TRANSAMERICA VARIABLE INSURANCE FUND INC, 485APOS, 1999-03-01

TRANSAMERICA VARIABLE INSURANCE FUND INC
485APOS, 1999-03-01

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As filed with the Securities and Exchange Commission on February 26, 1999
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 o

Pre-Effective Amendment No. o
Post-Effective Amendment No. 11 x

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940o

Amendment No. 12 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, LLP
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

It is proposed that this filing will become effective: o
immediately upon filing pursuant to paragraph (b) o
on December 11, 1998 pursuant to paragraph (b) |X| 60
days after filing pursuant to paragraph (a)(1) o on _
pursuant to paragraph (a)(1) |_| 75 days after filing
pursuant to paragraph (a)(2) o on _________________
pursuant to paragraph (a)(2) 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.

<PAGE>

TRANSAMERICA VARIABLE INSURANCE FUND
Registration Statement on Form N-1A
<TABLE>
<CAPTION>

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

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>
1

Transamerica Variable Insurance Fund, Inc.

Prospectus: May 1, 1999

Equity Portfolios
Aggressive Growth Portfolio
Growth Portfolio
Index Portfolio
Small Company Portfolio
Value Portfolio

Equity & Fixed Income Portfolio
Balanced Portfolio

Fixed Income Portfolios
Bond Portfolio
High Yield Bond 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 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
Guide to Portfolio Summaries
The Portfolios in Detail 9
Aggressive Growth Portfolio 9
Growth Portfolio 10
Index Portfolio 11
Small Company Portfolio 13
Value Portfolio 14
Balanced Portfolio 15
Bond Portfolio 17
High Yield Bond Portfolio 18
Money Market Portfolio 20
Investment Adviser & Sub-Adviser 21
Determination of Net Asset Value 24
Offering, Purchase and Redemption of Shares 25
Income, Dividends and Capital Gains Distributions 25
Taxes 26
Year 2000 Issue 26
Summary of Bond Ratings 27
Financial Highlights 27
Additional Information and Assistance Back Cover

<PAGE>

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. Definitions of the risks shown and an explanation of how
performance is shown are in Guide to Portfolio Summaries on page ______.

Aggressive Growth Portfolio
The portfolio seeks to maximize long-term growth.

It invests primarily in equity securities selected for their growth potential
resulting from growing franchises protected by high barriers to competition. The
portfolio generally invests 90% of its total assets in a non-diversified
portfolio of domestic equity securities.

Its risks include above-average market risk and financial risk.

The portfolio is intended for investors who have the perspective, patience, and
financial ability to take on above-average stock market volatility in a focused
pursuit of long-term capital growth.

The following performance information provides some indication of the risks of
investing in the portfolio by showing various performance measures and
comparisons. The table also includes the performance of the Premier Aggressive
Growth Fund (a mutual fund), which is operated substantially similar in all
material respects as this portfolio. Bar chart performance is that of Premier
Aggressive Growth Fund performance. Past performance is no guarantee of future
results.

[insert performance bar chart]
Best calendar quarter: ______% for quarter ending _______
Worst calendar quarter: ______% for quarter ending ________
<TABLE>
<CAPTION>

Average Annual Total Returns for Periods Shown (as of 12/31/98)
1 year 5 years 10 years Since Inception
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Premier Aggressive Growth Fund 84.07% -- -- 71.05% (6/30/97)
S&P 500 Index 28.58% -- -- _____% (6/30/97)
</TABLE>

Growth Portfolio
The portfolio seeks to maximize long-term capital growth.

It invests primarily in a diversified portfolio of common stocks of domestic
growth companies that we consider to be premier companies that are under-valued
in the stock market.

Its risks include above-average market and financial risk.
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 tables provide some indication of the risks of investing in the
portfolio by showing various performance measures and comparisons.. 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.

[insert performance bar chart]
Best calendar quarter: ______% for quarter ending _______
Worst calendar quarter: ______% for quarter ending ________

Average Annual Total Returns for Periods Shown (as of 12/31/98)
1 year 5 years 10 years
- ----------------------------------------------------------------------
Growth Portfolio ______% ______%_______%
S&P 500 Index 28.58% 24.06% 19.21%

Index Portfolio
The portfolio seeks to track the performance of the Standard & Poor's 500
Composite Stock Price Index, also known as the S&P 500 Index.

It attempts to reproduce the overall investment characteristics of the S&P 500
Index by using a combination of management techniques. Its stock purchases
reflect the S&P 500 Index, but it makes no attempt to forecast general market
movements.

Its risks include market and financial risk.

The portfolio is intended for investors who wish to participate in the overall
economy, as reflected by the domestic stock market. Investors should have the
perspective, patience, and financial ability to take on average stock market
volatility in pursuit of long-term capital growth.

The following tables provide some indication of the risks of investing in the
portfolio by showing various performance measures and comparisons. The tables
also include the performance of the Premier Index Fund (a mutual fund) and the
Transamerica Equity Index Fund (an insurance company separate account), which
are operated substantially similar in all material respects as this portfolio.
Bar chart performance is that of Transamerica Equity Index Fund. Past
performance is no guarantee of future results. [insert performance bar chart]
Best calendar quarter: ______% for quarter ending _______
Worst calendar quarter: ______% for quarter ending ________
Average Annual Total Returns for Periods Shown (as of 12/31/98)
<TABLE>
<CAPTION>

1 year 5 years 10 years Since Inception
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Premier Index Fund _____% - - - - _____% (10/2/95)
Transamerica Equity Index Fund 27.62% 23.48% 18.47% 17.43% (10/1/86)
S&P 500 Index 28.58% 24.06% 19.21% 15.85% (10/1/86)

</TABLE>

Small Company Portfolio
The portfolio seeks to maximize long-term growth.

It invests primarily in a diversified portfolio of domestic equity securities.
The portfolio generally invests at least 65% of its assets in companies with
smaller market capitalizations. Small companies are those whose market
capitalization falls within the range represented by the companies included in
the S&P 600 Small Cap Index.

Its risks include above average market and financial risk.

The portfolio is intended for investors who have the perspective, patience, and
financial ability to take on above-average stock market volatility in a focused
pursuit of long-term capital growth.

The following performance information provides some indication of the risks of
investing in the portfolio by showing various performance measures and
comparisons. The tables also include the performance of the Premier Small
Company Fund, which is operated substantially similar in all material respects
as this portfolio. Bar chart performance for years prior to 1999 is Premier
Small Company Fund performance. Past performance is no guarantee of future
results. [insert performance bar chart]
Best calendar quarter: ______% for quarter ending _______
Worst calendar quarter: ______% for quarter ending ________
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C>
Premier Small Company Mutual Fund 80.27% -- -- 71.53% (6/30/97)
S&P 600 Index ____% -- -- _____% (6/30/97)
</TABLE>

Value Portfolio
The portfolio seeks to maximize capital appreciation.

It invests primarily in a diversified portfolio of securities of companies that
the Sub-Adviser believes are under-valued relative to the intrinsic value of the
company. The securities in the portfolio may include common and preferred
stocks, warrants, convertible securities, and corporate debt securities.

Its risks include financial, market and inflation risk.

The portfolio is intended for investors who are willing and financially able to
take on significant market volatility and investment risk in pursuit of
long-term capital growth.

Balanced Portfolio
The portfolio seeks to achieve long-term capital growth and current income with
a secondary objective of capital preservation, by balancing investments among
stocks, bonds, and cash or cash equivalents.

It invests primarily in a diversified selection of common stocks, bonds, and
money market instruments and other short-term debt securities.

Its risks include financial, market, inflation and foreign risk.
The portfolio is intended for investors who seek long-term total returns that
balance capital growth and current income.

The following table provide some indication of the risks of investing in the
portfolio by showing various performance measures and comparisons. The table
also includes the performance of the Premier Balanced Fund (a mutual fund) and
the Transamerica Balanced Fund (an insurance company separate account), which
are operated substantially similar in all material respects as this portfolio.
Bar chart performance is that of Transamerica Balanced Fund.
Past performance is no guarantee of future results.

[insert performance bar chart]
Best calendar quarter: ______% for quarter ending _______
Worst calendar quarter: ______% for quarter ending ________
<TABLE>
<CAPTION>

Average Annual Total Returns for Periods Shown (as of 12/31/98)
1 year 5 years 10 years Since Inception
- -------------------------------------------------------------------------------------------------------
<S> <C>
Balanced Portfolio - - - - - - - - (_______)
Premier Balanced Fund ____% - - - - ____% (10/2/95)
Transamerica Balanced Fund 30.07% 23.19% - - 22.02% (4/1/93)
50% S&P 500 Index
50% Lehman Brothers Government/ ____% - - - - ____%
Corporate Bond Index 19.44% 15.65% - - 14.60% (4/1/93)
</TABLE>

Bond Portfolio
The portfolio seeks to achieve a high total return (income plus capital changes)
from fixed income securities consistent with preservation of principal.

It invests primarily in a diversified selection of investment grade corporate
and government bonds and mortgage-backed securities.

Its risks include market, inflation and foreign risk.
The portfolio is intended for investors who have the perspective, patience, and
financial ability to take on average bond price volatility in pursuit of a high
total return.

The following tables provide some indication of the risks of investing in the
portfolio by showing various performance measures and comparisons. The table
also includes the performance of the Premier Bond Fund (a mutual fund) and the
Transamerica Bond Fund (an insurance company separate account), which are
operated substantially similar in all material respects as this portfolio. Bar
chart performance is that of Transamerica Bond Fund. Past performance is no
guarantee of future results.

[insert performance bar chart]
Best calendar quarter: ______% for quarter ending _______
Worst calendar quarter: ______% for quarter ending ________
<TABLE>
<CAPTION>

Average Annual Total Returns for Periods Shown (as of 12/31/98)
1 year 5 years 10 years Since Inception
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Premier Bond Fund _____% - - - - _____% (10/2/95)
Bond Separate Account 9.13% 7.90% 10.76% 12.20% (5/1/83)
Lehman Brothers
Government/Corporate
Bond Index 9.47% 7.30% 9.34% 9.94% (5/1/83)
</TABLE>

High Yield Bond Portfolio
The portfolio seeks to achieve a high total return (income plus capital
appreciation) by investing primarily in debt instruments and convertible
securities, with an emphasis on lower quality securities.

It generally invests in a diversified selection of lower-rated bonds, commonly
known as "junk bonds." Investments of this type are subject to a greater risk of
loss of principal and nonpayment of interest than higher rated bonds, and their
prices are more volatile. Investors should carefully assess the risks associated
with an investment in this portfolio.

Its risks include inflation risk and higher market and financial risk, due to
defaults, than bond funds that emphasize higher quality securities.

The portfolio is intended for long term investors who wish to invest in the bond
market and are willing to assume substantial risk in return for potentially
higher income.

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. It seeks to maintain a stable net asset value
of $1.00 per share, but there is no guarantee it will continue to do so.

Its risk is inflation risk.
The portfolio is intended for investors who seek a low risk, relatively low cost
way to maximize current income through high-quality money market securities.

The following tables provide some indication of the risks of investing in the
portfolio by showing various performance measures and comparisons. The table
also includes the performance of the Premier Cash Reserve Fund (a mutual fund)
and the Transamerica Cash Management Fund (an insurance company separate
account), which are operated substantially similar in all material respects as
this portfolio. Bar chart performance is that of Transamerica Cash Management
Fund. Past performance is no guarantee of future results. [insert performance
bar chart]
Best calendar quarter: ______% for quarter ending _______
Worst calendar quarter: ______% for quarter ending ________
<TABLE>
<CAPTION>

Average Annual Total Returns for Periods Shown (as of 12/31/98)
1 year 5 years 10 years Since Inception
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Portfolio - - - - - - - - (1/2/98)
Premier Cash Reserve Fund _____% - - - - _____% (10/2/95)
Transamerica Cash Management Fund 5.01% . 4.86% 5.26% 6.55% (1/3/82)
IBC First Tier Index 4.96% 4.79% 5.25% 6.49% (1/3/82)
</TABLE>

The 7-day current yield of the Money Market Portfolio as of December 31, 1998
was ______%. You can get a more up to date 7-day current yield by calling
1-800-258-4260.

Guide to Portfolio Summaries

Definitions of Risks We refer to the following risks:
o Market risk -- refers to the price fluctuations, or price volatility, caused
by changing conditions in stock markets, and by interest rate movements in bond
markets. o Financial risk -- refers to a company's falling earnings or declining
overall financial circumstances. o Inflation risk -- refers to the uncertainty
that dollars invested may not buy as much in the future as they do today. o
Prepayment risk -- refers to mortgage refinancing when interest rates fall,
resulting in the portfolio reinvesting its assets at lower return rates. o
Foreign risk -- refers to the potential exposure of foreign securities to
currency fluctuations, changing political and economic climates and potentially
less liquidity.

These risks are discussed in greater detail in The Portfolios in Detail that
follows.

Performance
Performance is shown as average annual total returns, which is calculated
assuming reinvestment of dividends and distributions.

The Sub-Adviser manages other mutual funds and separate accounts in a manner
substantially similar in all material respects as the portfolios. We show the
performance for these other funds to provide you with information on the track
record of the Sub-Adviser in managing similar funds. The Premier Funds are the
no-load, investor class of mutual funds sold to the public. The Transamerica
Funds are separate accounts sold to pension plans that are not registered with
the SEC, nor subject to Subchaper M of the Internal Revenue Code. Since they are
not subject to the same investment limitations, diversification requirements and
other restrictions, the separate accounts' performance may have been better than
the portfolios' performance over the same time period. The performance of these
other funds should not be considered indicative of any portfolio's past or
future performance. The portfolios are currently only available as investment
options under variable annuities and variable life insurance contracts. The
performance we show for the portfolios and related mutual funds and separate
accounts does not reflect any fees and expenses applicable to these annuity and
insurance contracts.

We also show the performance of the following industry indexes compared to
appropriate portfolios:

The Standard and Poor's 500 Index (S&P 500) consists of 500 widely held,
publicly traded common stocks. The Standard and Poor's 600 Small Cap Index
(S&P 600) consists of the 600 smallest U.S. companies by market
capitalization.
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 Lehman Brothers Government/Corporate Bond Index is a broad-based
unmanaged index of government and corporate bonds with maturities of 10
years or longer that are rated investment grade or higher by Moody's
Investor Services, Inc. or Standard & Poor's Corporation.

In the performance tables, the inception date is not the beginning of the index,
but the date from which we measure the index's performance to match the
inception date of the oldest fund shown. Performance figures for these indexes
do not reflect any commissions or fees which you would pay if you purchased the
securities represented by the indexes. You cannot invest directly in these
indexes. We show their performance so you can compare the portfolios'
performance to them. The performance of these indexes does not indicate the past
or future performance of any portfolio.

The Portfolios in Detail

Aggressive Growth Portfolio

Goal
Our goal is to maximize long-term growth.

The Sub-Adviser's equity management team selects U.S. companies showing:

Strong potential for steady growth
High barriers to competition

We seek out the industry leaders of tomorrow - and invest in them today. We look
for companies with bright prospects for their products, management and markets.

Policies
We generally invest 90% of the portfolio's assets in a non-diversified portfolio
of equity securities of U.S. companies. We select these securities because of
their potential for long-term price appreciation. The portfolio does 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. In this event, the portfolio
may not achieve its investment objective.

Risks
Since the portfolio invests primarily in equity securities, the value of its
shares will fluctuate in response to general economic and market conditions. As
a non-diversified investment company, the portfolio can invest in a smaller
number of individual companies than a diversified investment company. As a
result, any single adverse event affecting a company within the portfolio could
impact the value of the portfolio more than it would for a diversified
investment company. Financial risk comes from the possibility that current
earnings of a company we invest in may fall, or its overall financial
circumstances may decline, causing the security to lose value.

This Portfolio Is Intended For
Investors who are willing and financially able to take on above-average stock
market volatility in order to pursue long-term capital growth. Since stocks
constantly change in value, this portfolio is intended as a long-term
investment.

Growth Portfolio

Goal
Our goal is to maximize long-term capital 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 generally invest the portfolio's assets in a diversified portfolio of
domestic equity securities. We may also invest up to 20% of its assets in
foreign securities which are traded on U.S. exchanges.

The portfolio does 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. In this event, the portfolio
may not achieve 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. Since the portfolio may invest in foreign
securities, these prices are subject to fluctuation due to instability in
political, economic and social structures in those countries.

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.

Index Portfolio

Goal
Our goal is to track the performance of the Standard & Poor's 500 Composite
Stock Price Index, also known as the S&P 500 Index.

Strategies
To achieve our goal, we use a combination of management techniques. We generally
purchase common stocks in proportion to their presence in the index. To help
offset normal operating and investment expenses and to maintain liquidity, we
also invest in futures and options with returns linked to the S&P 500, as well
as short-term money market securities and debt securities. The Sub-Adviser
regularly balances the proportions of these securities so that they will
replicate the performance of the S&P 500 as closely as possible. The correlation
between the performance of the portfolio and the S&P 500 Index is expected to be
0.95 or higher (a correlation of 1.00 would indicate perfect correlation). There
is no assurance that the portfolio will achieve the expected correlation.

Policies
We buy the stocks that make up the Index, with the exception of Transamerica
Corporation common stock. Our stock purchases reflect the Index, but we make no
attempt to forecast general market movements.

The S&P 500 Index is an unmanaged index which assumes reinvestment of dividends
and is generally considered representative of large capitalization U.S. stocks.
The Index is composed of 500 common stocks that are chosen by Standard & Poor's
Corporation. The inclusion of a company in the Index in no way implies that
Standard & Poor's Corporation believes the company to be an attractive
investment. Typically, companies included in the Index are the largest and most
dominant firms in their respective industries. The 500 companies represent
approximately 70% of the market value of all U.S. common stocks.

To help the portfolio track the total return of the Index, we also use
securities whose returns are linked to the S&P 500, such as S&P 500 Stock Index
Futures contracts, options on the Index, options on futures contracts, and debt
securities. These instruments provide this benefit on a cost-effective basis
while maintaining liquidity. Any cash that is not invested in stocks, futures or
options is invested in short-term debt securities. Those investments are made to
approximate the dividend yield of the S&P 500 and to offset transaction costs
and other expenses.

Risks
As a result of the price volatility that accompanies all stock-related
investments, the value of your shares will fluctuate in response to the economic
and market condition of the companies included in the S&P 500. 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. The performance of the portfolio will reflect the
performance of the S&P 500 Index, although it may not match it precisely. While
the Index itself has no investment or operating expenses, the portfolio does.
Generally, when the Index is rising, the value of the shares in the portfolio
should also rise. When the Index is declining, the value of shares should also
decline.

