06% 19.21%
* The Standard and Poor's 500 Index (S&P 500) consists of 500 widely held,
publicly traded common stocks.
Money Market Portfolio
The portfolio seeks to maximize current income from money market securities
consistent with liquidity and preservation of principal.
This is a money market fund. It invests primarily in a diversified selection of
high quality U.S. dollar-denominated money market instruments with remaining
maturities of 13 months or less. We look for securities with minimal credit
risk. We maintain an average maturity of 90 days or less.
Your principal risk of investing in this portfolio is that the performance will
not keep up with inflation and its real value will go down. Also, the
portfolio's performance can go down if a security issuer fails to pay the
principal or interest payments when due, but this risk is lower than our bond
funds due to the shorter term of money market obligations. To the extent this
portfolio invests in foreign securities, it is subject to currency fluctuations,
changing political and economic climates and potentially less liquidity.
Although your risks of investing in this portfolio over short periods of time
are less than investing in our equity or bond funds, yields will vary.
An investment in this portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although we seek
to preserve the value of your investment at $1.00 per share, you could lose
money by investing in this portfolio.
The portfolio is intended for investors who seek a low risk, relatively low cost
way to achieve current income through high-quality money market securities.
The following performance information provides some indication of the risks of
investing in the portfolio. We show annual returns, best and worst quarters, and
average annual total returns since the portfolio's commencement on January 2,
1998. Past performance is no guarantee of future results.
[GRAPHIC OMITTED]
Best calendar quarter: 4.97% for quarter ending 9/30/98
Worst calendar quarter: 4.61% for quarter ending 12/31/98
Average Annual Total Returns (as of 12/31/98)
Since Inception
(1/2/98 )
Money Market Portfolio 4.93%
IBC First Tier Index * 4.97%
* IBC's Money Fund ReportTM-First Tier represents all taxable money market funds
that meet the SEC's definition of first tier securities contained in Rule 2a-7
under the Investment Company Act of 1940.
The 7-day current yield of the Money Market Portfolio as of December 31, 1998
was 4.65%. You can get a more up to date 7-day current yield by calling
1-800-258-4260.
Sub-Adviser Performance on Similar Funds
The portfolios' Sub-Adviser also manages SEC-registered mutual funds and
non-registered segregated separate accounts of insurance companies. These mutual
funds and separate accounts have investment objectives, strategies and policies
that are substantially similar to those of the portfolios listed below.
Portfolios Mutual Funds Separate Accounts...
- --------------------------------------------------------------------------
Money Market Premier Cash Reserve Cash Management
You should not assume that the designated portfolio will have the same future
performance as its similar mutual fund or separate account. Any portfolio's
future performance may be greater or less than the historical performance and/or
future performance of the corresponding mutual fund or separate account due to,
among other things, certain inherent differences between them.
Additionally, the separate accounts are not registered with the SEC and not
subject to the Investment Company Act of 1940, nor are they subject to
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Therefore, the separate accounts were not subject to the investment limitations,
diversification requirements, and other restrictions that apply to the
portfolios. If the separate accounts had been subject to the Investment Company
Act or Subchapter M of the Code, their performance may have been adversely
affected at times. Additionally, the fees and expenses of the portfolios may be
higher or lower than the fees and expenses of mutual funds or separate accounts.
Higher fees and expenses have a negative impact on performance. Also, the
portfolios are currently only available through the purchase of variable annuity
and variable life insurance contracts. The performance of the mutual funds and
separate accounts does not reflect any expenses or charges applicable to these
variable insurance contracts.
Please do not consider the performance of these similar funds as indicative of
any portfolio's past or future performance. You should not consider this
performance a substitute for the portfolios' own performance
Mutual Funds
Average Annual Total Returns (as of 12/31/98)
Transamerica Premier Funds* 1 year 5 years10 years Since Inception Premier Cash
Reserve 5.45% - - 5.44% (10/2/95)
* Performance is for the Investor Class of the Transamerica Premier Funds.
