TRANSAMERICA VARIABLE INSURANCE FUND, INC.
GROWTH PORTFOLIO
SEMI-ANNUAL REPORT
PERIOD ENDED
JUNE 30, 2000
Directors
Gary U. Rolle
Chairman
Dr. James H. Garrity
Peter J. Sodini
Jon C. Strauss
Officers
Gary U. Rolle
President
William T. Miller
Treasurer and Assistant Secretary
Regina M. Fink
Secretary
Thomas M. Adams
Assistant Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Independent Auditors
Ernst & Young LLP
725 South Figueroa Street
Los Angeles, California 90017
<PAGE>
MANAGER COMMENTS
JUNE 30, 2000
TRANSAMERICA VIF Growth Portfolio
Portfolio Manager: Jeffrey S. Van Harte
Co-Manager: Gary U. Rolle
Fund Performance
The Transamerica VIF Growth Portfolio's total return for the first half of 2000
compared favorably with the S&P 500 Index, registering a total return of 5.64%
versus -0.42% for the S&P 500. For the ten-year period ended June 30, 2000, the
Portfolio has returned an average annual gain of 27.02%, compared to 17.80% for
the Index.
Portfolio Manager Comments
The first half of the year proved to be very volatile. Stocks moved up sharply
during the first quarter but corrected sharply in the second quarter. High
valuations in the Internet and technology sectors, along with excessive margin
debt, contributed to the market's correction. Concerns over rising oil prices
and inflation along with the Federal Reserve's resolve to increase short-term
interest rates also added to the market's worries.
Our long-held belief of investing in high-quality, premier companies continued
to pay off as the market's rally in June focused on high-quality growth
companies with proven business models and demonstrable profitability.
Low-quality companies with unproven business models did not come back in the
June rally.
New positions in the Portfolio in the first half of the year included Northern
Trust and 3Com. We believe Northern Trust is extraordinarily well positioned to
serve the needs of high net worth individuals, the fastest growing segment of
financial services. We also added 3Com given its first half announcement to spin
out to the public its most valuable asset, Palm, Inc. The market for personal
digital assistants (PDA's) is dominated by Palm, and we feel the PDA market is
on the verge of explosive growth.
Portfolio Asset Mix
Common Stock 97.9%
Cash and Cash Equivalents 2.1%
Going Forward
We think the market's correction in the second quarter eliminated some of the
unhealthy excesses that were not sustainable. We also believe that the Federal
Reserve is near the end of its tightening cycle and that oil prices will
stabilize in the second half of the year. This should allow the market to focus
on the excellent prospects for corporate earnings growth, and we think the stock
market will do well in the second half of the year. We also believe the market
will refocus on proven companies with excellent growth prospects and that our
portfolio is well positioned.
Thank you for your continued investment in the Transamerica VIF Growth
Portfolio.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN TRANSAMERICA VIF
GROWTH PORTFOLIO WITH THE S&P 500 INDEX*
Average Annual Total Return
As of June 30, 2000 One Year Three Year Five Year Ten Year
<S> <C> <C> <C> <C>
Growth Portfolio 28.61% 32.09% 34.95% 27.02%
S&P 500 Index 7.25% 19.67% 23.80% 17.80%
--Growth Portfolio ($113,577 at 6/30/00)
---S&P 500 Index ($53,058 at 6/30/00)
</TABLE>
* Hypothetical illustration of $10,000 invested on December 31, 1989, assuming
reinvestment of dividends and capital gains at net asset value through June 30,
2000.
The Standard & Poor's 500 Composite Stock Price Index ("S&P 500") consists of
500 widely held, publicly traded common stocks. The S&P 500 Index does not
reflect any commissions or fees which would be incurred by an investor
purchasing the securities it represents.
The Portfolio is only available through the purchase of variable insurance
products. The performance data does not reflect the additional charges
associated with such products. Application of these charges would reduce the
performance of the Portfolio. Variable products pose investment risks, including
loss of capital. Past performance is not predictive of future performance.