This Portfolio is Intended For:
Investors who want to participate in the overall economy and who have the
perspective, patience and financial ability to take on average stock market
volatility in pursuit of long-term capital growth. By owning shares of the
portfolio, you indirectly own shares in the largest U.S. companies.

Small Company Portfolio

Goal
Our goal is to maximize long-term growth.

Companies with smaller capitalization levels are less actively followed by
securities analysts. For this reason, they may be undervalued, providing strong
opportunities for capital appreciation. To achieve this goal, our equity
management team selects stocks issued by smaller U.S. companies which show:

Strong potential for steady growth
High barriers to competition

We seek out the industry leaders of tomorrow - and invest in them today. We look
for companies with bright prospects for their products, management and markets.

Policies
We generally invest at least 65% of the portfolio in a diversified portfolio of
equity securities: common stocks, preferred stocks, rights, warrants and
securities convertible into or exchangeable for common stocks. The companies
issuing these securities are small, U.S. companies. Small companies are those
whose market capitalization falls within the range represented by the companies
included in the S&P 600 SmallCap Index.

We may also invest in debt securities.

The portfolio may also invest in cash or cash equivalents for temporary
defensive purposes when market conditions warrant. In this event, the portfolio
may not achieve its investment objective.

Risks
Since the portfolio invests primarily in equity securities, the value of its
shares will fluctuate in response to general economic and market conditions.
This portfolio invests mainly in the equity securities of small companies. These
securities can provide strong opportunities for capital appreciation. However,
securities issued by companies with smaller asset bases or revenues are likely
to be subject to greater volatility in the market than securities issued by
larger companies. Securities of small companies are also typically traded on the
over-the-counter market and might not be traded in volumes as great as those
found on national securities exchanges. These factors can contribute to abrupt
or erratic changes in their market prices. Financial risk comes from the
possibility that current earnings of a company we invest in will fall, or that
its overall financial circumstances will decline, causing the security to lose
value.

This Portfolio Is Intended For
Investors who are willing and financially able to take on above-average stock
market volatility in order to pursue long-term capital growth. Stock values
change constantly. For this reason, the portfolio is intended as a long-term
investment.

Value Portfolio

Goal
Our goal is to maximize capital appreciation.

We generally invest in securities of domestic companies that we believe are
undervalued. We believe the market will recognize the intrinsic value of these
companies, which will lead to their market appreciation. These securities may
include common and preferred stocks, warrants, convertible securities, corporate
and high yield debt, and other securities.

To achieve our goal, we may invest in securities issued by companies of all
sizes. Generally, however we will invest in the securities of companies whose
market capitalization (total market value of publicly traded securities) is
greater than $500 million. There are no pre-set percentages of stocks, bonds or
cash equivalents or other securities we must invest in at any given time. In
pursuit of our goal, we consider:

The fundamental outlook for the line of business in which the company is
engaged The valuation of the company's securities compared to those of its
competitors

Since we invest in securities that we believe to be priced lower than their
intrinsic value, this portfolio will likely include securities issued by
companies that are reorganizing or restructuring, or which are facing, or have
recently emerged from reorganization or restructuring.

Policies
The portfolio invests primarily in a diversified portfolio of stocks, bonds and
related securities deemed by the Sub-Adviser to be currently valued below their
intrinsic value. The Sub-Adviser's opinion is based on analysis and research
performed by a group of expert managers and analysts who have examined the
issuing company's balance sheet and cash flow for potentially unrealized value.

Debt securities in which the portfolio invests may or may not be rated by rating
agencies such as Moody's or Standard & Poor's. If rated, such ratings may range
from the very highest ratings to the very lowest ratings. We may invest up to
35% of the portfolio's assets in medium and lower-rated debt securities,
referred to as "junk bonds."

The portfolio may also invest in cash or cash equivalents for temporary
defensive purposes when market conditions warrant. In this event, the portfolio
may not achieve its investment objective.

Risks
To the extent the portfolio invests in common stocks, the value of its shares
will fluctuate in response to economic and market conditions and the financial
circumstances of the companies in which it invests. For example, current
earnings of a company we invest in may fall, or its overall financial
circumstances may decline, causing the security to lose value. Stock prices of
medium and smaller size companies fluctuate more than larger, more established
companies. To the extent the portfolio invests in bonds, the value of its
investments will fluctuate in response to movements in interest rates. If rates
rise, the value of debt securities generally falls. The longer the average
maturity of the portfolio's holdings, the greater the fluctuation. The value of
any of the portfolio's bonds may also decline in response to events affecting
the issuer or its credit rating, and an issuer may default on the payment of
principal or interest, resulting in a loss to the portfolio. Lower rated
securities generally have more risk of default and volatility than higher rated
securities.

This Portfolio Is Intended For:
Investors who are willing and financially able to take on significant market
volatility and investment risk in order to pursue long-term capital growth.

Balanced Portfolio

Goal
Our goal is to achieve long-term capital growth and current income with a
secondary objective of capital preservation, by balancing investments among
stocks, bonds and cash or cash equivalents.

Strategies
To achieve our goal we invest in a diversified portfolio of common stocks,
bonds, money market instruments and other short-term debt securities issued by
companies of all sizes. The Sub-Adviser's equity and fixed income management
teams work together to build a portfolio of performance-oriented stocks combined
with bonds of good credit quality purchased at favorable prices.

We use a "bottom up" approach to investing. We study industry and economic
trends, but focus on researching individual issuers. The portfolio is
constructed one security at a time. Each issuer passes through a research
process and stands on its own merits as a viable investment in the Sub-Adviser's
opinion.

Equity Investments - Our Sub-Adviser's equity management team buys shares of
companies that have many or all of these features:

Fixed Income Investments - The Sub-Adviser's bond management team seeks out
bonds with credit strength of the quality that could warrant higher ratings,
which, in turn, could lead to higher valuations. To identify these bonds, the
bond research team performs in-depth income and credit analysis on companies
issuing bonds under consideration for the portfolio. It also compiles bond price
information from many different bond markets and evaluates how these bonds can
be expected to perform with respect to recent economic developments. The team
leader analyzes this market information daily, negotiating each trade and buying
bonds at the best available prices.

Policies
Common stocks generally represent 60% to 70% of the portfolio's total assets,
with the remaining 30% to 40% of the portfolio's assets primarily invested in
high quality bonds with maturities between 5 and 30 years. We may invest up to
20% of the portfolio's assets in non-investment grade bonds and up to 20% of the
portfolio's assets in foreign securities. We may also invest in cash or cash
equivalents such as money market funds and other short-term investment
instruments. This requires the managers of each portion of the portfolio to be
flexible in managing the portfolio's assets. At times, we may shift portions
held in bonds and stocks according to business and investment conditions.
However, at all times, the portfolio will hold at least 25% of its assets in
non-convertible debt securities.

The portfolio may also invest in cash or cash equivalents for temporary
defensive purposes when market conditions warrant. In this event, the portfolio
may not achieve its investment objective.

Risks
To the extent the portfolio invests in common stocks, the value of its shares
will fluctuate in response to economic and market conditions and the financial
circumstances of the companies in which it invests. For example, current
earnings of a company we invest in may fall, or its overall financial
circumstances may decline, causing the security to lose value. Stock prices of
medium and smaller size companies fluctuate more than larger more established
companies. To the extent the portfolio invests in bonds, the value of its
investments will fluctuate in response to movements in interest rates. If rates
rise, the value of debt securities generally falls. The longer the average
maturity of the portfolio's bond portfolio, the greater the fluctuation. The
value of any of the portfolio's bonds may also decline in response to events
affecting the issuer or its credit rating, and an issuer may default on the
payment of principal or interest, resulting in a loss to the portfolio. In
addition, to the extent the portfolio invests in foreign securities, its
performance will depend on the political and economic environments and overall
economic conditions in such countries. The balance between the stock and bond
asset classes often enables each class' contrasting risks to offset each other.

This Portfolio Is Intended For:
Investors who seek long-term total returns that balance capital growth with
current income. This portfolio allows investors to participate in both the stock
and bond markets.

Bond Portfolio

Goal
Our goal is to achieve high total return (income plus capital changes) from
fixed income securities consistent with preservation of principal.

Strategies
We use a "bottom up" approach to investing. We study industry and economic
trends, but focus on researching the issuers. The portfolio is constructed one
company at a time. Each issuer passes through a research process and stands on
its own merits as a viable investment in the Sub-Adviser's opinion.

To achieve our goal, the Sub-Adviser's bond research team performs extensive
ongoing analysis of bond issues and the markets in which they are sold. Through
its proprietary evaluation and credit research, the bond team:

Seeks out bonds that have strong credit characteristics that may not be
fully reflected in their market price. Seeks to accumulate additional
returns as the prices of such bonds increase.

The returns of the portfolio are produced by income from longer-term securities
and capital changes that may occur as the result of owning bonds whose credit
strength was undervalued at the time of purchase.

Policies
Generally, we invest the portfolio's assets in a diversified selection of
investment grade corporate and government bonds and mortgage-backed securities.
Investment grade bonds are rated Baa or higher by Moody's Investors Service
(Moody's) and BBB or higher by Standard & Poor's Corporation (S&P). Moody's and
S&P are private companies which rate bonds for quality. Maturities of these
bonds are primarily between 5 and 30 years. We may also invest up to 35% of the
portfolio's assets in lower-rated securities. Those securities are rated Ba1 by
Moody's and BB+ or lower by S&P. We may also invest in unrated securities of
similar quality, based on our analysis of those securities. Our investments may
also include securities issued or guaranteed by the U.S. government or its
agencies and instrumentalities, publicly traded corporate securities, municipal
obligations and mortgage-backed securities. In addition, we may invest up to 20%
of the portfolio's total assets in foreign securities.

The portfolio may also invest in cash or cash equivalents for temporary
defensive purposes when market conditions warrant. In this event, the portfolio
may not achieve its investment objective.

Risks
An increase in interest rates will cause bond prices to fall, whereas a decrease
in interest rates will cause bond prices to rise. A characteristic of bonds with
longer term maturities is that when interest rates go up or down, their prices
fluctuate more sharply than bonds with shorter term maturities. Since bonds with
longer term maturities have a large presence in this portfolio, the porfolio may
be affected more acutely by interest rate changes than one that invests more
heavily in short term bonds. While lower-rated bonds make up a much smaller
percentage of the portfolio's assets, they also carry higher risks. These risks
can include: a higher possibility of failure, especially during periods when the
economy slows, less liquidity in the bond market than other types of bonds, and
bond prices which are more volatile due to their lower ratings.

To the extent the portfolio invests in mortgage-backed securities, it may be
subject to the risk that homeowners will prepay (refinance) their mortgages when
interest rates decline. This forces the portfolio to reinvest these assets at a
potentially lower rate of return. In addition, to the extent the portfolio
invests in foreign securities, its performance will depend on different
political and economic environments, and overall economic conditions in such
countries.

This Portfolio Is Intended For:
Investors who have the perspective, patience and financial ability to take on
average bond price volatility in pursuit of a high total return.

High Yield Bond Portfolio

Goal
Our goal is to maximize total return (income plus capital appreciation) by
investing primarily in debt instruments and convertible securities, with an
emphasis on lower quality securities.

Strategies
We use a "bottom up" approach to investing. We study industry and economic
trends, but focus on researching individual issuers. The portfolio is
constructed one company at a time. Each issuer passes through a research process
and stands on its own merits as a viable investment in the Sub-Adviser's
opinion.

We generally invest this portfolio's assets in a diversified portfolio of high
yield, below investment grade debt securities commonly referred to as "junk
bonds."

To achieve our goal, the Sub-Adviser's fixed income management team:

Seeks to achieve potential price appreciation and to minimize price
volatility by identifying bonds that are likely to be upgraded by qualified
rating organizations
Employs research and credit analysis to minimize purchasing bonds that may
default by determining the likelihood of timely payment of interest and
principal of debt securities
Invests portfolio assets in other securities consistent with the objective
of high current income and capital appreciation

Policies
We generally invest in high yield debt securities. Up to 15% of portfolio assets
may be invested in bonds rated below Caa by Moody's or CCC by Standard & Poor's.
Investments may include bonds in the lowest rating category of each rating
agency, or in unrated bonds that we determine are of comparable quality. Such
bonds may be in default and are generally regarded by the rating agencies as
having extremely poor prospects of ever attaining any real investment standing.

The Sub-Adviser performs its own investment analysis and does not rely
principally on the ratings assigned by the rating services. Because of the
greater number of considerations involved in investing in lower-rated bonds, the
achievement of the portfolio's objectives depends more on the analytical
abilities of the portfolio management team than would be the case if the
portfolio were investing primarily in bonds in the higher rating categories.

The portfolio may also invest in cash or cash equivalents for temporary
defensive purposes when market conditions warrant. In this event, the portfolio
may not achieve its investment objective.

Risks
The value of the portfolio's investments will fluctuate in response to movements
in interest rates. If rates rise, the values of debt securities generally fall.
The longer the average maturity of the portfolio's bond portfolio, the greater
the fluctuation.

Although lower or non-rated bonds are capable of generating higher yields,
investors should be aware that they are also subject to greater price volatility
and higher rates of default than investment grade bonds (those rated above Baa
by Moody's or BBB by Standard & Poor's). Price volatility and higher rates of
default are both capable of diminishing the performance of the portfolio and the
value of your shares.

Additionally, although the Sub-Adviser's bond management team employs
comprehensive research and analysis in selecting securities for this portfolio,
it cannot guarantee their performance. Likewise, while the bond management team
uses time-tested defensive strategies to protect the value of shares during
adverse market conditions, it cannot guarantee that such efforts will prevail in
the face of changing market conditions.

This Portfolio Is Intended For:
Investors who are willing to take substantial risks in pursuit of potentially
higher rewards. The risks associated with investments in speculative securities
make this portfolio suitable only for long-term investment.

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 fund, which conforms to Rule 2a-7 of the Investment
Company Act of 1940. 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.

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 maximize 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 has been a wholly-owned direct or indirect
subsidiary of Transamerica Corporation, 600 Montgomery Street, San Francisco,
California 94111, since March 14, 1930. 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 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 ______% of the
portfolio's average net assets.

-------------------------- -----------------
Portfolio Advisory Fee
-------------------------- -----------------
-------------------------- -----------------
Aggressive Growth 0.80%
-------------------------- -----------------
-------------------------- -----------------
Growth 0.75%
-------------------------- -----------------
-------------------------- -----------------
Index 0.35%
-------------------------- -----------------
-------------------------- -----------------
Small Company 0.85%
-------------------------- -----------------
-------------------------- -----------------
Value 0.75%
-------------------------- -----------------
-------------------------- -----------------
Balanced 0.75%
-------------------------- -----------------
-------------------------- -----------------
Bond 0.55%
-------------------------- -----------------
-------------------------- -----------------
High Yield Bond 0.65%
-------------------------- -----------------
-------------------------- -----------------
Money Market 0.35%
-------------------------- -----------------

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 a wholly-owned
subsidiary of Transamerica Corporation. 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.

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:

Aggressive Growth Portfolio Primary Manager since portfolio's inception:
Philip Treick, Vice President and Portfolio Manager, Transamerica
Investment Services. Also managing Transamerica Premier Aggressive Growth
and Transamerica Premier Small Company Funds. B.S., University of South
Florida. Joined Transamerica in 1988.

Co-Manager since inception: Christopher J. Bonavico, Assistant Vice
President and Portfolio Manager, Transamerica Investment Services. Managed
Transamerica Premier Index Fund from inception to 1998. Also managing
Transamerica Premier Value Fund since 1998. B.S., University of Delaware.
Joined Transamerica in 1993.

Growth Portfolio Primary Manager since 1998: Jeffrey S. Van Harte, C.F.A.,
Vice President and Senior Portfolio Manager, Transamerica Investment
Services. Also managing Transamerica Equity Fund and Transamerica Premier
Equity Fund since 1998. Managed 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 1998: Philip Treick (see above).

Index Portfolio Primary Manager since inception: Lisa L. Hansen, Assistant
Vice President and Senior Trader, Transamerica Investment Services. Also
managing Transamerica Equity Index Fund and Transamerica Premier Index Fund
since 1998. B.A., University of California at Santa Cruz. Senior Trader,
Husic Capital Management, 1988-1997. Joined Transamerica in 1997.

Co-Manager since inception: Christopher J. Bonavico (see above).

Small Company Portfolio
Primary Manager since inception: Philip Treick (see above)

Co-Manager since inception: Christopher J. Bonavico (see above)

Value Portfolio
Primary Manager since inception: Christopher J. Bonavico (see above).

Co-Manager since inception: Jeffrey S. Van Harte (see above).

Balanced Portfolio Primary Manager since inception: Gary U. Rolle, C.F.A.,
Executive Vice President & Chief Investment Officer, Transamerica
Investment Services. Chairman & President, Transamerica Income Shares.
Chief Investment Officer, Transamerica Occidental Life and Transamerica
Life Insurance & Annuity Companies. Also managing Transamerica Balanced
Fund and Transamerica Premier Balanced Fund since 1998. 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.

Co-Manager since inception: Stephen J. Ahearn, C.F.A., Vice President and
Director of Research, Transamerica Investment Services. B.S. , Boston
College. Senior Associate- Municipal Bonds, General Electric Investment
Corporation, 1991-1994. Joined Transamerica in 1994.

Co-Manager since inception: Christopher J. Bonavico (see above).

Bond Portfolio Primary Manager since inception: Susan A. Silbert, C.F.A.,
Senior Vice President and Director of Fixed Income Management, Transamerica
Investment Services. Vice President of Transamerica Income Shares. Also
managing Transamerica Bond Fund and Transamerica Premier Bond Fund since
1998. Member of the Los Angeles Society of Financial Analysts. M.B.A.,
University of Southern California. B.S., University of Southern California.
Joined Transamerica in 1967.

Co-Manager since inception: Matthew W. Kuhns, C.F.A., Vice President and
Portfolio Manager, Transamerica Investment Services. Member of the Bond
Club of Los Angeles. M.B.A., University of Southern California. B.A.,
University of California, Berkeley. Joined Transamerica in 1991.

Co-Manager since inception: High Yield Bond Portfolio Primary Manager since
inception: Heather E. Creeden, C.F.A., Vice President and Portfolio
Manager, Transamerica Investment Services. Also managing Transamerica High
Yield Bond Fund and Transamerica Premier High Yield Bond Fund since 1998.
Member of the Los Angeles Society of Financial Analysts. B.S., Arizona
State University. Joined Transamerica in 1987.

Co-Manager since inception: Stephen J. Ahearn (see above).

Money Market Portfolio

Primary Manager since 1999: Rex A. Olson, C.F.A., Securities Analyst,
Transamerica Investment Services. Member of the Los Angeles Society of
Financial Analysts. B.S., University of Southern California. Vice
President, Mitsubishi Trust, 1987-1997. Joined Transamerica in 1997.