Separate Accounts
Average Annual Total Returns (as of 12/31/98) Transamerica Funds 1 year 5 years
10 yearsSince Inception Cash Management 5.01% 4.86% 5.26% 6.55% (1/3/82)
<PAGE>
The Portfolios in Detail
The following expands on the strategies, policies and risks described in The
Portfolios at a Glance. For more information about the performance of the
portfolios, see the Statement of Additional Information (SAI). You can get a
free copy of the SAI by asking us. The SAI includes the Annual Report.
Growth Portfolio
Goal
Our goal is to maximize long-term growth.
Strategies
We use a "bottom up" approach to investing. We study industry and economic
trends, but focus on researching individual companies. The portfolio is
constructed one company at a time. Each company passes through a research
process and stands on its own merits as a viable investment in the Sub-Adviser's
opinion.
We buy securities of companies we believe have the defining features of premier
growth companies that are under-valued in the stock market. The companies we
invest in have many or all of these features:
Outstanding management
Superior track record
Well-defined plans for the future
Unique low cost products
Dominance in market share or products in specialized markets Strong
earnings and cash flows to foster future growth
Focus on shareholders through increasing dividends, stock repurchases and
strategic acquisitions
We also select companies for their growth potential in relation to major U.S.
trends. These trends include: The aging of baby boomers The rapid growth
in communication and information technologies The shift toward financial
assets versus real estate or other tangible assets The continuing increase
in U.S. productivity
Policies
We invest at least 65% of the portfolio's assets in a diversified portfolio of
domestic equity securities. We do not limit its investments to any particular
type or size of company.
The portfolio may also invest in cash or cash equivalents for temporary
defensive purposes when market conditions warrant. To the extent it is invested
in these securities, the portfolio is not achieving its investment objective.
Risks
Since the portfolio invests principally in equity securities, the value of its
shares will fluctuate in response to general economic and market conditions.
Financial risk comes from the possibility that current earnings of a company we
invest in may fall, or that its overall financial circumstances may decline,
causing the security to lose value.
This Portfolio Is Intended For:
Long-term investors who have the perspective, patience and financial ability to
take on above-average price volatility in pursuit of long-term capital growth.
Money Market Portfolio
Goal
Our goal is to maximize current income from money market securities consistent
with liquidity and preservation of principal.
Strategies
This is a money market portfolio. We invest primarily in a diversified selection
of high quality money market instruments of U.S. and foreign issuers with
remaining maturities of 13 months or less.
To achieve our goal, we invest primarily in:
Short-term corporate obligations, including commercial paper, notes and
bonds
Obligations issued or guaranteed by the U.S. and foreign governments and
their agencies or instrumentalities
Obligations of U.S. and foreign banks, or their foreign branches, and
U.S. savings banks
Repurchase agreements involving any of the securities mentioned above
We also seek to maintain a stable net asset value of $1.00 per share by:
Investing in securities which present minimal credit risk
Maintaining the average maturity of obligations held in the portfolio at
90 days or less
Policies
Bank obligations purchased for the portfolio are limited to U.S. or foreign
banks with total assets of $1.5 billion or more. Similarly, savings association
obligations purchased for the portfolio are limited to U.S. savings banks with
total assets of $1.5 billion or more. Foreign securities purchased for the
portfolio must be issued by foreign governments, agencies or instrumentalities,
or banks that meet the minimum $1.5 billion capital requirement. These foreign
obligations must also meet the same quality requirements as U.S. obligations.
The commercial paper and other short-term corporate obligations we buy for the
portfolio are determined by the Sub-Adviser to present minimal credit risks.
Risks The interest rates on short-term obligations held in the portfolio will
vary, rising or falling with short-term interest rates generally. The
portfolio's yield will tend to lag behind general changes in interest rates. The
ability of the portfolio's yield to reflect current market rates will depend on
how quickly the obligations in its portfolio mature and how much money is
available for investment at current market rates. The portfolio is also subject
to the risk that the issuer of a security in which the portfolio invests may
fail to pay the principal or interest payments when due. This will lower the
return from , and the value of, the security, which will lower the performance
of the portfolio. To the extent this portfolio invests in foreign securities, it
is subject to currency fluctuations, changing political and economic climates
and potentially less liquidity.
An investment in this portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although this
portfolio seeks to preserve the value of your investment at $1.00 per share, you
could lose money by investing in the portfolio.