The performance of the Growth Portfolio prior to November 1, 1996, is the
performance of its predecessor Transamerica Occidental's Separate Account Fund C
recalculated to reflect the current fees and expenses of the Growth Portfolio.
If the Investment Adviser had not waived fees, the returns of the Portfolio
would have been lower.
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO - SCHEDULE OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
Market
Shares Value
COMMON STOCKS-- 97.9%
Banks-- 3.4%
<S> <C> <C>
Northern Trust Corporation 150,000 $ 9,759,375
Commercial Services & Supplies-- 6.8%
First Data Corporation 235,000 11,661,875
Sodexho Marriott Services, Inc. 475,000 7,600,000
19,261,875
Communication Equipment-- 12.4%
3Com Corporationa 200,000 11,525,000
JDS Uniphase Corporationa 65,000 7,791,875
QUALCOMM, Inc.a 140,000 8,400,000
RF Micro Devices, Inc.a 85,000 7,448,125
35,165,000
Computers & Peripherals-- 10.8%
Dell Computer Corporationa 250,000 12,328,125
EMC Corporationa 240,000 18,465,000
30,793,125
Containers & Packaging-- 3.1%
Sealed Air Corporationa 170,000 8,903,750
Diversified Financials-- 5.4%
Charles Schwab Corporation 452,108 15,202,115
Diversified Telecommunications Services-- 6.9%
Qwest Communications International, Inc.a 250,000 12,421,875
Vodafone AirTouch PLC ADRb 175,000 7,251,562
19,673,437
Electronic Equipment & Instruments-- 2.7%
Agilent Technologies, Inc.a 80,000 5,900,000
Palm, Inc.a 50,000 1,668,750
7,568,750
Food & Drug Retailing-- 12.6%
CVS Corporation 300,000 12,000,000
Kroger Companya 550,000 12,134,375
Safeway, Inc.a 260,000 11,732,500
35,866,875
Internet Software & Services-- 3.0%
DigitalThink, Inc.a 37,000 1,327,375
VeriSign, Inc.a 40,000 7,060,000
8,387,375
Media-- 3.3%
Clear Channel Communications, Inc.a 125,000 9,375,000
Shares or Market
Principal Amount Value
Pharmaceuticals-- 2.3%
Merck & Company, Inc. 85,000 $ 6,513,125
Semiconductor Equipment & Products-- 15.0%
Applied Materials, Inc.a 160,000 14,500,000
Intel Corporation 100,000 13,368,750
Maxim Integrated Products, Inc.a 150,000 10,190,625
QLogic Corporationa 70,000 4,624,375
42,683,750
Software-- 3.5%
Microsoft Corporationa 125,000 10,000,000
Specialty Retail-- 2.9%
Gap, Inc. 265,000 8,281,250
Transportation & Logistics-- 3.8%
United Parcel Service, Inc. 185,000 10,915,000
Total Common Stocks
(cost $179,272,018) 278,349,802
REPURCHASE AGREEMENT -- 3.2% State Street Bank and Trust Company, 4.25%, due
07/03/00, (collateralized by $8,945,000 par value U.S. Treasury Note, 6.500%,
due 08/31/01, with a
value of $9,135,081, cost $8,952,000) $ 8,952,000 8,952,000
Total Investments-- 101.1%
(cost $188,224,018)* 287,301,802
Liabilities in Excess of Other Assets-- (1.1)% (3,037,372)
Net Assets - 100.0% $284,264,430
a Non-income producing security
b ADR -- American Depositary Receipt
* Aggregate cost for Federal tax purposes. Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax
cost and aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over value were $106,686,260 and $7,608,476,
respectively. Net unrealized appreciation for tax purposes is $99,077,784.