Co-Manager, since 1999: Peter O. Lopez, Senior Research Analyst,
Transamerica Investment Services. M.B.A. (Finance), University of Michigan;
B.A. (Economics), Arizona State Unversity. Assistant Vice President,
Shields Alliance 1995-1997,Corporate Bond Associate, TIAA-CREF, 1993-1995.
Money Market Trader, The Sumitomo Bank, Ltd.,1989-1991. 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 Fund, 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
- ------------------------------------------------
Aggressive Growth Portfolio Annually
Growth Portfolio Annually
Index Portfolio Annually
Small Company Portfolio Annually
Value Portfolio Annually
Balanced Portfolio Annually
Bond Portfolio Monthly
High Yield Bond Portfolio Monthly
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.

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.

The above is subject to the Year 2000 Readiness Disclosure Act. This act
may limit your legal rights in the event of a dispute.

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."

Investment Grade Moody's Standard & Poor's
- -----------------------------------------------------
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 C D

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 certified public
accountants. Their report, a long 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.

Year ended December 31,
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
1998 1997 1996 1995 1994
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $10.93 $8.582 $5.615 $5.239
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------

Investment Operations
Net investment income (loss) (0.05) (0.065) (0.069) (0.042)
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------

------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Net realized and unrealized gain 5.13 2.413 3.036 0.418
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Total from investment operations 5.08 2.348 2.967 0.376
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Distribution from net realized gains (1.26) - - -
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Net asset value, end of year $14.75 $10.930 $8.582 $5.615
====== ======= ====== ======
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Total Return 46.50% 27.36% 52.84% 7.19%
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------

------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Ratios and Supplemental Data
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Net assets, end of year (in thousands) $46,378 $32,238 $25,738 $17,267
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Expenses to average net assets (1) 0.85% 1.27% 1.41% 1.43%
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Net investment income (loss) to average net assets (0.39%) (0.68%) (0.94%) (0.80%)
(2)
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Portfolio turnover rate 20.54% 34.58% 18.11% 30.84%
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
Average commission rate (3) $0.0575 $0.07 - -
------------------------------------------------------ ---------- ---------- ---------- ----------- ---------- -----------
</TABLE>

(1) If the Investment Adviser had not reimbursed expenses, the ratio of
operating expenses to average net assets would have been 0.96%, 0.98% and
1.34% for the years ended December 31, 1998, 1997, and 1996,
respectively.

(2) 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.

(3) This disclosure was required for fiscal periods beginning on or after
September 1, 1995, and represents the average commission rate paid on
equity security transactions on which commissions are charged.

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.

----------------------------------------------------------
Period ended
----------------------------------------------------------
----------------------------------------------------------
December 31,
1998*

----------------------------------------------------------
----------------------------------------------------------
Net Asset Value, beginning of period $1.000
----------------------------------------------------------
----------------------------------------------------------

----------------------------------------------------------
----------------------------------------------------------
Investment Operations
----------------------------------------------------------
----------------------------------------------------------
Net investment income 0.024
----------------------------------------------------------
----------------------------------------------------------
Total from investment operations ...0.024.
----------------------------------------------------------
----------------------------------------------------------

----------------------------------------------------------
----------------------------------------------------------
Distributions to Shareholders from:
----------------------------------------------------------
----------------------------------------------------------
Net investment income (0.024)
----------------------------------------------------------
----------------------------------------------------------
Total distributions (0.024)
----------------------------------------------------------
----------------------------------------------------------

----------------------------------------------------------
----------------------------------------------------------
Net Asset Value, end of period $1.000
----------------------------------------------------------
----------------------------------------------------------

----------------------------------------------------------
----------------------------------------------------------
Total Return (a) 2.41%
----------------------------------------------------------
----------------------------------------------------------

----------------------------------------------------------
----------------------------------------------------------
Ratios and Supplemental Data:
----------------------------------------------------------
----------------------------------------------------------
Expenses to average net assets (1)(3) 0.60%
----------------------------------------------------------
----------------------------------------------------------
Net investment income (loss)
to average net assets (2)(3) 4.84%
----------------------------------------------------------
----------------------------------------------------------
Net Assets, end of period (in
thousands) $3,043
----------------------------------------------------------

* 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 operating
expenses to average net assets would have been 3.03% for the period ended
December 31, 1998.
(2) 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.
(3) Annualized.

Other Portfolios

There are no financial statements for the Aggressive Growth, Balanced, Bond,
High Yield Bond, Index, Small Company and Value Portfolios because they had not
yet commenced operations as of the date of this prospectus.

<PAGE>

ADDITIONAL INFORMATION AND ASSISTANCE [back page]

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. These reports are only available for those portfolios in
operation on the date of the report.

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 1-800-420-7749
Write to Transamerica Annuity Service Center, 401 North Tryon Street,
Suite 700, Charlotte, North Carolina 28202.
E-mail us at ______________________________
Visit our Internet web site at http://www.transamerica.com

To Obtain Information from the SEC
o Visit the SEC, Public Reference Room, Washington, D.C. to review or copy
the prospectus and SAI
o Call 1-800-SEC-0330
o Visit the SEC's Internet web site at http://www.sec.gov
o 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:_____________________

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999

TRANSAMERICA VARIABLE INSURANCE FUND, INC.

Equity Portfolios
Aggressive Growth Portfolio
Growth Portfolio
Index Portfolio
Small Company Portfolio
Value Portfolio

Equity & Fixed Income Portfolios
Balanced Portfolio

Fixed Income Portfolios
Bond Portfolio
High Yield Bond Portfolio
Money Market Portfolio

This Statement of Additional Information (SAI) is not a prospectus. Much of the
information contained in this SAI expands upon information discussed in the
Prospectus for the Portfolios of Transamerica Variable Insurance Portfolio, Inc.
(Fund). The 1998 annual and semi-annual reports are incorporated by reference in
this SAI. Please read this SAI in conjunction with the current Prospectus for
the Fund dated May 1, 1999. To obtain a free copy of the Prospectus write to the
Fund at the Transamerica Annuity Service Center, 401 North Tryon Street, Suite
700, Charlotte, North Carolina 28202, or call 800- 258-4260.

TABLE OF CONTENTS
Page

INTRODUCTION.................................................
INVESTMENT GOALS AND POLICIES................................
INVESTMENT RESTRICTIONS......................................
INVESTMENT ADVISERS and OTHER SERVICE PROVIDERS..............
PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND BROKERAGE.....
DETERMINATION OF NET ASSET VALUE.............................
PERFORMANCE INFORMATION......................................
FEDERAL TAX MATTERS..........................................
SHARES OF STOCK..............................................
DIRECTORS AND OFFICERS.......................................
LEGAL PROCEEDINGS............................................
OTHER INFORMATION............................................

Other Information...................................
FINANCIAL STATEMENTS.........................................
APPENDIX A...................................................
APPENDIX B

<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 currently consists of nine investment portfolios:
Aggressive Growth; Growth; Index; Small Company; Value; Balanced; Bond;
High Yield Bond; and Money Market.

The Fund 's Growth Portfolio is the successor to Transamerica Occidental's
Separate Account Fund C ("Separate Account Fund C"), a registered management
investment company. 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 on November 1, 1996, in exchange for shares in the Growth Portfolio
which are held by Separate Account C.

The Money Market Portfolio commenced operations on January 2,1998. The other
seven Portfolios have not yet commenced operations. By investing in a Portfolio,
an investor becomes entitled to a pro-rata share of all dividends and
distributions arising from the net income and realized and unrealized capital
gains on the investments of that Portfolio. Likewise, an investor shares
pro-rata in any losses (realized and unrealized) of that Portfolio.

As of ______________, _______% of the outstanding shares of the Growth Portfolio
were owned by Transamerica Occidental Life Insurance Company on behalf of
Separate Account C, and _______% of the outstanding shares of the Growth
Portfolio were owned by Transamerica Life Insurance and Annuity Company on
behalf of Separate Account VA-6. As of _____________, _______% of the
outstanding shares of the Money Market Portfolio were owned by Transamerica Life
Insurance and Annuity Company and _______% were owned by Transamerica Life
Insurance and Annuity Company on behalf of Separate Account VA-6.

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. to act as the Fund's Sub-Adviser to
provide the day-to-day portfolio management for the Portfolios.

The Fund currently offers shares of the Portfolios as the underlying funding
vehicles for the variable annuity and variable life insurance contracts (the
"Contracts"). The Contracts are registered with the Securities and Exchange
Commission ("SEC"), and have separate prospectuses, and Statements 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. The Fund does
not offer its stock directly to the general public.

Terms appearing in this Statement of Additional Information that are defined in
the Prospectus have the same meaning as in the Prospectus.

INVESTMENT GOALS AND POLICIES

The investment goals stated in the Prospectus for each Portfolio are
fundamental. This means they can be changed only with the approval of a majority
of shareholders of such Portfolio. The strategies and policies described in the
Prospectus are not fundamental. Strategies and policies can be changed by the
Board of Directors without shareholder approval. If any investment goal of a
Portfolio changes, you should decide if the Portfolio still meets your financial
needs.

The achievement of each Portfolio's investment goal will depend on market
conditions generally and on the analytical and portfolio management skills of
the Sub-Adviser. There can be no assurance that the investment goal of any of
the Portfolios will be achieved.

Buying and Selling Securities

In general, the Portfolios purchase and hold securities for capital growth,
current income, or a combination of the two, depending on the Portfolio's
investment objective. Portfolio changes can result from liquidity needs,
securities reaching a price objective, anticipated changes in interest rates, a
change in the creditworthiness of an issuer, or from general financial or market
developments. Because portfolio changes usually are not tied to the length of
time a security has been held, a significant number of short-term transactions
may occur.

The Portfolios may sell one security and simultaneously purchase another of
comparable quality. The Portfolios may simultaneously purchase and sell the same
security to take advantage of short-term differentials and bond yields. In
addition, the Portfolios may purchase individual securities in anticipation of
relatively short-term price gains.

Portfolio turnover has not been and will not be a consideration in the
investment process. The Sub-Adviser buys and sells securities for each Portfolio
whenever it believes it is appropriate to do so. Increased turnover results in
higher costs. These costs result from brokerage commissions, dealer mark-ups and
other transaction costs on the sale of securities and reinvestment in other
securities. Increased turnover may also result in additional short-term gains.

High Yield (`Junk') Bonds
The High Yield Bond Portfolio purchases high yield bonds (commonly called `junk'
bonds). These are lower-rated bonds that involve higher current income but are
predominantly speculative because they present a higher degree of credit risk
than investment-grade bonds. The other Portfolios, except the Index and Money
Market Portfolios, may purchase these securities to a limited extent. The
Sub-Adviser needs to carefully analyze the financial condition of companies
issuing junk bonds. The prices of junk bonds tend to be more reflective of
prevailing economic and industry conditions, the issuers' unique financial
situations, and the bonds' coupon than to small changes in the level of interest
rates. But during an economic downturn or a period of rising interest rates,
highly leveraged companies can have trouble making principal and interest
payments, meeting projected business goals, and obtaining additional financing.

The Portfolios may also invest in unrated debt securities. Unrated debt, while
not necessarily of lower quality than rated securities, may not have as broad a
market. Because of the size and perceived demand for the issue, among other
factors, certain issuers may decide not to pay the cost of getting a rating for
their bonds. The creditworthiness of the issuer, as well as any financial
institution or other party responsible for payments on the security, will be
analyzed to determine whether to purchase unrated bonds.

Changes by recognized rating services in their ratings of a fixed-income
security and changes in the ability of an issuer to make payments of interest
and principal may also affect the value of these investments. Changes in the
value of portfolio securities generally will not affect income derived from
these securities, but will affect the owning Portfolio's net asset value.

Periods of economic or political uncertainty and change can create volatility in
the price of junk bonds. Since the last major economic recession, there has been
a substantial increase in the use of high-yield debt securities to fund highly
leveraged corporate acquisitions and restructurings. Past experience with
high-yield securities in a prolonged economic downturn may not provide an
accurate indication of future performance during such periods. Lower rated
securities may also be harder to sell than higher rated securities because of
negative publicity and investor perceptions of this market, as well as new or
proposed laws dealing with high yield securities. For many junk bonds, there is
no established retail secondary market. As a result, it may be difficult for the
Sub-Adviser to accurately value the bonds because they cannot rely on available
objective data.

The Portfolios will not necessarily dispose of a security when its rating is
reduced below its rating at the time of purchase. However, the Sub-Adviser will
monitor the investment to determine whether continued investment in the security
will assist in meeting the Portfolio's investment objectives.

At times, a substantial portion of a Portfolio's assets may be invested in
securities of which the Portfolio, by itself or together with other Portfolios
and accounts managed by the Sub-Adviser, holds all or a major portion. Under
adverse market or economic conditions or in the event of adverse changes in the
financial condition of the issuer, the Portfolio could find it more difficult to
sell these securities when the Sub-Adviser believes it advisable to do so or may
be able to sell the securities only at prices lower than if they were more
widely held. Under these circumstances, it may also be more difficult to
determine the fair value of such securities for purposes of computing the
Portfolio's net asset value.

In order to enforce its rights in the event of a default of these securities, a
Portfolio may be required to participate in various legal proceedings or take
possession of and manage assets securing the issuer's obligations on the
securities. This could increase the Portfolio's operating expenses and adversely
affect the Portfolio's net asset value.

Certain securities held by a Portfolio may permit the issuer at its option to
call, or redeem, its securities. If an issuer were to redeem securities held by
the Portfolio during a time of declining interest rates, the Portfolio may not
be able to reinvest the proceeds in securities providing the same investment
return as the securities redeemed.

The Portfolios may invest in zero-coupon bonds and payment-in-kind bonds.
Zero-coupon bonds are issued at a significant discount from their principal
amount and may pay interest either only at maturity, or subsequent to the issue
date prior to maturity, rather than at regular intervals during the life of the
security. Payment-in-kind bonds allow the issuer, at its option, to make current
interest payments on the bonds either in cash or in additional bonds. The values
of zero-coupon bonds and payment-in-kind bonds are subject to greater
fluctuation in response to changes in market interest rates than bonds that pay
interest in cash currently. Both zero-coupon bonds and payment-in-kind bonds
allow an issuer to avoid the need to generate cash to meet current interest
payments. Accordingly, such bonds may involve greater credit risks than bonds
paying interest currently. Even though such bonds do not pay current interest in
cash, a Portfolio nonetheless is required to accrue interest income on these
investments and to distribute the interest income at least annually to
shareholders. Thus, the Portfolio could be required at times to liquidate other
investments in order to satisfy its distribution requirements.

Certain investment grade securities in which a Portfolio may invest share some
of the risk factors discussed above with respect to lower-rated securities.

Restricted and Illiquid Securities
The Portfolios may purchase certain restricted securities of U.S. issuers
(securities that are not registered under the Securities Act of 1933, as amended
(1933 Act) but can be offered and sold to qualified institutional buyers
pursuant to Rule 144A under that Act) and limited amounts of illiquid
investments, including illiquid restricted securities.

Up to 15% of a Portfolio's net assets may be invested in securities that are
illiquid, except that the Money Market Portfolio may only invest 10% of its net
assets in such securities. Securities are considered illiquid when there is no
readily available market or when they have legal or contractual restrictions.

Illiquid investments include restricted securities, repurchase agreements that
mature in more than seven days, fixed time deposits that mature in more than
seven days and participation interests in loans. These investments may be
difficult to sell quickly for their fair market value.

Certain repurchase agreements which provide for settlement in more than seven
days, however, can be liquidated before the nominal fixed term of seven days.
The Sub-Adviser will consider such repurchase agreements as liquid. Likewise,
restricted securities (including commercial paper issued pursuant to Section
4(2) of the 1933 Act) that the Board or the Sub-Adviser have determined to be
liquid will be treated as such.

The SEC staff has taken the position that fixed time deposits maturing in more
than seven days, that cannot be traded on a secondary market, and participation
interests in loans are illiquid and not readily marketable. A considerable
amount of time may elapse between a Portfolio's decision to dispose of
restricted or illiquid securities and the time which such Portfolio is able to
dispose of them, during which time the value of such securities (and therefore
the value of the Portfolio's shares) could decline.

Certain restricted securities that are not registered for sale to the general
public but that can be resold to institutional investors under Rule 144A may not
be considered illiquid if a dealer or institutional trading market exists. The
institutional trading market is relatively new. However, liquidity of a
Portfolio's investments could be impaired if trading for these securities does
not further develop or declines. The Sub-Adviser determines the liquidity of
Rule 144A securities under guidelines approved by the Board.

Derivatives
Each Portfolio, except for Money Market Portfolio, may use options, futures,
forward contracts, and swap transactions (derivatives). The Portfolios may
purchase, or write, call or put options on securities or on indexes (options)
and may enter into interest rate or index futures contracts for the purchase or
sale of instruments based on financial indexes (futures contracts), options on
futures contracts, forward contracts, and interest rate swaps and swap-related
products.

By investing in derivatives, the Sub-Adviser may seek to protect a Portfolio
against potentially unfavorable movements in interest rates or securities
prices, or attempt to adjust a Portfolio's exposure to changing securities
prices, interest rates, or other factors that affect securities values. This is
done in an attempt to reduce a Portfolio's overall investment risk. Although it
will not generally be a significant part of a Portfolio's strategies, the
Sub-Adviser may also use derivatives to enhance returns. Opportunities to
enhance returns arise when the derivative does not reflect the fair value of the
underlying securities. None of the Portfolios will use derivatives for leverage.

Risks in the use of derivatives include: (1) the risk that interest rates and
securities prices do not move in the directions being hedged against, in which
case the Portfolio has incurred the cost of the derivative (either its purchase
price or, by writing an option, losing the opportunity to profit from increases
in the value of the securities covered) with no tangible benefit; (2) imperfect
correlation between the price of derivatives and the movements of the
securities' prices or interest rates being hedged; (3) the possible absence of a
liquid secondary market for any particular derivative at any time (some
derivatives are not actively traded but are custom designed to meet the
investment needs of a narrow group of institutional investors and can become
illiquid if the needs of that group of investors change); (4) the potential loss
if the counterparty to the transaction does not perform as promised; and (5) the
possible need to defer closing out certain positions to avoid adverse tax
consequences.

The Bond Portfolio and Balanced Portfolio may invest in derivatives with respect
to no more than 20% of each Portfolio's assets; Index Portfolio may invest with
respect to no more than 35% of its assets. The Board will closely monitor the
Sub-Adviser's use of derivatives in each of the Portfolios to assure they are
used in accordance with the investment objectives of each Portfolio.