This Portfolio Is Intended For:
Investors who seek a low risk, relatively low cost way to achieve current income
through high-quality money market securities.
Investment Adviser & Sub-Adviser
Investment Adviser
The Investment Adviser of the portfolios is Transamerica Occidental Life
Insurance Company, 1150 South Olive Street, Los Angeles, California 90015. The
Investment Adviser is a stock life insurance company incorporated in the state
of California on June 30, 1906. It is a wholly-owned indirect subsidiary of
Transamerica Corporation, a subsidiary of AEGON N.V., 600 Montgomery Street, San
Francisco, California 94111. The Investment Adviser was the investment adviser
of Transamerica Occidental's Separate Account Fund C ("Separate Account Fund
C"), the predecessor to the Growth Portfolio.
The Investment Adviser's duties include, but are not limited to:
Overall responsibility for administering all operations of the portfolios;
Monitoring and evaluating the management of the assets of the portfolios
by the Sub-Adviser on an ongoing basis; and Procuring services for the
portfolios, including liaison and supervision of the various service
providers.
Advisory Fees
For its services to the portfolios, the Investment Adviser receives annual
advisory fees from the portfolios. These fees are based on the average daily net
assets of the portfolios. The fees are deducted daily from the assets of the
portfolios. The fees may be higher than the average advisory fee paid to the
investment advisers of other similar portfolios. The advisory fees, payable
under the investment advisory agreement, are shown below. The Investment Adviser
may waive some or all of its fees from time to time at its discretion. In 1998
the Investment Adviser waived a portion of the advisory fee payable by the
Growth Portfolio and was paid 0.64% of the portfolio's average net assets. The
Investment Adviser waived the full amount of advisory fee payable by the Money
Market Portfolio and was paid 0% of the portfolio's average net assets.
----------------------- ----------------
Advisory Fee
Portfolio
----------------------- ----------------
----------------------- ----------------
Growth 0.75%
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----------------------- ----------------
Money Market 0.35%
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Each portfolio pays all the costs of its operations that are not assumed by the
Investment Adviser, including:
Custodian;
Legal;
Auditing;
Administration
Registration fees and expenses; and
Fees and expenses of directors unaffiliated with the Investment Adviser.
We allocate the expenses that are not portfolio-specific among the portfolios
based on the net assets of each portfolio.
Sub-Adviser
The Investment Adviser has contracted with Transamerica Investment Services,
Inc. to be the Sub-Adviser. The Sub-Adviser has been in existence since 1967 and
has provided investment advisory services to investment companies since 1968 and
to Transamerica Corporation and affiliated companies since 1981. The Sub-Adviser
currently manages over $40 billion. The Sub-Adviser is located at 1150 South
Olive Street, Los Angeles, California 90015-2211. The Sub-Adviser is a
wholly-owned subsidiary of Transamerica Corporation, a subsidiary of AEGON N.V.
The Investment Adviser has agreed to pay the Sub-Adviser a portion of the
advisory fee. The Sub-Adviser will provide recommendations on the management of
portfolio assets, provide investment research reports and information, supervise
and manage the investments of the portfolios, and direct the purchase and sale
of portfolio investments.
The Sub-Adviser is also responsible for the selection of brokers and dealers to
execute transactions for the portfolios. Some of these brokers or dealers may be
affiliated persons of the Investment Adviser and Sub-Adviser. Although it is the
policy of the Sub-Adviser to seek the best price and execution for each
transaction, they may give consideration to brokers and dealers who provide them
with statistical information research and other services in addition to
transaction services.
AEGON Merger
On July 21, 1999, Transamerica Corporation completed its merger with a
subsidiary of AEGON N.V., one of the world's leading international insurance
groups. As a result of the merger, the investment advisory contract between
Transamerica Variable Insurance Fund, Inc. ("TVIF") and Transamerica Occidental
Life Insurance Company ("TOLIC"), TVIF's investment adviser, and the
sub-advisory agreement between TOLIC and Transamerica Investment Services, Inc.
("TIS") automatically terminated and the new investment advisory and
sub-advisory contracts between the same parties, approved at a special meeting
of TVIF shareholders on June 16, 1999, became effective.