See notes to financial statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED
Growth
Portfolio
Assets
Investments, at cost $188,224,018
Investments, at value $287,301,802
Cash 354
Receivables:
Fund shares sold 5,176
Dividends and interest 50,129
Reimbursement from adviser 4,936
287,362,397
Liabilities
Payables:
Securities purchased 2,795,637
Fund shares redeemed 69,934
Advisory fees 170,229
Custody fees 9,243
Audit fees 18,185
Other accrued expenses 34,739
3,097,967
Total Net Assets $284,264,430
Net Assets Consist of
Paid in capital $166,044,956
Undistributed net investment loss (820,133)
Accumulated net realized gain on investments 19,961,823
Net unrealized appreciation of investments 99,077,784
Total Net Assets $284,264,430
Shares Outstanding 10,110,700
Net Asset Value Per Share $28.12
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
Growth
Portfolio
Investment Income
Interest income $103,773
Dividend income 201,902*
Total Income 305,675
Expenses
Investment adviser fee 993,361
Administration fees 58,267
Custodian fees 36,556
Audit fees 20,272
Transfer agent fees 14,848
Legal fees 123
Printing expenses 2,685
Directors' fees 2,126
Insurance and miscellaneous expenses 2,506
Total expenses before waiver and reimbursement 1,130,744
Reimbursed expenses and waived fees (4,936)
Net Expenses 1,125,808
Net Investment Income (Loss) (820,133)
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments 21,886,429
Net change in unrealized appreciation of investments (7,387,869)
Net Realized and Unrealized Gain (Loss) on Investments 14,498,560
Net Increase In Net Assets Resulting From Operations $13,678,427
* Net of foreign tax withholding, the amount withheld in the Growth Portfolio
was $1,949.
See notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Period ended Year ended
June 30, 2000 December 31,
(Unaudited) 1999
Increase In Net Assets
Operations
Net investment loss $(820,133) $(788,317)
Net realized gain (loss) on investments 21,886,429 (1,924,606)
Net change in unrealized appreciation of investments (7,387,869) 61,657,926
Net increase in net assets resulting from operations 13,678,427 58,945,003
Dividends and Distributions to Shareholders
Net realized gains - (506,836)
Fund Share Transactions (Note 3) 31,930,777 72,324,880
Net Increase in Net Assets 45,609,204 130,763,047
Net Assets
Beginning of period 238,655,226 107,892,179
End of period1 $284,264,430 $238,655,226
1 Includes undistributed net investment loss of: $(820,133) -
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected data for a share outstanding throughout each period are as follows*
Six months
ended
June 30, 2000 Years ended December 31,
(Unaudited) 1999 1998 1997 1996 1995
Net Asset Value
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $26.610 $19.360 $14.750 $10.930 $8.582 $5.615
Operations
Net investment loss (0.081) (0.088) (0.013) (0.050) (0.065) (0.069)
Net realized and
unrealized gain 1.591 7.395 6.380 5.130 2.413 3.036
Total from
investment
operations 1.510 7.307 6.367 5.080 2.348 2.967
Dividends/Distributions to Shareholders
Net realized gains - (0.057) (1.757) (1.260) - -
Net Asset Value
End of period $28.120 $26.610 $19.360 $14.750 $10.930 $8.582
Total Return 5.64%a 37.79% 43.28% 46.50% 27.36% 52.84%
Ratios and Supplemental Data
Expenses to average
net assets1 0.85%3 0.85% 0.85% 0.85% 1.27% 1.41%
Net investment loss
to average
net assets2 (0.62%)3 (0.49%) (0.32%) (0.39%) (0.68%) (0.94%)
Portfolio
turnover rate 19.89% 28.79% 34.41% 20.54% 34.58% 18.11%
Net Assets, end of
period
(in thousands) $284,264 $238,655 $107,892 $46,378 $32,238 $25,738
</TABLE>
a Total return is not annualized for periods less than one year.
*Prior to November 1, 1996, activity represents accumulated unit values of
Transamerica Occidental's Separate Account Fund C which have been converted to
share values for presentation purposes.
1 If the Investment Adviser had not waived expenses, the ratio of operating
expenses to average net assets would have been 0.85%, 0.90%, 0.96%, 0.98% and
1.34% for the periods ended June 30, 2000 and December 31, 1999, 1998, 1997
and 1996, respectively.