Options on Securities and Securities Indexes
The Portfolios may write (i.e., sell) covered call and put options on any
securities in which they may invest. A call option written by a Portfolio
obligates the Portfolio to sell specified securities to the holder of the option
at a specified price if the option is exercised at any time before the
expiration date. A Portfolio would normally write a call option in anticipation
of a decrease in the market value of securities of the type in which it may
invest. All call options written by a Portfolio are covered, which means that
the Portfolio will own the securities subject to the option so long as the
option is outstanding. A Portfolio's purpose in writing covered call options is
to realize greater income than would be realized on securities transactions
alone. However, by writing the call option a Portfolio might forgo the
opportunity to profit from an increase in the market price of the underlying
security.

A put option written by a Portfolio would obligate the Portfolio to purchase
specified securities from the option holder at a specified price if the option
is exercised at any time before the expiration date. All put options written by
a Portfolio would be covered, which means that such Portfolio would have
deposited with its custodian cash or liquid securities with a value at least
equal to the exercise price of the put option. The purpose of writing such
options is to generate additional income for the Portfolio. However, in return
for the option premium, a Portfolio accepts the risk that it might be required
to purchase the underlying securities at a price in excess of the securities'
market value at the time of purchase.

In addition, a Portfolio may cover a written call option or put option by
maintaining liquid securities in a segregated account with its custodian or by
purchasing an offsetting option or any other option which, by virtue of its
exercise price or otherwise, reduces the Portfolio's net exposure on its written
option position.

A Portfolio may also write (sell) covered call and put options on any securities
index composed of securities in which it may invest. Options on securities
indexes are similar to options on securities, except that the exercise of
securities index options requires cash payments and does not involve the actual
purchase or sale of securities. In addition, securities index options are
designed to reflect price fluctuations in a group of securities or segment of
the securities market rather than price fluctuations in a single security.

A Portfolio may cover call options on a securities index by owning securities
whose price changes are expected to be similar to those of the underlying index,
or by having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or exchange of other
securities in the Portfolio. A Portfolio may cover call and put options on a
securities index by maintaining cash or liquid securities with a value equal to
the exercise price in a segregated account with its custodian.

A Portfolio may terminate its obligations under an exchange traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as closing purchase transactions.

A 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. A Portfolio would also be able to enter into closing sale transactions
in order to realize gains or minimize losses on options it had purchased.

A 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 a Portfolio, in return for the premium
paid, to purchase specified securities at a specified price during the option
period. A 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 Portfolio would realize a loss
on the purchase of the call option.

A Portfolio would normally purchase put options in anticipation of a decline in
the market value of its securities (protective puts) or in securities in which
it may invest. The purchase of a put option would entitle a 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 a Portfolio's securities. Put
options may also be purchased by a Portfolio for the purpose of affirmatively
benefiting from a decline in the price of securities which it does not own. A
Portfolio would ordinarily realize a gain if, during the option period, the
value of the underlying securities decreased below the exercise price
sufficiently to cover the premium and transaction costs; otherwise such a
Portfolio would realize a loss on the purchase of the put option.

A Portfolio would purchase put and call options on securities indexes 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 will exist for any
particular exchange-traded option at any particular time. If a Portfolio is
unable to effect a closing purchase transaction with respect to covered options
it has written, the Portfolio will not be able to sell the underlying securities
or dispose of assets held in a segregated account until the options expire or
are exercised. Similarly, if a Portfolio is unable to effect a closing sale
transaction with respect to options it has purchased, it will have to exercise
the options in order to realize any profit and will incur transaction costs upon
the purchase or sale of underlying securities.

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 Portfolios may purchase and sell both options that are traded on U.S.,
United Kingdom, and other 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, a 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, the amount of illiquid securities may be
calculated with reference to the formula.

Transactions by a Portfolio in options on securities and securities indexes 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 written or purchased by a single investor or group of
investors acting in concert. Thus, the number of options which a Portfolio may
write or purchase may be affected by options written or purchased by other
investment advisory clients of the Sub-Adviser of the Portfolios. An exchange,
board of trade or other trading facility may order the liquidation of positions
found to be in excess of these limits, and it may impose certain other
sanctions.

The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary securities transactions. The successful use of protective puts for
hedging purposes depends in part on an ability to anticipate future price
fluctuations and the degree of correlation between the options and securities
markets.

Futures Contracts and Options on Futures Contracts
The Portfolios may purchase and sell futures contracts and may also purchase and
write options on futures contracts. A Portfolio may purchase and sell futures
contracts based on various securities (such as U.S. government securities),
securities indexes, and other financial instruments and indexes. A Portfolio
will engage in futures or related options transactions only for bona fide
hedging purposes as defined below or to increase total returns to the extent
permitted by regulations of the Commodity Futures Trading Commission (CFTC). All
futures contracts entered into by a Portfolio are traded on U.S. exchanges or
boards of trade that are licensed and regulated by the CFTC.

Futures Contracts A futures contract may generally be described as an agreement
between two parties to buy or sell particular financial instruments for an
agreed price during a designated month (or to deliver the final cash settlement
price, in the case of a contract relating to an index or otherwise not calling
for physical delivery at the end of trading in the contract).

When interest rates are rising or securities prices are falling, a Portfolio can
seek to offset a decline in the value of its current securities through the sale
of futures contracts. When rates are falling or prices are rising, a Portfolio,
through the purchase of futures contracts, can attempt to secure better rates or
prices than might later be available in the market when it effects anticipated
purchases. The Index Portfolio will use options and futures contracts only to
achieve its performance objective of matching the return on the S&P 500.

Positions taken in the futures markets are not normally held to maturity, but
are instead liquidated through offsetting transactions which may result in a
profit or a loss. While a Portfolio's futures contracts on securities will
usually be liquidated in this manner, it may instead make or take delivery of
the underlying securities whenever it appears economically advantageous for the
Portfolio to do so. A clearing corporation associated with the exchange on which
futures on securities are traded guarantees that, if still open, the sale or
purchase will be performed on the settlement date.

Hedging Strategies Hedging by use of futures contracts seeks to establish more
certainty than would otherwise be possible in the effective price or rate of
return on securities that a Portfolio owns or proposes to acquire. A Portfolio
may, for example, take a short position in the futures market by selling futures
contracts in order to hedge against an anticipated rise in interest rates or a
decline in market prices that would adversely affect the value of the
Portfolio's securities. Such futures contracts may include contracts for the
future delivery of securities held by the Portfolio or securities with
characteristics similar to those of the Portfolio's securities.

If, in the opinion of the Sub-Adviser, there is a sufficient degree of
correlation between price trends for a Portfolio's securities and futures
contracts based on other financial instruments, securities indexes or other
indexes, the Portfolio may also enter into such futures contracts as part of its
hedging strategy. Although under some circumstances prices of a Portfolio's
securities may be more or less volatile than prices of such futures contracts,
the Sub-Adviser will attempt to estimate the extent of this difference in
volatility based on historical patterns and to compensate for it by having a
Portfolio enter into a greater or lesser number of futures contracts or by
attempting to achieve only a partial hedge against price changes affecting the
Portfolio's securities. When hedging of this character is successful, any
depreciation in the value of the Portfolio's securities will be substantially
offset by appreciation in the value of the futures position. On the other hand,
any unanticipated appreciation in the value of the Portfolio's securities would
be substantially offset by a decline in the value of the futures position.

On other occasions, a Portfolio may take a long position by purchasing such
futures contracts. This would be done, for example, when a Portfolio anticipates
the subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or interest rates then available in the applicable market
to be less favorable than prices or rates that are currently available.

Options on Futures Contracts The acquisition of put and call options on futures
contracts will give a Portfolio the right (but not the obligation), for a
specified price, to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, a Portfolio obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event of
an unfavorable price movement to the loss of the option premium and transaction
costs.

The writing of a call option on a futures contract generates a premium which may
partially offset a decline in the value of a Portfolio's assets. By writing a
call option, a Portfolio becomes obligated, in exchange for the premium, to sell
a futures contract, which may have a value higher than the exercise price.
Conversely, the writing of a put option on a futures contract generates a
premium, which may partially offset an increase in the price of securities that
a Portfolio intends to purchase. However, a Portfolio becomes obligated to
purchase a futures contract, which may have a value lower than the exercise
price. Thus, the loss incurred by a Portfolio in writing options on futures is
potentially unlimited and may exceed the amount of the premium received. A
Portfolio will increase transaction costs in connection with the writing of
options on futures.

The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be effected. A Portfolio's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.

Other Considerations Where permitted, a Portfolio will engage in futures
transactions and in related options transactions only for bona fide hedging or
to increase total return to the extent permitted by CFTC regulations. A
Portfolio will determine that the price fluctuations in the futures contracts
and options on futures used for hedging purposes are substantially related to
price fluctuations in securities held by the Portfolio or which it expects to
purchase. Except as stated below, each Portfolio's futures transactions will be
entered into for traditional hedging purposes, i.e., futures contracts will be
sold to protect against a decline in the price of securities that the Portfolio
owns, or futures contracts will be purchased to protect the Portfolio against an
increase in the price of securities it intends to purchase. As evidence of this
hedging intent, a Portfolio expects that on 75% or more of the occasions on
which it takes a long futures or option position (involving the purchase of
futures contracts), that Portfolio will have purchased, or will be in the
process of purchasing, equivalent amounts of related securities in the cash
market at the time when the futures or option position is closed out. However,
in particular cases, when it is economically advantageous for a Portfolio to do
so, a long futures position may be terminated or an option may expire without
the corresponding purchase of securities or other assets.

As an alternative to literal compliance with the bona fide hedging definition, a
CFTC regulation permits a Portfolio to elect to comply with a different test
under which the aggregate initial margin and premiums required to establish
positions in futures contracts and options on futures, for the purpose of
increasing total return, will not exceed 5% of the Portfolio's net asset value,
after taking into account unrealized profits and losses on any such positions
and excluding the amount by which such options were in-the-money at the time of
purchase. As permitted, each Portfolio will engage in transactions in futures
contracts and in related options transactions only to the extent such
transactions are consistent with the requirements of the Internal Revenue Code
of 1986, as amended (Code), for maintaining its qualification as a regulated
investment company for federal income tax purposes.

Transactions in futures contracts and options on futures involve brokerage
costs, require margin deposits and, in the case of contracts and options
obligating a Portfolio to purchase securities or currencies, require the
Portfolio to segregate with its custodian liquid securities in an amount equal
to the underlying value of such contracts and options.

While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail other risks. Thus,
unanticipated changes in interest rates or securities prices may result in a
poorer overall performance for a Portfolio than if it had not entered into any
futures contracts or options transactions. In the event of an imperfect
correlation between a futures position and the position which the Portfolio
intends to protect, the desired protection may not be obtained and a Portfolio
may be exposed to risk of loss.

Perfect correlation between a Portfolio's futures positions and current
positions may be difficult to achieve because no futures contracts based on
individual equity securities are currently available. The only futures contracts
available to these Portfolios for hedging purposes are various futures on U.S.
government securities and securities indexes.

Swap Transactions
The Portfolios may, to the extent permitted by the SEC, enter into privately
negotiated swap transactions with other financial institutions in order to take
advantage of investment opportunities generally not available in public markets.
In general, these transactions involve swapping a return based on certain
securities, instruments, or financial indexes with another party, such as a
commercial bank, in exchange for a return based on different securities,
instruments, or financial indexes.

By entering into swap transactions, a Portfolio may be able to protect the value
of a portion of its securities against declines in market value. A Portfolio may
also enter into swap transactions to facilitate implementation of allocation
strategies between different market segments or to take advantage of market
opportunities which may arise from time to time.

A Portfolio may be able to enhance its overall performance if the return offered
by the other party to the swap transaction exceeds the return swapped by the
Portfolio. However, there can be no assurance that the return a Portfolio
receives from the counterparty to the swap transaction will exceed the return it
swaps to that party.

While a Portfolio will only enter into swap transactions with counterparties it
considers creditworthy, a risk inherent in swap transactions is that the other
party to the transaction may default on its obligations under the swap
agreement. Each Portfolio will monitor the creditworthiness of parties with
which it has swap transactions. If the other party to the swap transaction
defaults on its obligations, a Portfolio would be limited to contractual
remedies under the swap agreement. There can be no assurance that a Portfolio
will succeed when pursuing its contractual remedies. To minimize a Portfolio's
exposure in the event of default, the Portfolios will usually enter into swap
transactions on a net basis (i.e., the parties to the transaction will net the
payments payable to each other before such payments are made). When a Portfolio
enters into swap transactions on a net basis, the net amount of the excess, if
any, of the Portfolio's obligations over its entitlements with respect to each
such swap agreement will be accrued on a daily basis and an amount of liquid
assets having an aggregate market value at least equal to the accrued excess
will be segregated by the Portfolio's custodian. To the extent a Portfolio
enters into swap transactions other than on a net basis, the amount segregated
will be the full amount of the Portfolio's obligations, if any, with respect to
each such swap agreement, accrued on a daily basis. See "Segregated Accounts."

Swap agreements are considered to be illiquid by the SEC staff and will be
subject to the limitations on illiquid investments. See "Restricted and Illiquid
Securities."

To the extent that there is an imperfect correlation between the return a
Portfolio is obligated to swap and the securities or instruments representing
such return, the value of the swap transaction may be adversely affected.
Therefore, a Portfolio will not enter into a swap transaction unless it owns or
has the right to acquire the securities or instruments representative of the
return it is obligated to swap with the counterparty to the swap transaction. It
is not the intention of the Portfolios to engage in swap transactions in a
speculative manner, but rather primarily to hedge or manage the risks associated
with assets held in a Portfolio, or to facilitate the implementation of
strategies of purchasing and selling assets for a Portfolio.

Interest Rate Swaps The Portfolios may enter into interest rate swaps for
hedging purposes and non-hedging purposes. Since swaps are entered into for good
faith hedging purposes or are offset by a segregated account as described below,
the Sub-Adviser believes that swaps do not constitute senior securities as
defined in the Investment Company Act of 1940, as amended (1940 Act) and,
accordingly, will not treat them as being subject to the Portfolio's borrowing
restrictions. The net amount of the excess, if any, of a Portfolio's obligations
over its entitlement with respect to each interest rate swap will be accrued on
a daily basis and an amount of cash or other liquid securities having an
aggregate net asset value at least equal to such accrued excess will be
maintained in a segregated account by the Portfolio's custodian. A Portfolio
will not enter into any interest rate swap unless the credit quality of the
unsecured senior debt or the claims-paying ability of the other party to the
swap is considered to be investment grade by the Sub-Adviser. If there is a
default by the other party to such a transaction, a Portfolio will have
contractual remedies pursuant to the agreement. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid in
comparison with the markets for other similar instruments which are traded in
the interbank market.

Foreign Securities
The Portfolios may invest in foreign securities. The Index Portfolio invests
only in American Depositary Receipts (ADRs) that are selected by the Standard &
Poor's Corporation to be included in the S&P 500 Index. Foreign securities,
other than ADRs, will be held in custody by State Street London Limited, who
will handle transactions with the transnational depositories Euroclear and
Cedel. Foreign securities may trade, and a Portfolio's net asset value may be
affected, on days when an investor has no access to the Portfolio.

Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks and considerations include differences in accounting, auditing and
financial reporting standards, generally higher commission rates on foreign
securities transactions, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investment in foreign countries
and potential restrictions on the flow of international capital and currencies.
Foreign issuers may also be subject to less government regulation than U.S.
companies. Moreover, the dividends and interest payable on foreign securities
may be subject to foreign withholding taxes, thus reducing the net amount of
income available for distribution to the Portfolio's shareholders. Further,
foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility.

Changes in foreign currency exchange rates will affect, favorably or
unfavorably, the value of those securities which are denominated or quoted in
currencies other than the U.S. dollar. Currency exchange rates generally are
determined by the forces of supply and demand in the foreign exchange markets
and the relative merits of investments in different countries, actual or
perceived changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention of U.S. or foreign governments or central banks,
or the failure to intervene, or by currency controls or political developments
in the United States or abroad.

Short Sales
The Portfolios may sell securities which they do not own or own but do not
intend to deliver to the buyer (sell short) if, at the time of the short sale,
the Portfolio making the short sale owns or has the right to acquire an equal
amount of the security being sold short at no additional cost. These
transactions allow the Portfolios to hedge against price fluctuations by locking
in a sale price for securities they do not wish to sell immediately.

A Portfolio may make a short sale when it decides to sell a security it owns at
a currently attractive price. This allows the Portfolio to postpone a gain or
loss for federal income tax purposes and to satisfy certain tests applicable to
regulated investment companies under the Code. The Portfolios will only make
short sales if the total amount of all short sales does not exceed 10% of the
total assets of the Portfolio. This limitation can be changed at any time.

Purchase of When-Issued Securities
The Portfolios may enter into firm commitment agreements for the purchase of
securities on a specified future date. Thus, the Portfolios may purchase, for
example, new issues of fixed-income instruments on a when-issued basis, whereby
the payment obligation, or yield to maturity, or coupon rate on the instruments
may not be fixed at the time of the transaction. A Portfolio will not purchase
securities on a when-issued basis if, as a result, more than 15% of the
Portfolio's net assets would be so invested. In addition, the Portfolios may
invest in asset-backed securities on a delayed delivery basis. This reduces the
Portfolios' risk of early repayment of principal, but exposes the Portfolios to
some additional risk that the transaction will not be consummated.

When a Portfolio enters into a firm commitment agreement, liability for the
purchase price and the rights and risks of ownership of the security accrue to
the Portfolio at the time it becomes obligated to purchase such security,
although delivery and payment occur at a later date. Accordingly, if the market
price of the security should decline, the effect of such an agreement would be
to obligate the Portfolio to purchase the security at a price above the current
market price on the date of delivery and payment. During the time a Portfolio is
obligated to purchase such security it will be required to segregate assets. See
"Segregated Accounts."

Segregated Accounts
In connection with when-issued securities, firm commitment agreements, futures,
the writing of options, and certain other transactions in which a Portfolio
incurs an obligation to make payments in the future, such Portfolio may be
required to segregate assets with its custodian in amounts sufficient to settle
the transaction. To the extent required, such segregated assets will consist of
liquid securities.