As of July 21, 1999, AEGON N.V. indirectly owns the investment adviser, TOLIC,
and the sub-adviser, TIS.
Portfolio Managers
Management decisions for each of the portfolios are made by a team of expert
managers and analysts headed by team leaders (designated as primary managers)
and their backups (designated as co-managers). The team leaders have primary
responsibility for the day-to-day decisions related to their portfolios. They
are supported by the entire group of managers and analysts. The transactions and
performance of the portfolios are reviewed by the Sub-Adviser's senior officers.
The following listing provides a brief biography of the primary manager and
co-managers for each of the portfolios:
Growth Portfolio
Primary Manager since 1984: Jeffrey S. Van Harte, C.F.A., Vice President and
Senior Portfolio Manager, Transamerica Investment Services. Manager of the
Transamerica Equity Fund and the Transamerica Premier Equity Fund since 1998.
Manager of an unregistered separate account and a Transamerica corporate
account. Co-Manager of the Transamerica Premier Value Fund, the Transamerica
Value Fund, the Transamerica Premier Balanced Fund and the Transamerica Balanced
Fund. Was manager of the Transamerica Balanced Fund from 1993 to 1998 and the
Transamerica Premier Balanced Fund from 1995 to 1998. Member of San Francisco
Society of Financial Analysts. B.A., California State University at Fullerton.
Joined Transamerica in 1980.
Co-Manager since 1999: Gary U. Rolle, CFA, Executive Vice President & Chief
Investment Officer, Transamerica Investment Services. Chairman & President,
Transamerica Income Shares. Chief Investment Officer, Transamerica Occidental
Life Insurance and Transamerica Life Insurance & Annuity Companies. Manager of
the Transamerica Balanced Fund and Transamerica Premier Balanced Fund since
1998. Co-Manager of the Transamerica Premier Equity Fund, Transamerica Equity
Fund, Fund A, and Transamerica corporate accounts. Former member of the Board of
Governors of the Los Angeles Society of Financial Analysts. B.S., University of
California at Riverside. Joined Transamerica in 1967.
Money Market Portfolio Primary Manager since 1999: Rex A. Olson, CFA, Securities
Analyst, Transamerica Investment Services. Manager of the Transamerica Cash
Management Fund since 1999. Was co-manager of the Transamerica Premier Cash
Reserve Fund, the TVIF Money Market Fund and the Transamerica Cash Management
Fund. Member of the Los Angeles Society of Financial Analysts. Vice President,
Mitsubishi Trust, 1987-1997. B.S., University of Southern California. Joined
Transamerica in 1997.
Co-Manager since 1999: Peter O. Lopez, Senior Research Analyst, Transamerica
Investment Services. Assistant Vice President, Shields Alliance, 1995-1997.
Corporate Bond Associate, TIAA-CREF, 1993-1995. B.A., Arizona State University.
M.B.A., University of Michigan. Joined Transamerica in 1997.
Determination of Net Asset Value
We normally determine the net asset value per share of each portfolio once daily
as of the close of regular trading on the New York Stock Exchange, currently
4:00 p.m. New York time. We do this each day when the New York Stock Exchange is
open. The New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year, except for certain holidays.
We calculate the net asset value by subtracting the portfolio's liabilities from
its total assets and dividing the result by the total number of shares
outstanding.
We generally determine the value of the portfolio securities and assets on the
basis of their market values. However, all securities held by the Money Market
Portfolio and any short-term debt securities of the other portfolios having
remaining maturities of sixty days or less are valued by the amortized cost
method, which approximates market value. Amortized cost involves valuing an
investment at its cost and assuming a constant amortization to maturity of any
discount or premium, regardless of the effect of movements in interest rates. We
value investments for which market quotations are not readily available at their
fair value as determined in good faith by, or under authority delegated by, the
portfolios' Board of Directors.
Offering, Purchase and Redemption of Shares
We sell shares of the portfolios in a continuous offering to various insurance
companies. These insurance companies offer them as investment options in
variable annuity and variable life insurance contracts. The insurance companies
purchase and redeem shares of the portfolios at net asset value without sales or
redemption charges being imposed by the portfolios. On each business day
insurance companies purchase or redeem shares of the portfolios based on the
requests from their contract owners that have been processed on that day.