Lending of Securities
Subject to investment restriction number 2 titled "Lending" (relating to loans
of securities), as a means to earn additional income a Portfolio may lend its
securities to brokers and dealers that are not affiliated with the Investment
Adviser and the Sub-Adviser, are registered with the Commission and are members
of the NASD, and also to certain other financial institutions. All loans will be
fully collateralized. In connection with the lending of its securities, a
Portfolio will receive as collateral cash, securities issued or guaranteed by
the United States government (i.e., Treasury securities), or other collateral
permitted by applicable law, which at all times while the loan is outstanding
will be maintained in amounts equal to at least 102% of the current market value
of the loaned securities, or such lesser percentage as may be permitted by
applicable law, as reviewed daily. A Portfolio lending its securities will
receive amounts equal to the interest or dividends paid on the securities loaned
and in addition will expect to receive a portion of the income generated by the
short-term investment of cash received as collateral or, alternatively, where
securities or a letter of credit are used as collateral, a lending fee paid
directly to the Portfolio by the borrower of the securities. Such loans will be
terminable by the Portfolio at any time and will not be made to affiliates of
the Investment Adviser or the Sub-Adviser. A Portfolio may terminate a loan of
securities in order to regain record ownership of, and to exercise beneficial
rights related to, the loaned securities, including but not necessarily limited
to voting or subscription rights, and may, in the exercise of its fiduciary
duties, terminate a loan in the event that a vote of holders of those securities
is required on a material matter. The Portfolio must have the right to call the
loan and obtain the securities loaned at any time on three days notice. This
includes the right to call the loan to enable the Portfolio to execute
shareholder voting rights. Such loans cannot exceed one-third of the Portfolio's
net assets taken at market value. Interest on loaned securities cannot exceed
10% of the annual gross income of the Portfolio (without offset for realized
capital gains). A Portfolio may pay reasonable fees to persons unaffiliated with
the Portfolio for services or for arranging such loans. Loans of securities will
be made only to firms deemed creditworthy.

A Portfolio lending securities will incur credit risks as with any extension of
credit. The Portfolio risks delay in recovering the loaned securities should the
borrower of securities default, become the subject of bankruptcy proceedings, or
otherwise be unable to fulfill its obligations or fail financially. Lending
securities to broker-dealers and institutions could result in a loss or a delay
in recovering the Portfolio's securities.

The lending policy described in this paragraph is a fundamental policy that can
only be changed by a vote of a majority of shareholders.

Indebtedness
From time to time, the Portfolios may purchase the direct indebtedness of
various companies (Indebtedness) or participation in such Indebtedness. The
Value Portfolio is more likely to invest in such securities than the other
Portfolios. Indebtedness represents a specific commercial loan or portion of a
loan which has been given to a company by a financial institution such as a bank
or insurance company (Bank Claims). The company is typically obligated to repay
such commercial loan over a specified time period. By purchasing the Bank
Claims, a Portfolio steps into the shoes of the financial institution which made
the loan to the company prior to its restructuring or refinancing. Such Bank
Claims purchased by a Portfolio may be in the form of loans, notes or bonds.

The Portfolios normally invest in the Indebtedness which has the highest
priority of repayment by the company. However, on occasion, lower priority
Indebtedness also may be acquired.

Indebtedness of companies may also include Trade Claims. Trade Claims generally
represent money due to a supplier of goods or services to the companies issuing
indebtedness. Company Indebtedness, including Bank Claims and Trade Claims, may
be illiquid (as defined below).

Borrowing Policies of the Portfolios
The Portfolios may borrow money from banks or engage in reverse repurchase
agreements, for temporary or emergency purposes. Each Portfolio may borrow up to
one-third of the Portfolio's total assets. To secure borrowings, each Portfolio
may mortgage or pledge securities in an amount up to one-third of the
Portfolio's net assets. If a Portfolio borrows money, its share price may be
subject to greater fluctuation until the borrowing is paid off. The Portfolio
will not make any additional investments, other than reverse repurchase
agreements, while the level of the borrowing exceeds 5% of the Portfolio's total
assets.

Variable Rate, Floating Rate, or Variable Amount Securities
The Portfolios may invest in variable rate, floating rate, or variable amount
securities. These are short-term unsecured promissory notes issued by
corporations to finance short-term credit needs. They are interest-bearing notes
on which the interest rate generally fluctuates on a scheduled basis.

Short-term corporate obligations may also include variable amount master demand
notes. Variable amount master notes are obligations that permit the investment
of fluctuating amounts by a Portfolio at varying rates of interest pursuant to
direct arrangements between the Portfolio, as lender, and the borrower. These
notes permit daily changes in the amounts borrowed. The Portfolio has the right
to increase the amount under the note at any time up to the full amount provided
by the note agreement, or to decrease the amount, and the borrower may repay up
to the full amount of the note without penalty. The borrower is typically a
large industrial or finance company which also issues commercial paper.
Typically these notes provide that the interest rate is set daily by the
borrower. The rate is usually the same or similar to the interest rate on
commercial paper being issued by the borrower. Because variable amount master
notes are direct lending arrangements between the lender and borrower, it is not
generally contemplated that such instruments will be traded, and there is no
secondary market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at the face value, plus accrued interest,
at any time. Accordingly, a Portfolio's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. In connection
with master demand note arrangements, the Portfolio considers earning power,
cash flow, and other liquidity ratios of the issuer. The Portfolios will only
invest in master demand notes of U.S. issuers. While master demand notes, as
such, are not typically rated by credit rating agencies, if not so rated the
Portfolios may invest in them only if at the time of an investment the issuer
meets the criteria set forth in the Prospectus for all other commercial paper
issuers. A Portfolio will not invest more than 25% of its assets in master
demand notes.

Repurchase Agreements
The Portfolios may enter into repurchase agreements. Repurchase agreements have
the characteristics of loans by a 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 a 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
Portfolios 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 the Sub-Adviser and which 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. A Portfolio will not invest in
repurchase agreements maturing in more than seven days if that would result in
more than 10% of the Portfolio's net assets being so invested when taking into
account the remaining days to maturity of its existing repurchase agreements.

If a 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 repurchase agreement, including the securities
subject to the repurchase agreement, for satisfaction of the seller's obligation
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
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. If the seller is unable to make a timely repurchase, the
expected proceeds could be delayed, or the Portfolio could suffer a loss in
principal or current interest, or incur costs in liquidating the collateral. The
Portfolios have established procedures to evaluate the creditworthiness of
parties making repurchase agreements.

Reverse Repurchase Agreements and Leverage
The Portfolios may enter into reverse repurchase agreements with Federal Reserve
member banks and U.S. securities dealers from time to time. In a reverse
repurchase transaction the Portfolio sells securities and simultaneously agrees
to repurchase them at a price which reflects an agreed-upon rate of interest.
The Portfolio will use the proceeds of reverse repurchase agreements to make
other investments which either mature or are under an agreement to resell at a
date simultaneous with, or prior to, the expiration of the reverse repurchase
agreement. The Portfolio may utilize reverse repurchase agreements only if the
interest income to be earned from the investment proceeds of the transaction is
greater than the interest expense of the reverse repurchase transaction.

Reverse repurchase agreements are a form of leverage which increases the
opportunity for gain and the risk of loss for a given change in market value. In
addition, the gains or losses will cause the net asset value of a Portfolio's
shares to rise or fall faster than would otherwise be the case. There may also
be a risk of delay in the recovery of the underlying securities if the opposite
party has financial difficulties. A Portfolio's obligations under all
borrowings, including reverse repurchase agreements, will not exceed one-third
of the Portfolio's net assets.

The use of reverse repurchase agreements is included in the Portfolio's
borrowing policy and is subject to the limits of Section 18(f)(1) of the 1940
Act. During the time a reverse repurchase agreement is outstanding, each
Portfolio that has entered into such an agreement maintains a segregated account
with its Custodian containing cash or other liquid securities having a value at
least equal to the repurchase price under the reverse repurchase agreement.

Municipal Obligations
The Portfolios, except the Index Portfolio, may invest in municipal obligations.
The equity Portfolios may invest in such obligations as part of their cash
management techniques. In addition to the usual risks associated with investing
for income, the value of municipal obligations can be affected by changes in the
actual or perceived credit quality of the issuers. The credit quality of a
municipal obligation can be affected by, among other factors: a) the financial
condition of the issuer or guarantor; b) the issuer's future borrowing plans and
sources of revenue; c) the economic feasibility of the revenue bond project or
general borrowing purpose; d) political or economic developments in the region
or jurisdiction where the security is issued; and e) the liquidity of the
security. Because municipal obligations are generally traded over the counter,
the liquidity of a particular issue often depends on the willingness of dealers
to make a market in the security. The liquidity of some municipal issues can be
enhanced by demand features which enable the Portfolio to demand payment from
the issuer or a financial intermediary on short notice.

Small Capitalization Stocks
The Portfolios may purchase securities of small companies. The securities of
small companies are usually less actively followed by analysts and may be
under-valued by the market, which can provide significant opportunities for
capital appreciation; however, the securities of such small companies may also
involve greater risks and may be subject to more volatile market movements than
securities of larger, more established companies. The securities of small
companies are often traded in the over-the counter market, and might not be
traded in volumes typical of securities traded on a national securities
exchange. Thus, the securities of small companies are likely to be subject to
more abrupt or erratic market movements than securities of larger, more
established companies.

Over-The-Counter-Market
The Portfolios may invest in over-the-counter stocks. Generally, the volume of
trading in an unlisted or over-the-counter common stock is less than the volume
of trading in a listed stock. Low trading volumes may make it difficult to find
a buyer or seller for the securities of some companies. This will have an effect
on the purchase or selling price of a stock.

Mortgage-Backed and Asset-Backed Securities
The Portfolios may invest in mortgage-backed and asset-backed securities. The
Bond Portfolio is more likely to invest in such securities than the other
Portfolios. Mortgage-backed and asset-backed securities are generally securities
evidencing ownership or interest in pools of many individual mortgages or other
loans. Part of the cash flow of these securities is from the early payoff of
some of the underlying loans. The specific amount and timing of such prepayments
is difficult to predict, creating prepayment risk. For example, prepayments on
Government National Mortgage Association certificates (GNMAs) are more likely to
increase during periods of declining long-term interest rates because borrowers
tend to refinance when interest rates drop. In the event of very high
prepayments, the Portfolios may be required to invest these proceeds at a lower
interest rate, causing them to earn less than if the prepayments had not
occurred. Prepayments are more likely to decrease during periods of rising
interest rates, causing the expected average life of the underlying mortgages to
become longer. This variability of prepayments will tend to limit price gains
when interest rates drop and to exaggerate price declines when interest rates
rise.

Zero Coupon Bonds
The Portfolios may invest in zero coupon bonds and strips. Zero coupon bonds do
not make regular interest payments. Instead, they are sold at a discount from
face value. A single lump sum, which represents both principal and interest, is
paid at maturity. Strips are debt securities whose interest coupons are taken
out and traded separately after the securities are issued but otherwise are
comparable to zero coupon bonds. The market value of zero coupon bonds and
strips generally is more sensitive to interest rate fluctuations than
interest-paying securities of comparable term and quality.

Investments in Other Investment Companies
Up to 10% of each Portfolio's total assets may be invested in the shares of
other investment companies, but only up to 5% of its assets may be invested in
any one other investment company. In addition, no Portfolio may purchase more
than 3% of the outstanding shares of any one investment company.

Special Situations
The Portfolios may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Sub-Adviser, the securities of a
particular issuer will be recognized and appreciate in value due to a specific
development with respect to that issuer. Developments creating a special
situation might include, among others, a merger proposal or buyout, a leveraged
recapitalization, a new product or process, a technological breakthrough, a
management change or other extraordinary corporate event, or differences in
market supply of and demand for the security. Investment in special situations
may carry an additional risk of loss in the event that the anticipated
development does not occur or does not attract the expected attention. It is not
the policy of any of the Portfolios to select investments based primarily on the
possibility of one or more of these investment techniques and opportunities
being presented.

State Insurance Regulation
The Portfolios are 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
Portfolios, a 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 intention of each Portfolio that it operate in material compliance with
current insurance laws and regulations, as applied, in each jurisdiction in
which the Portfolio is offered.

INVESTMENT RESTRICTIONS

Fundamental Policies and RestrictionsCertain investment restrictions and
policies have been adopted as fundamental policies for the Portfolios. It is
fundamental that each Portfolio operate as a "diversified company" within the
meaning of the Investment Company Act of 1940, except the Aggressive Growth
Portfolio, which will operate as a "non-diversified company." The investment
objective of each Portfolio is also a fundamental policy. See "Portfolios at a
Glance" and "Portfolios in Detail" in the 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 each Portfolio. For purposes of the 1940
Act, "majority" of share means the lesser of: (a) 67% or more of the votes
attributable to shares of such 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 such Portfolio.

The fundamental policies and restrictions of the Growth and Money Market
Portfolios are: 1. Borrowing. Each 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.

2. Lending. Each 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. (Each 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.

3. 5% Portfolio Rule. With respect to 75% of total assets, the Growth
Portfolio may not purchase securities of any issuer if, as a result of
the purchase, more than 5% of such 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"). All securities of a foreign government and its agencies
will be treated as a single issuer for purposes of this restriction.
The Money Market Portfolio may invest more than 5%, but no more than
25%, of total assets in the securities of one issuer for a period not
to exceed three business days.

4. 10% Issuer Rule. With respect to 75% of total assets, the Growth
Portfolio may not purchase more than 10% of the voting securities of
any one issuer. This limitation is not applicable to a Portfolio's
investment in Government Securities. All securities of a foreign
government and its agencies will be treated as a single issuer for
purposes of this restriction. The Money Market Portfolio will not
invest in voting securities.

5. 25% Industry Rule. Each Portfolio may not invest more than 25% of
the value of its total assets in securities issued by companies engaged
in any one industry, including non-domestic banks or any foreign
government. This limitation does not apply to investments in United
States Government Securities. For the Money Market Portfolio,
investments in the following are not subject to the 25% limitation:
repurchase agreements and securities loans collateralized by United
States Government Securities, certificates of deposit, bankers'
acceptances, and obligations (other than commercial paper) issued or
guaranteed by United States banks and United States branches of foreign
banks.

6. Underwriting. No Portfolio may 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 Growth 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 Portfolios may not purchase or sell commodities or
commodities contracts.

9. Senior Securities. The Portfolios may not issue senior securities.

The fundamental policies and restrictions of the Aggressive Growth; Balanced;
Bond; High Yield Bond; Index; Small Company; and Value Portfolios are:

1. Borrowing. Each 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
that might otherwise require the untimely disposition of securities, in
an amount not to exceed 33.33% of the value of the Portfolio's total
assets (including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) at the time the
borrowing is made. Whenever outstanding borrowings, not including
reverse repurchase agreements, represent 5% or more of a Portfolio's
total assets, the Portfolio will not make any additional investments.

2. Lending. No Portfolio may lend its assets or money to other persons,
except through (a) purchasing debt obligations, (b) lending securities
in an amount not to exceed 33.33% of the Portfolio's assets taken at
market value, (c) entering into repurchase agreements (d) trading in
financial futures contracts, index futures contracts, securities
indexes and options on financial futures contracts, options on index
futures contracts, options on securities and options on securities
indexes and (e) entering into variable rate demand notes.

3. 5% Portfolio Rule. Except for the Aggressive Growth Portfolio, no
Portfolio may purchase securities (other than government 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, except that up to 25% of the value of the total assets of each
Portfolio, may be invested without regard to this limitation. All
securities of a foreign government and its agencies will be treated as
a single issuer for purposes of this restriction. With respect to the
Aggressive Growth Portfolio, no more than 25% of the Portfolio's total
assets may be invested in the securities of a single issuer (other than
cash items and government securities); and with respect to 50% of the
Portfolio's total assets, no more than 5% may be invested in the
securities of a single issuer (other than cash items and government
securities).

4. 10% Issuer Rule. No Portfolio may purchase more than 10% of the
voting securities of any one issuer, or more than 10% of the
outstanding securities of any class of issuer, except that (a) this
limitation is not applicable to a Portfolio's investments in government
securities and (b) up to 25% of the value of the assets of a Portfolio
may be invested without regard to these 10% limitations. All securities
of a foreign government and its agencies will be treated as a single
issuer for purposes of this restriction. These limitations are subject
to any further limitation under the 1940 Act.

5. 25% Industry Rule. No Portfolio may invest more than 25% of the
value of its total assets in securities issued by companies engaged in
any one industry, including non-domestic banks or any foreign
government. This limitation does not apply to securities issued or
guaranteed by the United States government, its agencies or
instrumentalities.

7. Real Estate. No Portfolio may purchase or sell real estate or real
estate limited partnership interests, or invest in oil, gas or mineral
leases, or mineral exploration or development programs, except that a
Portfolio may (a) invest in securities secured by real estate,
mortgages or interests in real estate or mortgages, (b) purchase
securities issued by companies that invest or deal in real estate,
mortgages or interests in real estate or mortgages, (c) engage in the
purchase and sale of real estate as necessary to provide it with an
office for the transaction of business or (d) acquire real estate or
interests in real estate securing an issuer's obligations, in the event
of a default by that issuer.

8. Short Sales. No Portfolio may make short sales of securities or
maintain a short position, unless at all times when a short position is
open, the Portfolio owns an equal amount of the securities or
securities convertible into or exchangeable for, without payment of any
further consideration, securities of the same issue as, and equal in
amount to, the securities sold short.

9. Margin Purchases. No Portfolio may purchase securities on margin,
except that a 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 futures contracts, financial futures contracts or
related options, and options on securities, and options on securities
indexes will not be deemed to be a purchase of securities on margin by
a Portfolio.

10. Commodities. No Portfolio may invest in commodities, except that
each Portfolio may invest in futures contracts (including financial
futures contracts or securities index futures contracts) and related
options and other similar contracts as described in this Statement of
Additional Information and in the Prospectus.

All other investment policies and restrictions of the Portfolios are considered
not to be fundamental and accordingly may be changed by the Board of Directors
without shareholder approval.

Non-Fundamental RestrictionsNon-Fundamental RestrictionsNon-Fundamental
RestrictionsNon-Fundamental RestrictionsNon-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 Growth and Money Market Portfolios' non-fundamental restrictions are:

1. Securities of Other Investment Companies. The Portfolios do not
currently intend to make investments in the securities of other
investment companies. Each 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) the Portfolio, together with other investment
companies advised by the Sub-Adviser, to own more than 10% of the
outstanding voting stock of a closed-end investment company. 2. Invest
for Control. No Portfolio may invest in companies for the purpose of
exercising management or control in that company.

3. Short Sales. The Growth 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. The Money Market Portfolio may not make
short sales of securities or maintain a short position.

4. Restricted and Illiquid Securities. Purchases or acquisitions may be
made of securities which are illiquid due to the absence of a readily
available market, or due to legal or contractual restrictions on
resale, including real estate and certain repurchase agreements or time
deposits maturing in more than seven days, as long as any such purchase
or acquisition will not immediately result in the value of all such
securities exceeding 15% of the value of the Growth Portfolio's total
assets (10% for the Money Market Portfolio).

5. Margin Purchases. Each Portfolio may not purchase securities on
margin, except that a 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 a Portfolio.

6. Put and Call Options. No Portfolio may write put and call options.

The non-fundamental restrictions for the Aggressive Growth; Balanced; Bond; High
Yield Bond; Index; Small Company; and Value Portfolios are:

1. Securities of Other Investment Companies
No Portfolio may purchase securities of other investment companies,
other than a security acquired in connection with a merger,
consolidation, acquisition, reorganization or offer of exchange and
except as permitted under the 1940 Act, if as a result of the purchase:
(a) more than 10% of the value of the Portfolio's total assets would be
invested in the securities of investment companies; (b) more than 5% of
the value of the Portfolio's total assets would be invested in the
securities of any one investment company; or (c) the Portfolio would
own more than 3% of the total outstanding voting securities of any
investment company.

2. Invest for Control
No Portfolio may invest in companies for the purposes of exercising
control or management. 4. Restricted and Illiquid Securities No
Portfolio will invest more than 15% of its net assets in illiquid
investments, which includes most repurchase agreements maturing in more
than seven days, currency and interest rate swaps, time deposits with a
notice or demand period of more than seven days, certain
over-the-counter option contracts, participation interests in loans,
securities that are not readily marketable, and restricted securities,
unless the Manager determines, based upon a continuing review of the
trading markets and available reliable price information for the
specific security, that such restricted securities are eligible to be
deemed liquid under Rule 144A. For purposes of this restriction,
illiquid securities are securities that cannot be disposed of by a
Portfolio within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued the
securities. In no event will any Portfolio's investment in illiquid
securities, in the aggregate, exceed 15% of its assets. If through a
change in values, net assets, or other circumstances, any Portfolio
were in a position where more than 15% of its assets were invested in
illiquid securities, it would take appropriate steps to protect
liquidity.

The Board has adopted guidelines and delegated to the Sub-Adviser 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. When no
market, dealer, or matrix quotations are available for a security,
illiquid investments are priced at fair value as determined in good
faith by a committee appointed by the Board. 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 each 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 a 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.

Interpretive Rules

The above restrictions apply at the time of purchase and will not be considered
as having been exceeded due solely to market value fluctuations.

INVESTMENT ADVISERS AND OTHER SERVICE PROVIDERS

Transamerica Occidental Life Insurance Company is the Investment Adviser of the
Fund and its Portfolios. It will oversee the management of the assets of the
Portfolios by the Sub-Adviser. In turn, the Sub-Adviser is responsible for the
day-to-day management of the Portfolios.

The Investment Adviser has entered into an Investment Advisory Agreement with
the Fund under which the Investment Adviser 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 Portfolios by the Sub-Adviser on an ongoing basis. The Investment
Adviser 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. The Investment Adviser also acts as
liaison among, and supervisor of, the various service providers to the Fund. The
Investment Adviser is also responsible for overseeing the Fund's compliance with
the requirements of applicable law and in conformity with the Portfolios'
investment objective(s), policies and restrictions, including oversight of the
Sub-Adviser.

For its services to the Fund, the Investment Adviser receives annual advisory
fees which are percentages of the average daily net assets of the Portfolios.
The fees are deducted daily from the assets of each Portfolio and paid to the
Investment Adviser periodically. The Investment Adviser pays the salaries and
fees, if any, of some of the officers of the Fund and of personnel of the
Investment Adviser performing services relating to research, statistical and
investment activities and the fees of the Sub-Adviser.

The Growth Portfolio of the Fund began operations on November 1, 1996, as the
successor to Separate Account Fund C of Transamerica Occidental Life Insurance
Company. Transamerica Occidental Life Insurance Company was the investment
adviser to the Separate Account Fund C. The advisory fee paid by Separate
Account Fund C prior to the November 1, 1996, reorganization was 0.30% of its
average daily net assets. The dollar amount paid by Separate Account Fund C to
the Investment Adviser in 1995 was $67,198. The total dollar amount paid to the
Investment Adviser in 1996, including amounts paid by Separate Account Fund C
through October 31 and amounts paid by the Growth Portfolio after October 31,
1996, was $66,831. The advisory fee payable to the Investment Adviser by the
Growth Portfolio after the November 1, 1996, reorganization is 0.75% of the
Portfolio's average daily net assets. Amounts paid to the Investment Adviser
during November and December 1996 reflect waiver of advisory fees by the
Investment Adviser; 0.62% of the Growth Portfolio's average daily net assets
were paid to the Investment Adviser as advisory fees in November and December of
1996. The total dollar amount paid to the Investment Adviser by the Portfolio in
1997 was $313,749. Amounts paid to the Investment Adviser in 1997 reflected
waiver of advisory fees by the Investment Adviser; 0.62% of the Growth
Portfolio's average daily net assets were paid to the Investment Adviser as
advisory fees in 1997. Amounts paid to the Investment Adviser in 1997 reflected
waiver of advisory fees by the Investment Adviser; _____% of the Growth
Portfolio's average daily net assets were paid to the Investment Adviser as
advisory fees in 1998.

The Money Market Portfolio commenced operations January 2, 1998.

As of the date of this Statement of Additional Information, the Aggressive
Growth, Balanced, Bond, High Yield Bond, Index, Small Company, and Value
Portfolios had not yet commenced operations.

Each Portfolio pays all the costs of its operations that are not assumed by the
Investment Adviser, including custodian fees, legal and auditing fees, fund
administration, registration fees and expenses, and fees and expenses of
directors unaffiliated with the Investment Adviser. Portfolio expenses that are
not Portfolio-specific will be allocated among the Portfolios based on the net
assets of each Portfolio.

The Investment Advisory Agreement does not place limits on the operating
expenses of the Portfolios. However, the Investment Adviser 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 each Portfolio separately, exceed .10% of the Growth Portfolio's and 0.25%
of the Money Market Portfolio's estimated average daily net assets on an
annualized basis.

The Investment Advisory Agreement provides that the Investment Adviser may
render similar services to others so long as the services that it provides to
the Portfolio are not impaired thereby. The Investment Advisory Agreement also
provides that the Investment Adviser 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 Portfolio, 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 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") for the Growth
Portfolio on July 24, 1996, and for the Money Market Portfolio on July 31, 1997,
and for the Aggressive Growth, Balanced, Bond, High Yield Bond, Index, Small
Company and Value Portfolios on___________. The investment advisory agreement
will remain in effect from year to year provided such continuance is
specifically approved as to each Portfolio at least annually by: (a) the Board
of Directors or the vote of a majority of the votes attributable to shares of
such 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
the Investment Adviser.

Sub-Adviser
The Investment Adviser has contracted with Transamerica Investment Services,
Inc., a wholly-owned subsidiary of Transamerica Corporation, to render
investment services to the Fund as the Sub-Adviser. Transamerica Investment
Services, Inc. has been in existence since 1967 and has provided investment
services to investment companies since 1968 and the Transamerica Life Companies
since 1981. The Sub-Adviser provides recommendations on the management of each
Portfolio's assets, provides investment research reports and information,
supervises and manages the investments of each Portfolio, and directs the
purchase and sale of portfolio investments. Investment decisions regarding the
composition of each Portfolio and the nature and timing of changes in each
Portfolio are subject to the control of the Board of Directors of the Fund. The
Sub-Adviser also pays the salaries and fees, if any, of some of the officers of
the Fund, all of the directors of the fund who are "interested person" (as
defined in the 1940 Act), and personnel of Sub-Adviser performing services
relating to research statistical and investment activities.

The Investment Adviser has agreed to pay the Sub-Adviser a fee at the annual
rate of a percentage of each Portfolio's average daily net assets. These fees
are shown below.

----------------------- ----------------------------------
Portfolio Sub-Advisory Fee
----------------------- ----------------------------------
----------------------- ----------------------------------
Aggressive Growth
----------------------- ----------------------------------
----------------------- ----------------------------------
Balanced
----------------------- ----------------------------------
----------------------- ----------------------------------
Bond
----------------------- ----------------------------------
----------------------- ----------------------------------
Growth 0.30% of 1st $50 million
----------------------- ----------------------------------
----------------------- ----------------------------------
0.25% of next $150 million
----------------------- ----------------------------------
----------------------- ----------------------------------
0.2% in excess of $200 million
----------------------- ----------------------------------
----------------------- ----------------------------------
High Yield Bond
----------------------- ----------------------------------
----------------------- ----------------------------------
Money Market 0.15%
----------------------- ----------------------------------
----------------------- ----------------------------------
Small Company
----------------------- ----------------------------------
----------------------- ----------------------------------
Value
--------------------------------------------

The Investment Sub-Adviser agreement was approved by the Board of Directors,
including a majority of the Directors who are not parties to the sub-advisory
agreement or "interested persons" (as such term is defined in the 1940 Act) of
any party thereto (the "non-interested Directors"), for the Growth Portfolio on
July 24, 1996, and for the Money Market Portfolio on October 31, 1997, and for
the Aggressive Growth, Balanced, Bond, High Yield Bond, Index, Small Company and
Value Portfolios on __________________. The Sub-Advisory Agreement will remain
in effect from year to year provided such continuance is specifically approved
as to each Portfolio at least annually by: (a) the Board of Directors or the
vote of a majority of the votes attributable to shares of such 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 sub-advisory
agreement will terminate automatically if assigned (as defined in the 1940 Act).
The sub-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 such Portfolio (a) without penalty and (b) on
30 days' written notice to the Sub-Adviser.

Custodian
Pursuant to a Custodian Agreement with the Fund, State Street Bank and Trust
Company 225 Franklin Street, Boston, Massachusetts 02110 ("State Street") holds
the cash and portfolio securities of the Portfolios as custodian.

State Street is responsible for holding all securities and cash of the
Portfolios, 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 Portfolios or the Fund. Portfolio
securities 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.

Administrator
Pursuant to an Administration Agreement with the Fund, State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, acts as
Administrator and performs certain administrative services including:

Overseeing the determination and publication of the Portfolios' net
asset value in accordance with the Portfolios' policies as adopted from
time to time by the Board;

Preparing the Portfolios' federal, state and local income tax returns
for review by the Fund's independent accountants and filing by the
Fund's treasurer; and

Preparing for review and approval by officers of the Fund financial
information for the Fund's semi-annual and annual reports.

The total compensation paid State Street by the Portfolio pursuant to the
Administration Agreement for the last three fiscal years is as follows: Growth
Portfolio $ in 1998; $ in 1997 and $ in 1996; and Money Market Portfolio $ in
1998.

Independent Public Accountants
Ernst & Young LLP, 515 South Flower Street, Los Angeles, California 90071, acts
as the Fund's independent certified public accountants.

PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND BROKERAGE The Sub-Adviser is
responsible for decisions to buy and sell securities for each 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 the
Investment Adviser or the Sub-Adviser.

In placing orders for portfolio securities of a Portfolio, the Sub-Adviser is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that the Sub-Adviser 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 the
Sub-Adviser generally seeks reasonably competitive spreads or commissions, each
Portfolio will not necessarily be paying the lowest spread or commission
available. Within the framework of this policy, the Sub-Adviser will consider
research and investment services provided by brokers or dealers who effect or
are parties to portfolio transactions of the Portfolio, the Sub-Adviser and its
affiliates, or other clients of the Sub-Adviser 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 the
Sub-Adviser in connection with all of its investment activities, and some of
such services obtained in connection with the execution of transactions for each
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 each
Portfolio, and the services furnished by such brokers may be used by the
Sub-Adviser in providing investment sub-advisory services for each Portfolio.
The aggregate dollar amounts of the brokerage commissions paid with respect to
portfolio transactions of the Portfolio by the Sub-Adviser as sub-adviser to
Separate Account Fund C (the Growth Portfolio's predecessor) were $7,253 for
1995, and $19,115 for the first ten months of 1996. The aggregate dollar amount
of brokerage commissions paid by the Growth Portfolio after the reorganization,
during November and December 1996, was $5,550, so that the total paid during
1996 was $24,665. The total paid by the Growth Portfolio during fiscal year 1997
was $16,312. The total paid by the Growth Portfolio during fiscal year 1998 was
$_90,274. The total paid by the Money Market Portfolio during fiscal year 1998
was $______. The other Portfolios did not commence operations in 1998.

On occasions when the Sub-Adviser deems the purchase or sale of a security to be
in the best interest of a Portfolio as well as its other advisory clients
(including any other fund or other investment company or advisory account for
which the Sub-Adviser or an affiliate acts as Investment Adviser), the
Sub-Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased for a 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 the Sub-Adviser in the manner it considers to be most equitable as to
each customer and consistent with its fiduciary obligations to such Portfolio
and such other customers. In some instances, this procedure may adversely affect
the price and size of the position obtainable for a Portfolio.

Commission rates are established pursuant to negotiations with the broker based
on the quality and quantity of execution services provided by the broker 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.

For calendar year 1998, the portfolio turnover rate for the Growth Portfolio was
____%. The turnover rate for the Money Market Portfolio is zero for regulatory
purposes. A 100% annual turnover rate would occur if all of a Portfolio's
securities were replaced one time during a one year period. None of the other
Portfolios began investing in 1998.

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 each Portfolio. In accordance with
procedures adopted by the Board of Directors, the net asset value per share is
calculated by determining the net worth of each Portfolio (assets, including
securities at market value or amortized cost value, minus liabilities) divided
by the number of that Portfolio's outstanding shares. All securities are valued
as of the close of regular trading on the New York Stock Exchange.

In the event that the New York Stock Exchange, the Federal Reserve, 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
Portfolios may compute their net asset value as of any time permitted pursuant
to any exemption, order or statement of the SEC or its staff.

Assets of the Portfolios, other than the Money Market 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 the Sub-Adviser 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 is 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 the Sub-Adviser 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. The value of all assets
and liabilities expressed in foreign currencies will be converted into U.S.
dollar values at the noon (Eastern Time) Reuters spot rate. If such quotations
are not available, the price will be determined in good faith by or under
procedures established by the Board of Directors.

All of the assets of the Money Market Portfolio are valued on the basis of
amortized cost in an effort to maintain a constant net asset value per share of
$1.00. The Board of Directors has determined the use of the amortized cost
method to be in the best interests of the Money Market Portfolio and its
shareholders. Under the amortized cost method of valuation, securities are
valued at cost on the date of their acquisition, and thereafter a constant
accretion of any discount or amortization of any premium to maturity is assumed,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which the value as determined by amortized cost is higher or
lower than the price the Portfolio would receive if it were to sell the
security. During such periods, the quoted yield to investors may differ somewhat
from that obtained by a similar fund which uses available market quotations to
value all of its securities.

The Board has established procedures reasonably designed, taking into account
current market conditions and the Money Market Portfolio's investment objective,
to stabilize the net asset value per share for purposes of sales and redemptions
at $1.00. These procedures include review by the Board, at such intervals as it
deems appropriate, to determine the extent, if any, to which the net asset value
per share calculated by using available market quotations deviates from $1.00
per share. In the event such deviation should exceed one half of one percent,
the Board will promptly consider initiating corrective action. If the Board
believes that the extent of any deviation from a $1.00 amortized cost price per
share may result in material dilution or other unfair results to new or existing
shareholders, it will take such steps as it considers appropriate to eliminate
or reduce these consequences to the extent reasonably practicable. Such steps
may include: (1) selling securities prior to maturity; (2) shortening the
average maturity of the Portfolio; (3) withholding or reducing dividends; or (4)
utilizing a net asset value per share determination from available market
quotations. Even if these steps were taken, the Money Market Portfolio's net
asset value might still decline.

PERFORMANCE INFORMATION

The investment results of each 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 a 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 a Portfolio's holdings available to investors upon request.

Since each Portfolio 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 Portfolios' performance
data do not reflect separate account or contract level charges.

Average Annual Total Return Performance
The Fund may from time to time quote or otherwise use average annual total
return information for the Portfolios 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).

Average Annual Total Returns (as of 12/31/98)
1 5 10 Since Incep-

year years years Inception tion Date
Growth Portfolio 2/26/69
Money Market Portfolio 1/2/98

From time to time, the Portfolio 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.

Although 30-day yields are not used in advertising, they are available upon
request. Quotations will be based on all investment income per share earned
during a particular 30-day period, less expenses accrued during the period (net
investment income), and will be computed by dividing net investment income by
the value of a share on the last day of the period, according to the following
formula:

Yield = 2[({[a-b]/cd} + 1)6 - 1] Where:
a = dividends and interest earned during the period b = the expenses accrued for
the period (net of reimbursements) c = the average daily number of shares
outstanding during the period d = the maximum offering price per share on the
last day of the period

Any performance data quoted for the Portfolios 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. Performance data for the Portfolios does not reflect charges
deducted under the variable annuity contracts. If contract charges are taken
into account, such performance data would reflect lower returns.

Growth Portfolio Performance
The Growth Portfolio is the successor to Transamerica Occidental's Separate
Account Fund C. Separate Account Fund C had been a separate account of the
Investment Adviser 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. Because the Growth Portfolio is the successor to Separate
Account Fund C, the historical performance data of Separate Account Fund C is
the Growth Portfolio's performance history for periods prior to the
reorganization.

Prior to the reorganization on November 1, 1996, Separate Account Fund C paid a
mortality and expense risk fee of 1.10% and an investment advisory fee of 0.30%
per year, and it did not bear any operating expenses. After the reorganization,
the Growth Portfolio does not pay any mortality and expense risk fees, and its
total investment advisory fee and operating expenses during 1997 were 0.98%
(before fee waivers and expense reimbursements) and 0.85% after fee waivers and
expense reimbursements. In accordance with opinions expressed by the SEC staff,
investment performance for the Growth Portfolio for periods prior to the
reorganization reflect total mutual fund fees and expenses of 0.98% per year.

In computing its standardized total returns for periods prior to the
reorganization, the Fund assumes that the charges currently imposed by the
Growth Portfolio were in effect through each of the periods for which the
standardized returns are presented. The Growth Portfolio's performance data do
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. Likewise, the performance data for the Growth
Portfolio since the reorganization do not reflect any charges applicable to any
insurance product. Currently, the Growth Portfolio is only available through the
purchase of variable annuity and variable life insurance contracts which have
charges and expenses specific to them.

Money Market Portfolio Performance
Current yield for the Money Market Portfolio will be computed by determining the
net change, exclusive of capital changes at the beginning of a seven-day period
in the value of a hypothetical investment, subtracting any deductions from
shareholder accounts, and dividing the difference by the value of a hypothetical
investment at the beginning of the base period to obtain the base period return.
This base period return is then multiplied by (365/7) with the resulting yield
figure carried to at least the nearest hundredth of one percent.

Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:
365/7
Effective yield = [(1 + (Base Period Return) ] - 1

Sub-Adviser Performance on Similar Funds
The Portfolios' Sub-Adviser also manages SEC-registered mutual funds ("mutual
funds") and non-registered segregated investment accounts ("separate accounts")
of insurance companies.