Insurance companies purchase and redeem shares at their net asset value
calculated at the end of that day, although such purchases and redemptions may
be executed the next business day.
If insurance companies purchase shares of a portfolio for variable life
insurance or 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. We do not foresee
any disadvantage to owners of the annuity contracts arising from the fact that
shares of a portfolio might be held by such entities. However, in such an event,
the portfolios' Board of Directors will monitor the portfolios 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
Each portfolio distributes substantially all of its net investment income
in the form of dividends to its shareholders. Dividends are made on a per
share basis to shareholders of record of a portfolio as of the
distribution date of that
portfolio, regardless of how long the shares have been held. Capital gains,
if any, are generally distributed annually for all portfolios.
If you buy shares just before or on a record date, you will pay the full
price for the shares and then you may receive a portion of the price back
as a taxable distribution.
Dividends on the Money Market Portfolio are determined daily but paid
monthly.
Dividend Payment Schedules:
Portfolio When It Pays
Growth Portfolio Annually
Money Market Portfolio Monthly
Taxes
Each portfolio qualifies as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). Each 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 portfolios. In addition,
each 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. For more information see Federal Tax Matters in the SAI.
The shareholders of the portfolios are insurance companies offering variable
insurance contracts. For information concerning federal income tax consequences
for owners of variable insurance contracts, see the prospectus for these
products.
Year 2000 Issue
Many computer software systems in use today cannot distinguish the year 2000
from the year 1900 because dates are encoded using the standard six-place format
that allows entry of only the last two digits of the year. This is commonly
known as the "Year 2000 Problem." This issue could adversely impact the
portfolios if the computer systems used by the portfolios' Investment Adviser,
Sub-Adviser, Custodian and Transfer Agent (including service providers' systems)
do not accurately process date information after January 1, 2000. The Investment
Adviser and Sub-Adviser are addressing this issue by testing the computer
systems they use to ensure that those systems will operate properly after
January 1, 2000. The Investment Adviser and Sub-Adviser are also seeking
assurances from the Custodian, Transfer Agent and other service providers they
use that their computer systems will be adapted to address the Year 2000 Problem
in time to prevent adverse consequences after January 1, 2000.
However, especially when taking into account interaction with other systems, it
is difficult to predict with precision that there will be no disruption of
services in connection with the year 2000. We continue to believe that we will
achieve Year 2000 readiness; however, the size and complexity of our systems and
the need for them to interface with other systems internally and with those of
our customers, vendors, partners, government agencies and other outside parties,
creates the possibility that some systems may experience Year 2000 problems.
Although we believe we will be properly prepared for the date change, we are
also developing contingency plans to minimize any potential disruptions to
operations, especially from externally interfaced systems over which we have
limited or no control. This issue could also adversely impact the value of the
securities that the portfolios invest in if the issuing companies' systems do
not operate properly after January 1, 2000.
The above is subject to the Year 2000 Readiness Disclosure Act. This act may
limit your legal rights in the event of a dispute.
<PAGE>
Financial Highlights
The following information is intended to help you understand the portfolios'
financial performance for the past five years. Certain information reflects
financial results for a single portfolio share. The total returns in the table
represent the rate the investor would have earned (or lost) in that year on that
portfolio, assuming reinvestment of all dividends and distributions. This
information has been audited by Ernst & Young LLP, independent auditors. Their
report, along with the portfolios' financial statements, are included in the
statement of additional information and annual report. See the back cover to
find out how to get the statement of additional information.
Growth Portfolio
The Growth Portfolio was formerly Transamerica Occidental's Separate Account
Fund C. The former fund was reorganized on November 1, 1996, when all its assets
and liabilities were transferred to the newly created Growth Portfolio. The
financial information is presented as if the reorganization had always been in
effect. The activity prior to November 1, 1996, represents accumulated unit
values of Separate Account Fund C which have been converted to share values for
presentation purposes.