A Portfolio may disclose in advertisements, supplemental sales literature, and
reports performance data of existing mutual funds or separate accounts managed
by the Portfolio's Sub-Adviser that have investment objectives, policies, and
strategies substantially similar to those of such Portfolio (a "Similar
Sub-Adviser Fund").

Although the Similar Sub-Adviser Funds have substantially similar investment
objectives, policies, and strategies as the designated Portfolio, and are
managed by the same Sub-Adviser as the designated Portfolio, you should not
assume that the designated Portfolio will have the same future performance as
the Similar Sub-Adviser Funds. Any Portfolio's future performance may be greater
or less than the historical performance and/or future performance of the
corresponding Similar Sub-Adviser Fund due to, among other things, certain
inherent differences between a Portfolio and the Similar Sub-Adviser Funds.
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 Similar Sub-Adviser Funds. 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 Similar Sub-Adviser
Funds does not reflect any expenses or charges applicable to these variable
insurance contracts.

On June 30, 1998, the assets of the High Yield separate account were transferred
to the Premier High Yield Bond mutual fund in exchange for fund shares.
Therefore, the performance of the Premier High Yield Bond mutual fund, prior to
June 30, 1998, is the performance of the High Yield Bond separate account
recalculated to reflect the higher fees and expenses of the Premier High Yield
Bond Fund. The separate account commenced operations September 1, 1990.

The performance of each Similar Sub-Adviser Fund is its own and should not be
considered a substitute for a Portfolio's own performance; nor should Similar
Sub-Adviser Fund performance be considered indicative of any past or future
performance of the Portfolios.

Published Performance
From time to time the Fund may publish, or provide telephonically, an indication
of the Portfolios' past performance as measured by independent sources such as
(but not limited to) Lipper Analytical Services, Weisenberger Investment
Companies Service, Donoghue's Money Fund 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 the Portfolios'
performance relative to certain indices and benchmark investments, including:
o the Lipper Analytical Services, Inc. Mutual Fund Performance
Analysis, Fixed-Income Analysis and
Mutual Fund Indices (which measure total return and average current
yield for the mutual fund
industry and rank mutual fund performance);
o the CDA Mutual Fund Report published by CDA Investment
Technologies, Inc. (which analyzes price, risk
and various measures of return for the mutual fund industry);
o the Consumer Price Index published by the U. S. Bureau of Labor
Statistics (which measures changes in
the price of goods and services);
o Stocks, Bonds, Bills and Inflation published by Ibbotson Associates
(which provides historical performance figures for stocks,
government securities and inflation);
o the Hambrecht & Quist Growth Stock Index; o the NASDAQ OTC Composite
Prime Return; o the Russell Midcap Index; o the Russell 2000 Index - Total
Return; o the ValueLine Composite-Price Return; o the Wilshire 5000 Index;
o the Salomon Brothers' World Bond Index (which measures the total
return in U. S. dollar terms of
government bonds, Eurobonds and foreign bonds of ten countries, with
all such bonds having a minimum
maturity of five years);
o 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);
o the S&P Bond indices (which measure yield and price of corporate,
municipal and U. S. Government
bonds);
o the J.P. Morgan Global Government Bond Index;
o Donoghue's Money Market Fund Report (which provides industry
averages of 7-day annualized and
compounded yields of taxable, tax-free and U. S. Government money
market funds);
o other taxable investments including certificates of deposit, money
market deposit accounts, checking accounts, savings accounts, money
market mutual funds and repurchase agreements;
o 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;
o the FT-Actuaries Europe and Pacific Index;
o mutual fund performance indices published by Variable Annuity Research &
Data Service; o S&P 500 Index; and o 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 each 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 Portfolios' performance figures.

The Portfolios may also from time to time include in such advertising a total
return figure that is not calculated according to the formula set forth above in
order to compare more accurately the performance of a Portfolio with other
measures of investment return. For example, unmanaged indexes may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.

The Fund may from time to time summarize the substance of discussions contained
in shareholder reports in advertisements and publish the Sub-Adviser's views as
to markets, the rationale for the Portfolios' investments and discussions of the
Portfolios' 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 a Portfolio varies based on
market conditions, portfolio expenses, portfolio investments and other factors.
The value of a Portfolio's shares fluctuates and an investor's shares may be
worth more or less than their original cost upon redemption.

FEDERAL TAX MATTERS

Each 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, each Portfolio
must distribute to its 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, each Portfolio must
also, among other things, derive its income from certain sources. Specifically,
in each taxable year, each 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. For purposes of this test, 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, each Portfolio must
also satisfy certain tax requirements with respect to the diversification of its
assets. Each 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 each 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 each Portfolio's requirements to maintain
diversification for tax purposes, the issuer of a loan participation will be the
underlying borrower. In cases where a 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 each Portfolio's assets that may be represented by any single
investment. In general, no more than 55% of the value of the assets of each
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 Portfolios will not be subject to the 4% Federal excise tax imposed on
amounts not distributed to shareholders on a timely basis because each Portfolio
intends to make sufficient distributions to avoid such excise tax. If a
Portfolio failed to qualify as a regulated investment company, owners of
variable annuity contracts or variable life policies ("Contracts") based on such
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 a Portfolio failed to qualify as a
regulated investment company, or if a Portfolio failed to comply with the
diversification requirements of Section 817(h) of the Code, owners of Contracts
based on that 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 the Sub-Adviser and it is
intended that each 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 of each 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 the Sub-Adviser 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 each Portfolio is entitled to participate
equally in dividends and distributions declared for that Portfolio's stock and,
upon liquidation or dissolution, in that Portfolio's net assets remaining after
satisfaction of outstanding liabilities. The shares of each 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 Fund C with shares in the Growth Portfolio.

Under normal circumstances, subject to the reservation of rights explained
below, the Fund will redeem shares of each Portfolio in cash within 7 days.
However, the right of a 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 a 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.

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>
Donald E. Cantlay (77) 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.

Richard N. Latzer (62)* 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.

Jon C. Strauss (59) Board of Directors President of Harvey Mudd College; Previously Vice
President and Chief Financial Officer of Howard
Hughes Medical Institute; President of Worcester
Polytechnic Institute; Vice President and Professor
of Engineering at University of Southern
California; Vice President Budget and Finance,
Director of Computer Activities and Professor of
Computer and Decision Sciences at University of
Pennsylvania.

Gary U. Rolle' (58)* President, Chairman, Board of , Executive Vice President and Chief
Directors Investment Officer of Transamerica Investment
Services, Inc.; Director and Chief Investment
Officer of Transamerica Occidental Life Insurance
Company; Director, Transamerica Investors, Inc
Peter J. Sodini (58) 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).

Matt Coben (38)*** 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 .

Susan R. Hughes (43) Treasurer and Assistant Vice President and Chief Financial Officer,
Secretary Transamerica Investment Services, Inc., since
1997;
Independent Financial Consultant 1992-1997

Regina M. Fink (43) Secretary Counsel for Transamerica Occidental Life Insurance
Company and prior to 1994 Counsel and Vice
President for Colonial Management Associates, Inc.

Sally S. Yamada (48) Assistant Treasurer Vice President and Treasurer of Transamerica
Assistant Secretary Occidental Life Insurance Company and Treasurer of
Transamerica Life Insurance and Annuity Company.

Thomas M. Adams (64) Assistant Secretary Partner in the law firm of Lanning, Adams &
Peterson.
</TABLE>

* 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.

Members of the Board hold the same position with Transamerica Occidental's
Separate Account Portfolio B and the officers are similar. 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, an open-end management company advised by Transamerica Investment Services,
Inc..

Compensation
The following table shows the compensation paid by the Fund and the Fund Complex
during the fiscal year ending December 31, 1998, to all Directors of the Fund.
<TABLE>
<CAPTION>

Total Pension or
Aggregate Compensation Retirement Benefits Compensation From Registrant and
Name of Person From Fund 1/ Accrued As Part of Fund Fund Complex Paid to Directors3/
- -------------- -------- -----------
Expenses2/
<S> <C> <C> <C>
Donald E. Cantlay $1500 -0- $6,000
Richard N. Latzer -0- -0- -0-
Jon C. Strauss $1500 -0- $6,250
Gary U. Rolle -0- -0- -0-
Peter J. Sodini $1500 -0- $4,750
</TABLE>

- ---------------------

1/ Each director of the Fund is 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 1998, 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 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. The Investment
Adviser is involved in various kinds of routine litigation which, in
management's judgment, are not of material importance to the Investment
Adviser's assets.

Other InformationOther InformationOther 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.

FINANCIAL STATEMENTS
This Statement of Additional Information contains the financial statements for
the Growth Portfolio and the Money Market Portfolio of Transamerica Variable
Insurance Fund, Inc., for fiscal year ending December 31, 1998. No financial
statements are provided for the other Portfolios because, as of December 31,
1998, the other Portfolios had not yet commenced operations.

<PAGE>

Appendix A

Description of Corporate Bond Ratings

Moody's Investors Service, Inc. and Standard and Poor's Corporation are two
prominent independent rating agencies that rate the quality of bonds. Following
are expanded explanations of the ratings shown in the Prospectus.

Moody's Investors Service, Inc. Aaa: Bonds with this rating are judged to be of
the best quality. They carry the smallest degree of investment risk. Interest
payments are protected by a large or exceptionally stable margin and principal
is secure.

Aa: Bonds with this rating 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.

A: Bonds with this rating 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 with this rating are considered as 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 may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds with this rating are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B: Bonds with this rating generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds with this rating are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds with this rating represent obligations which are speculative to a high
degree. Such issues are often in
default or have other marked shortcomings.

C: Bonds with this rating are the lowest rated class of bonds. Issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

Generally, investment-grade debt securities are those rated Baa3 or better by
Moody's.

<PAGE>

Standard & Poor's Corporation AAA: This rating is the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is very strong.

AA: This rating indicates a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only by a small degree.

A: This rating indicates a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: This rating indicates an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.

BB, B, CCC, CC: These ratings indicate, on balance, a predominantly speculative
capacity of the issuer to pay interest and repay principal in accordance with
the terms of the obligation. BB indicates the lowest degree of speculation and
CC the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.

C: This rating is reserved for income bonds on which no interest is being paid.

D: This rating indicates debt in default, and payment of interest and/or
repayment of principal are in arrears.

The ratings from "AA" to "B" may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories, for example A
or B+.

Generally, investment-grade debt securities are those rated BBB or better by
Standard & Poor's.

<PAGE>

Appendix B

Description of Fixed-Income Instruments

U.S. Government Obligations
Securities issued or guaranteed as to principal and interest by the United
States government include a variety of Treasury securities, which differ in
their interest rates, maturities and times of issuance. Treasury Bills have a
maturity of one year or less; Treasury Notes have maturities of one to ten
years; and Treasury Bonds can be issued with any maturity period but generally
have a maturity of greater than ten years. Agencies of the United States
government which issue or guarantee obligations include, among others, the
Export-Import Bank of the United States, Farmers Home Administration, Federal
Housing Administration, Government National Mortgage Association, Maritime
Administration, Small Business Administration and The Tennessee Valley
Authority. Obligations of instrumentalities of the United States government
include securities issued or guaranteed by, among others, banks of the Farm
Credit System, the Federal National Mortgage Association, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Student Loan Marketing
Association, Federal Intermediate Credit Banks, Federal Land Banks, Banks for
Cooperatives, and the U.S. Postal Service. Some of these securities are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the Treasury, while still
others are supported only by the credit of the instrumentality.

Certificates of Deposit
Certificates of deposit are generally short-term, interest-bearing negotiable
certificates issued by banks, savings and loan associations or savings banks
against funds deposited in the issuing institution.

Time Deposits
Time deposits are deposits in a bank or other financial institution for a
specified period of time at a fixed interest rate for which a negotiable
certificate is not received. Certain time deposits may be considered illiquid.

Bankers' Acceptance
A bankers' acceptance is a draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction (to finance
the import, export, transfer or storage of goods). The borrower is liable for
payment as well as the bank, which unconditionally guarantees to pay the draft
at its face amount on the maturity date. Most acceptances have maturities of six
months or less and are traded in secondary markets prior to maturity.

Commercial Paper
Commercial paper refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding 270 days.

Variable Rate, Floating Rate, or Variable Amount Securities
Variable rate, floating rate, or variable amount securities are short-term
unsecured promissory notes issued by corporations to finance short-term credit
needs. These are interest-bearing notes on which the interest rate generally
fluctuates on a scheduled basis.

Corporate Debt Securities
Corporate debt securities are debt issued by a corporation that pays interest
and principal to the holders at specified times.

Asset-Backed Securities
Asset-backed securities are securities which represent an undivided fractional
interest in a trust whose assets generally consist of mortgages, motor vehicle
retail installment sales contracts, or other consumer-based loans.

Participation Interests in Loans
A participation interest in a loan entitles the purchaser to receive a portion
of principal and interest payments due on a commercial loan extended by a bank
to a specified company. The purchaser of such an interest has no recourse
against the bank if payments of principal and interest are not made by the
borrower and generally relies on the bank to administer and enforce the loan's
terms.

International Organization Obligations
International organization obligations include obligations of those
organizations designated or supported by U.S. or foreign government agencies to
promote economic reconstruction and development, international banking, and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank, and the InterAmerican Development Bank.

Custody Receipts
A Portfolio may acquire custody receipts in connection with securities issued or
guaranteed as to principal and interest by the U.S. government, its agencies,
authorities or instrumentalities. Such custody receipts evidence ownership of
future interest payments, principal payments or both on certain notes or bonds
issued by the U.S. government, its agencies, authorities or instrumentalities.
These custody receipts are known by various names, including "Treasury
Receipts," "Treasury Investors Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). For certain securities law purposes,
custody receipts are not considered U.S.
government securities.

Pass-Through Securities
The Portfolios may invest in mortgage pass-through securities such as Government
National Mortgage Association ("GNMA") certificates or Federal National Mortgage
Association ("FNMA") and other mortgage-backed obligations, or modified
pass-through securities such as collateralized mortgage obligations issued by
various financial institutions. In connection with these investments, early
repayment of investment principal arising from prepayments of principal on the
underlying mortgage loans due to the sale of the underlying property, the
refinancing of the loan, or foreclosure may expose the Portfolio to a lower rate
of return upon reinvestment of the principal. Prepayment rates vary widely and
may be affected by changes in market interest rates. In periods of falling
interest rates, the rate of prepayment tends to increase, thereby shortening the
actual average life of the mortgage-related security. Conversely, when interest
rates are rising, the rate of prepayment tends to decrease, thereby lengthening
the actual average life of the mortgage-related security. Accordingly, it is not
possible to accurately predict the average life of a particular pool of
pass-through securities. Reinvestment of prepayments may occur at higher or
lower rates than the original yield on the certificates. Therefore, the actual
maturity and realized yield on pass-through or modified pass-through
mortgage-related securities will vary based upon the prepayment experience of
the underlying pool of mortgages. For purposes of calculating the average life
of the assets of the relevant Portfolio, the maturity of each of these
securities will be the average life of such securities based on the most recent
or estimated annual prepayment rate.

<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) Form of Participation Agreement between Transamerica Variable Insurance
Fund, Inc. and Transamerica Life Insurance and Annuity Company. 4/ 5/ 8/
(a) Form of Participation Agreement between Transamerica Variable Insurance
Fund and Transamerica Occidental Life Insurance Company4/5 (b) Form of
Participation Agreement between Transamerica Variable Insurance Fund and
Transamerica Life Insurance and Annuity Company8

(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. 4/

(11) (a) Consent of Sutherland, Asbill & Brennan, L.L.P.

(b) Consent of Ernst & Young LLP. 10

(12) No financial statements are omitted from Item 23.

(13) Form of Agreement and Plan of Reorganization. 1/

(14) Not Applicable.

(15) Not Applicable.

(16) Performance Data Calculations. 6/

(17) Not Applicable.

(18) Not Applicable.

(19) Powers of Attorney. 1/ 9/10
Susan R. Hughes
Gary U. Rolle'

(27) Financial Data Schedule 6/ 7/ 9/10

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/ Incorporated by reference to the like-numbered exhibit to
Post-Effective Amendment No. 2 to this Registration Statement on Form
N-1A, File No. 33-99016 (May 1, 1997).
7/ . Incorporated by reference to the like numbered exhibit to
Post-Effective Amendment No. 3 to this Registration Statement on Form
N-1A, File No. 33-99016 (June 11, 1997).
8/ Incorporated by reference to the like-numbered exhibit to
Post-Effective Amendment No. 5 to this Registration Statement on Form
N-1A, File No. 33-99016 (October 31, 1997).
9/ Incorporated by reference to the like-numbered exhibit to Post
Effective Amendment No. 6 to this Registration Statement on Form N-1A,
File no. 33-99016 (April 29, 1998)

10/ Incorporated by reference to the like-numbered exhibit to Post
Effective Amendment No. 7 to this Registration Statement on Form N-1A,
File no. 33-99016 (August 19, 1998)

Item 25. Person Controlled by or Under Common Control With the Registrant.

Shares of the Registrant, Transamerica Variable Insurance Fund, Inc.,
are owned by Transamerica Occidental Life Insurance Company ("Transamerica
Occidental"), and Transamerica Life Insurance and Annuity Company ("Transamerica
Life and Annuity") on behalf of their separate accounts which fund variable
insurance contracts. Transamerica Life and Annuity is a wholly-owned subsidiary
of Transamerica Occidental, which is 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

ARC Reinsurance Corporation
Transamerica Management, Inc. -- DE
BWAC Seventeen, Inc.
Transamerica Commercial Finance Canada, Limited -- ON Transamerica Commercial
Finance Corporation, Canada -- Can.
BWAC Twelve, Inc.
TIFCO Lending Corporation -- IL
Transamerica Insurance Finance Corporation -- MD
BWAC Twenty-One, Inc.
Transamerica Commercial Holdings Limited -- U.K.
First Florida Appraisal Services, Inc.
First Georgia Appraisal Services, Inc. -- GA
Greybox L.L.C.
Transamerica Trailer Leasing S.N.C. -- Fra.
Intermodal Equipment, Inc.
Transamerica Leasing N.V. -- Belg.
Transamerica Leasing SRL -- Itl.
Inventory Funding Trust
Inventory Funding Company, LLC -- DE
Metropolitan Mortgage Company
Easy Yes Mortgage, Inc. -- FL
Easy Yes Mortgage, Inc. -- GA
First Florida Appraisal Services, Inc. -- FL
Freedom Tax Services, Inc. -- FL
J.J. & W. Advertising, Inc. -- FL
J.J. & W. Realty Services, Inc. -- FL
Liberty Mortgage Company of Ft. Myers, Inc. -- FL
Metropolis Mortgage Company -- FL
Perfect Mortgage Company -- FL
Pyramid Insurance Company, Ltd.
Pacific Cable Ltd. -- Bmda.
TA Leasing Holding Co., Inc.
Trans Ocean Ltd. -- DE
Transamerica Leasing Inc. -- DE
Trans Ocean Container Corp.
SpaceWise Inc. -- DE
Trans Ocean Container Finance Corp. -- DE
Trans Ocean Leasing Deutschland GmbH -- Ger.
Trans Ocean Leasing PTY Limited -- Aust.
Trans Ocean Management S.A. -- SWTZ
Trans Ocean Regional Corporate Holdings -- CA
Trans Ocean Tank Services Corporation -- DE
Trans Ocean Ltd.
Trans Ocean Container Corp. -- DE
Transamerica Accounts Holding Corporation
ARS Funding Corporation -- DE
Transamerica Acquisition Corporation
Camtrex Group, Inc. --
Transamerica Business Credit Corporation
Bay Capital Corporation -- DE
Coast Funding Corporation -- DE
Direct Capital Equity Investment, Inc. -- DE
Gulf Capital Corporation -- DE
TA Air East, Corp. --
TA Air III, Corp. -- DE
TA Air IV, Corp. -- DE
TA Air IX, Corp. -- DE
TA Air I, Corp. -- DE
TA Air VIII, Corp. --
TA Air VII, Corp. --
TA Air VI, Corp. --
TA Air V, Corp. --
TA Air X Corp. -- DE
TA Marine I Corp. -- DE
TA Marine II Corp. -- DE
TBC III, Inc. -- DE
TBC II, Inc. -- DE
TBC IV, Inc. -- DE
TBC I, Inc. -- DE
TBC Tax III, Inc. -- DE
TBC Tax II, Inc. -- DE
TBC Tax IV, Inc. -- DE
TBC TAX IX, Inc. -- DE
TBC Tax I, Inc. -- DE
TBC Tax VIII, Inc. -- DE
TBC Tax VII, Inc. -- DE
TBC Tax VI, Inc. -- DE
TBC Tax V, Inc. -- DE
TBC V, Inc. -- DE
TBCC Funding Trust I --
TBCC Funding Trust II --
The Plain Company -- DE
Transamerica Mezzanine Financing, Inc. --
Transamerica Small Business Services, Inc. --
Transamerica Business Credit Corporation - DE
TA Air II, Corp. -- DE
Transamerica Commercial Finance Canada, Limited
Transamerica Acquisition Corporation -- Can.
Transamerica Commercial Finance Corporation
Inventory Funding Trust -- DE
TCF Asset Management Corporation -- CO
Transamerica Distribution Finance Corporation de Mexico --
Transamerica Joint Ventures, Inc. -- DE
Transamerica Commercial Finance Corporation, I
BWAC Credit Corporation -- DE
BWAC International Corporation -- DE
BWAC Twelve, Inc. -- DE
Transamerica Business Credit Corporation -- DE
Transamerica Distribution Finance Corporation -- DE
Transamerica Equipment Financial Services Corporation --
Transamerica Commercial Finance Limited
WFC Polska Sp. Zo.o --
Transamerica Commercial Holdings Limited
Transamerica Commercial Finance Limited -- U.K.
Transamerica Trailer Leasing Limited -- NY
Transamerica Trailer Leasing Limited -- U.K.
Transamerica Consumer Finance Holding Company
Metropolitan Mortgage Company -- FL
Pacific Agency, Inc. -- IN
Transamerica Consumer Mortgage Receivables Corporation -- DE
Transamerica Mortgage Company -- DE
Transamerica Corporation
ARC Reinsurance Corporation -- HI
Inter-America Corporation -- CA
Pyramid Insurance Company, Ltd. -- HI
RTI Holdings, Inc. -- DE
Transamerica Airlines, Inc. -- DE
Transamerica Business Technologies Corporation -- DE
Transamerica CBO I, Inc. -- DE
Transamerica Corporation (Oregon) -- OR
Transamerica Delaware, L.P. -- DE
Transamerica Finance Corporation -- DE
Transamerica Financial Products, Inc. -- CA
Transamerica Foundation -- CA
Transamerica Insurance Corporation of California -- CA
Transamerica Intellitech, Inc. -- DE
Transamerica International Holdings, Inc. -- DE
Transamerica Investment Services, Inc. -- DE
Transamerica LP Holdings Corp. -- DE
Transamerica Pacific Insurance Company, Ltd. -- HI
Transamerica Real Estate Tax Service (A Division of Transamerica Corporation)
-- N/A
Transamerica Realty Services, Inc. -- DE
Transamerica Senior Properties, Inc. -- DE
TREIC Enterprises, Inc. -- DE
Transamerica Distribution Finance Corporation Transamerica Accounts Holding
Corporation -- DE Transamerica Commercial Finance Corporation -- DE
Transamerica Inventory Finance Corporation -- DE Transamerica Retail Financial
Services Corporation -- DE Transamerica Vendor Financial Services Corporation
-- DE
Transamerica Distribution Finance Corporation de Mexico
TDF de Mexico --
Transamerica Distribution Finance Corporation de Mexico and TDF de Mexico
Transamerica Corporate Services de Mexico --
Transamerica Finance Corporation
TA Leasing Holding Co., Inc. -- DE
Transamerica Commercial Finance Corporation, I -- DE
Transamerica Home Loan -- CA
Transamerica HomeFirst, Inc. -- CA
Transamerica Lending Company -- DE
Transamerica Financial Resources, Inc.
Financial Resources Insurance Agency of Texas -- TX
TBK Insurance Agency of Ohio, Inc. -- OH
Transamerica Financial Resources Insurance Agency of Alabama Inc. -- AL
Transamerica Financial Resources Insurance Agency of Massachusetts Inc. -- MA
Transamerica GmbH Inc.
Transamerica Financieringsmaatschappij B.V. -- Neth.
Transamerica GmbH - Germany -- Ger.
Transamerica Insurance Corporation of California
Arbor Life Insurance Company -- AZ
Bulkrich Trading --
Gemini Investments, Inc. --
Plaza Insurance Sales, Inc. -- CA
Transamerica Advisors, Inc. -- CA
Transamerica Annuity Service Corporation -- NM
Transamerica Financial Resources, Inc. -- DE
Transamerica International Insurance Services, Inc. -- DE
Transamerica Occidental Life Insurance Company -- CA
Transamerica Products, Inc. -- CA
Transamerica Securities Sales Corporation -- MD
Transamerica Service Company -- DE
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Company (Europe) -- MD
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Corporation, California -- CA
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Corporation, Canada -- ON
Transamerica Intellitech, Inc.
Information Service Corp. --
Transamerica International Insurance Services, Inc.
Home Loans and Finance Ltd. -- U.K.
Transamerica Inventory Finance Corporation
BWAC Seventeen, Inc. -- DE
BWAC Twenty-One, Inc. -- DE
Transamerica Commercial Finance France S.A. -- Fra.
Transamerica GmbH Inc. -- DE
Transamerica Investment Services, Inc.
Transamerica Income Shares, Inc. (managed by TA Investment Services) -- MD
Transamerica Leasing Holdings Inc.
Greybox Logistics Services Inc. -- DE
Greybox L.L.C. -- DE
Greybox Services Limited -- U.K.
Intermodal Equipment, Inc. -- DE
Transamerica Distribution Services Inc. -- DE
Transamerica Leasing Coordination Center -- Belg.
Transamerica Leasing do Brasil Ltda. -- Braz.
Transamerica Leasing GmbH -- Ger.
Transamerica Leasing Limited -- U.K.
Transamerica Leasing Pty. Ltd. -- Aust.
Transamerica Leasing (Canada) Inc. -- Can.
Transamerica Leasing (HK) Ltd. -- H.K.
Transamerica Leasing (Proprietary) Limited -- S.Afr.
Transamerica Tank Container Leasing Pty. Limited -- Aust.
Transamerica Trailer Holdings I Inc. -- DE
Transamerica Trailer Holdings II Inc. -- DE
Transamerica Trailer Holdings III Inc. -- DE
Transamerica Trailer Leasing AB -- Swed.
Transamerica Trailer Leasing AG -- SWTZ
Transamerica Trailer Leasing A/S -- Denmk.
Transamerica Trailer Leasing GmbH -- Ger.
Transamerica Trailer Leasing (Belgium) N.V. -- Belg.
Transamerica Trailer Leasing (Netherlands) B.V. -- Neth.
Transamerica Trailer Spain S.A. -- Spn.
Transamerica Transport Inc. -- NJ
Transamerica Leasing Inc.
Better Asset Management Company LLC -- DE
Transamerica Leasing Holdings Inc. -- DE
Transamerica Leasing Limited
ICS Terminals (UK) Limited -- U.K.
Transamerica Life Insurance and Annuity Company
Transamerica Assurance Company -- MO
Transamerica Management, Inc.
Criterion Investment Management Company -- TX
Transamerica Occidental Life Insurance Company
NEF Investment Company -- CA
Transamerica China Investments Holdings Limited -- H.K.
Transamerica International RE (Bermuda) Ltd. -- Bmda.
Transamerica Life Insurance and Annuity Company -- NC
Transamerica Life Insurance Company of Canada -- Can.
Transamerica Life Insurance Company of New York -- NY
Transamerica South Park Resources, Inc. -- DE
Transamerica Variable Insurance Fund, Inc. -- MD
USA Administration Services, Inc. -- KS
Transamerica Products, Inc.
Transamerica Products II, Inc. -- CA
Transamerica Products IV, Inc. -- CA
Transamerica Products I, Inc. -- CA
Transamerica Real Estate Tax Service
Transamerica Flood Hazard Certification (A Division of TA Real Estate Tax
Service) -- N/A Transamerica Realty Services, Inc.
Bankers Mortgage Company of California -- CA
Pyramid Investment Corporation -- DE
The Gilwell Company -- CA
Transamerica Affordable Housing, Inc. -- CA
Transamerica Minerals Company -- CA
Transamerica Oakmont Corporation -- CA
Ventana Inn, Inc. -- CA
Transamerica Retail Financial Services Corporation
Transamerica Consumer Finance Holding Company -- DE
Whirlpool Financial National Bank -- DE
Transamerica Senior Properties, Inc.
Transamerica Senior Living, Inc. -- DE
Transamerica Small Business Services, Inc.
Emergent Business Capital Holdings, Inc. --

*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner

Item 26. Numbers of Holders of Securities (as of April 1, 1999):

Title of Class Number of Record Holders

Growth Three
Money Market Two

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
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 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 2/1/98 to 2/1/99.
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 1998with 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>
Virginia M. Wilson Senior Vice None None
President & Controller

Thomas J. Cusack Director, Chariman,
President and None Executive Vice President of
Chief Executive Officer Transamerica Corporation

James W. Dederer Director, Executive None None
Vice President, General
Counsel and Corporate
Secretary

Frank Beardsley Director and President - None None
Transamerica Asset
Management

George A. Foegele*** Director and None President and Chief
Senior Vice President Executive Officer of
Transamerica Life Insurance
Company of Canada

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

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
Managers Officer of Transamerica
Investment Services, Inc.

Paul E. Rutledge III** Director and None None
President - Reinsurance Division

T. Desmond Sugrue Director and Executive None None
Vice President

Nooruddin S. Veerjee Director and President, None President of Transamerica
Insurance Products Division 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
*** 300 Consilium Place, Scarborough, Ontario, Canada M1H3G2

List of Officers for Transamerica Occidental Life Insurance Company
<TABLE>
<CAPTION>

<S> <C>
Thomas J. Cusack Chairman, President and Chief Executive Officer
Nooruddin S. Veerjee President - Insurance Products Division
Frank Beardsley President - Transamerica Asset Management
George A. Foegele Senior Vice President
Paul E. Rutledge III President - Reinsurance Division
James W. Dederer, CLU Executive Vice President, General Counsel and Corporate Secretary
David E. Gooding Executive Vice President and Chief Information Officer
Meheriar Hasan Vice President
Daniel E. Jund, FLMI Senior Vice President
Karen MacDonald Senior Vice President and Corporate Actuary
William N. Scott, CLU, FLMI Senior Vice President
T. Desmond Sugrue Executive Vice President
Ron F. Wagley Senior Vice President and Chief Agency Officer
Darrel K.S. Yuen President-Asian Operations
Richard N. Latzer Chief Investment Officer
Gary U. Rolle', CFA Chief Investment Officer
Stephen J. Ahearn Investment Officer
Jim Bowman Vice President
John M. Casparian Investment Officer
Catherine Collinson Vice President
Heather E. Creeden Investment Officer
Colin Funai Investment Officer
William L. Griffin Investment Officer
Heidi Y. Hu Investment Officer
Matthew W. Kuhns Investment Officer
Michael F. Luongo Investment Officer
Dennis J. McNamara Investment Officer
Matthew Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Susan A. Silbert Investment Officer
Philip W. Treick Investment Officer
Jeffrey S. Van Harte Investment Officer
Paul Wintermute Investment Officer
William D. Adams Vice President
Sandra Bailey-Whichard Vice President
Nicki Bair Senior Vice President
Michael Barnhart Regional Vice President
Dennis Barry Vice President
Laurie Bayless Vice President
Nancy Blozis Vice President and Controller
Thomas Briggle Vice President
Thomas Brimacombe Vice President
Sandy Brown Vice President
John Byrnes Vice President
Kent Callahan Vice President
Roy Chong-Kit Senior Vice President and Actuary
Matt Coben Vice President
Ken Cochrane Vice Presidetn
Alan T. Cunningham Vice President and Deputy General Counsel
Glenn Cunningham Vice President
Robert DeMarco Vice President
Peter DeWolf Vice President
Mitch Dimler Vice President
Randy Dobo Vice President and Actuary
Thomas P. Dolan, FLMI Vice President
John V. Dohmen Vice President
Harry Dunn, FSA Vice President and Chief Reinsurance Actuary
Gail DuBois Vice President and Actuary
Ken Ellis Vice President
George Garcia Vice President and Chief Medicare Officer
David M. Goldstein Vice President and Deputy General Counsel
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
Michael Kappos Vice President
Patrick Kelleher Vice President and Reinsurance Financial Officer
Ken Kilbane Vice President
Frank J. LaRusso Vice President and Chief Underwriting Officer
Susan Mack Vice President and Associate General Counsel
Philip E. McHale, FLMI Vice President
Mark Madden Vice President
Maureen McCarthy Vice President
Vic Modugno Vice President and Associate Actuary
Jess Nadelman Vice President
Wayne Nakano, CPA Vice President
Paul Norris Vice President and Actuary
Susan O'Brien Vice President
Thomas P. O'Neill Vice President
Michael Palace, ASA Vice President and Actuary
Jerry Paul Vice President
Stephen W. Pinkham Vice President
Kristy M. Pipes Senior Vice President
Larry H. Roy Senior Vice President
Michael Sanders Vice President
Gary L. Seagraves Vice President
Joel D. Seigle Vice President
Karen Stout Vice President
James O. Strand Vice President
Alice Su Vice President
Lee Tang Vice President
Bill Tate Vice President
Claude W. Thau, FSA Senior Vice President
Barry Tobin Vice President
Kim A. Tursky Vice President and Assistant Secretary
John Vieren Vice President
Timothy Weis Vice President
William R. Wellnitz, FSA Senior Vice President and Actuary
Virginia M. Wilson Senior Vice President and Controller
Ronald R. Wolfe Regional Vice President
Sally Yamada Vice President and Treasurer
Olisa Abaelu Second Vice President
Benjamin Bock Vice President
Daniel J. Bohmfalk Second Vice President and Associate Actuary
Ken Bromberg Second Vice President
Art Bueno Second Vice President
Barry Buner Second Vice President
Wonjoon Cho Second Vice President
Art Cohen Second Vice President
Dave Costanza 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
Toni A. Forge Second Vice President
Jerry Gable, FSA Second Vice President
Linda Goodwin M.D. Second Vice President and Reinsurance Medical Director
Roger Hagopian Second Vice President
Zahid Hussain Vice President and Associate Actuary
Ahmad Kamil, FIA, MAAA Vice President and Associate Actuary
Andrew G. Kanelos Second Vice President
Ronald G. Keller Second Vice President
Joan Klubnik Second Vice President
Roger Korte Second Vice President
Lynette Lawson Second Vice President
Dean LeCesne Second Vice President
Liwen Lien Second Vice President
Marilyn McCullough Vice President
Richard MacKenzie Second Vice President
Danny Mahoney Second Vice President
Carl Marcero Vice President and Chief Reinsurance Underwriter
Jodie Moore Second Vice President
Clay Moye Second Vice President
Daniel A. Norwick Second Vice President
John Oliver Second Vice President
Susan O'Brien Second Vice President
Stephanie Quincey Second Vice President
Paul Reisz Second Vice President
Ray Robinson Second Vice President
Beverly Rochecharlie Second Vice President
John J. Romer Vice President
Laura Scully Second Vice President
Frederick Seto Second Vice President
Jack Shalley, MD Second Vice President and Medical Director
Steven R. Shepard Second Vice President and Assistant General Counsel
Frank Snyder Second Vice President
Mary Spence Second Vice President
Jean Stefaniak Second Vice President
Christina Stiver Vice President
David Stone Second Vice President
Suzette Stover-Hoyt Second Vice President
John Tillotson Second Vice President
K. Y. To Second Vice President
Boning Tong Second Vice President and Associate Actuary
Janet Unruh Second Vice President and Assistant General Counsel
Colleen Vandermark Vice President
Marsha Wallace Second Vice President
James B. Watson Second Vice President and Assistant General Counsel
Sheila Wickens, MD Second Vice President and Medical Director
Michael B. Wolfe Vice President
James Wolfenden Statement Officer
Kamran Haghighi Tax Officer
Susan Vivino Assistant Secretary
</TABLE>

Item 29. Principal Underwriter

Not applicable. There is no principal underwriter, the Fund is
self-distributing.

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).

<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(a) under the
Securities Act of 1933 and that it has duly caused this Post-Effective Amendment
No. 11 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 26th day
ofFebruary, 1999.

TRANSAMERICA VARIABLE INSURANCE FUND, INC.

By: __________________________*
Regina M. Fink Secretary

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.

Signatures Titles Date

<S> <C> <C>
______________________* Treasurer February 26, 1999
Susan R. Hughes

______________________* Director February 26, 1999
Donald E. Cantlay

______________________* Director February 26, 1999
Richard N. Latzer

______________________* Director, President and Chairman February 26, 1999
Gary U. Rolle'

______________________* Director February 26, 1999
Peter J. Sodini

______________________* Director February 26, 1999
Jon C. Strauss
</TABLE>

On February 26, 1999 as Attorney-in-Fact pursuant to

powers of attorney filed with the initial registration statement.

*By: Regina M. Fink

<PAGE>