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
1998 1997 1996 1995 1994
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Net Asset Value
<S> <C> <C> <C> <C> <C>
Beginning of year $14.750 $10.930 $8.582 $5.615 $5.239
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Operations:
Net investment income (loss) (0.013) (0.050) (0.065) (0.069) (0.042)
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Net realized and unrealized gain 6.380 5.130 2.413 3.036 0.418
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Total from investment operations 6.367 5.080 2.348 2.967 0.376
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Dividends/Distributions to Shareholders:
Net realized gains (1.757) (1.260) - - -
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Net Asset Value
End of year $19.360 $14.750 $10.930 $8.582 $5.615
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Total Return 43.28% 46.50% 27.36% 52.84% 7.19%
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Ratios and Supplemental Data:
Expenses to average net assets:
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After reimbursement/fee waiver 0.85% 0.85% 1.27% 1.41% 1.43%
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------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Before reimbursement/fee waiver 0.96% 0.98% 1.34% 1.41% 1.43%
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
Net investment income (loss) to average net assets (0.32%) (0.39%) (0.68%) (0.94%) (0.80%)
(1)
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Portfolio turnover rate 34.41% 20.54% 34.58% 18.11% 30.84%
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
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Net assets, end of year (in thousands) $107,892 $46,378 $32,238 $25,738 $17,267
------------------------------------------------------ -------------- ---------- ----------- ---------- -----------
</TABLE>
(1) If the Investment Adviser had not reimbursed expenses the ratio of net
investment loss to average net assets would have been (0.44%), (0.52%)
and (0.75%) for the years ended December 31, 1998, 1997, and 1996,
respectively.
<PAGE>
Money Market Portfolio
The following table gives condensed financial information for the Money Market
Portfolio, which commenced operation January 2, 1998, for the period ending
December 31, 1998.
<TABLE>
<CAPTION>
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Period ended
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December 31,
1998*
----------------------------------------------------------
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Net Asset Value
<S> <C>
Beginning of period $1.000
----------------------------------------------------------
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Operations:
----------------------------------------------------------
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Net investment income 0.048
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Total from investment operations 0.048
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Dividends/Distributions to Shareholders:
----------------------------------------------------------
----------------------------------------------------------
Net investment income (0.048)
----------------------------------------------------------
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Total distributions (0.048)
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Net Asset Value
End of period $1.000
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Total Return (a) 4.93%
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Ratios and Supplemental Data:
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Expenses to average net assets (2)
----------------------------------------------------------
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After reimbursement/fee waiver 0.60%
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Before reimbursement/fee waiver 3.03%
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Net investment income (loss)
to average net assets (1)(2) 4.81%
----------------------------------------------------------
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Net Assets, end of period (in thousands) $6,803
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</TABLE>
* The Portfolio commenced operations January 2, 1998.
(a) Total return is not annualized for periods less than one year
(1) If the Investment Adviser had not waived expenses, the ratio of net
investment income to average net assets would have been 2.38% for the
period ended December 31, 1998.
(2) Annualized.
<PAGE>
ADDITIONAL INFORMATION AND ASSISTANCE
You may get more information, at no charge, about these portfolios by requesting
the following:
Annual and Semi-Annual Report
These reports describe the portfolios' performance and list their holdings. The
annual report discusses the market conditions and the portfolio managers'
strategies that significantly affected the portfolios' performance during the
last fiscal year.
Statement of Additional Information (SAI)
This document gives additional information about the portfolios. The SAI was
filed with the Securities and Exchange Commission (SEC) and is incorporated by
reference as part of the prospectus. The audited annual report is a part of the
SAI.
To Obtain Information from Us
Call 1-800-258-4260 Write to Transamerica Service Center, 401 North Tryon
Street, Suite 700, Charlotte, North Carolina 28202. Visit our Internet web site
at http://www.transamerica.com
To Obtain Information from the SEC
Visit the SEC, Public Reference Room, Washington, D.C. to review or copy the
prospectus and SAI
Call 1-800-SEC-0330
Visit the SEC's Internet web site at http://www.sec.gov
Write to Securities and Exchange Commission, Public Reference Section,
Washington, D.C. 20549-6009 for copies of these
documents (requires you to pay a duplicating fee)
SEC file number: 811-9216
VIM-433-0999