2 If the Investment Adviser had not waived expenses, the ratio of net
investment loss to average net assets would have been (0.62%), (0.55%),
(0.44%), (0.52%) and (0.75%) for the periods ended June 30, 2000 and
December 31, 1999, 1998, 1997 and 1996, respectively.
3 Annualized.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Transamerica Variable Insurance Funds, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as an open-end management investment company. The
Fund was established as a Maryland Corporation on June 23, 1995. One of the
Fund's portfolios is the Growth Portfolio (the "Portfolio"). The Portfolio's
investment objective is long-term capital growth.
The Portfolio is the successor to Transamerica Occidental's Separate Account
Fund C (the "Separate Account") which was organized as an open-end diversified
management investment company. On November 1, 1996, all investments held by the
Separate Account, with a fair value of $29,567,077 and a cost basis of
$15,661,836, were transferred to the Portfolio of the Fund. In exchange for
these investments, the Separate Account received all of the outstanding shares
(2,956,116) of the Portfolio. This transaction was accounted for in a manner
similar to a pooling of interests. Thereafter, the Separate Account's only
investment is shares of the Portfolio. Effective October 31, 1996, the net asset
value of the Portfolio was re-priced at $10 per unit. All previous accumulation
unit values of the Separate Account have been restated for presentation purposes
to account for this change.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
(A) Valuation of Securities
Equity securities traded on a national exchange, NASDAQ and over-the-counter
securities are valued at the last sale price. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith pursuant to procedures established by the Portfolio's Board of
Directors. Debt securities with a maturity of 60 days or less, are valued at
amortized cost, which approximates market value.
(B) Repurchase Agreements
The Portfolio may enter into repurchase agreements with Federal Reserve System
member banks or U.S. securities dealers. A repurchase agreement occurs when the
Portfolio purchases an interest-bearing debt obligation and the seller agrees to
repurchase the debt obligation on a specified date in the future at an
agreed-upon price. If the seller is unable to make a timely repurchase, the
Portfolio's expected proceeds could be delayed, or the Portfolio could suffer a
loss in principal or current interest, or incur costs in liquidating the
collateral.
(C) Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date and interest income is recorded daily on an
accrual basis. Realized gains and losses on investments are determined using the
identified cost method for both financial statement and Federal income tax
purposes. The aggregate cost of securities purchased (excluding short-term
investments) and proceeds from sales for the Portfolio were $79,509,112 and
$52,263,307 respectively, for the period ended June 30, 2000.
(D) Dividends and Distributions
The Portfolio declares and distributes dividends from net investment income and
net realized capital gains, if any, at least annually. Net realized capital
gains, if any, are distributed at least annually. All distributions are paid in
shares at net asset value.
(E) Federal Income Taxes
The Portfolio's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Therefore, no federal income tax
provision is required. As of December 31, 1999 for Federal income tax purposes,
the Portfolio had a capital loss carry forward of $1,924,606 expiring in 2007.
(F) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of financial
statements and the reported amounts of revenue and expenses during the period.
Actual results could differ from those estimates.
<PAGE>
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Investment Advisory Agreement with Transamerica
Investment Management, LLC (the "Adviser"). For its services to the Portfolio,
the Adviser receives an annual advisory fee of 0.75% of the average daily net
assets.
The Adviser has contracted with Transamerica Investment Services, Inc., a
wholly-owned subsidiary of Transamerica Corporation to provide investment
research and other information and services to the Portfolio. Transamerica
Investment Services receives its fee directly from the Adviser, and receives no
compensation from the Portfolio.
The Adviser, at its discretion, has agreed to waive its fee and assume any other
operating expenses (other than certain extraordinary or non-recurring expenses)
of the Portfolio which exceeds 0.85% of the average daily net assets.
No officer, director, or employee of the Adviser or any of their respective
affiliates receives any compensation from the Fund for acting as director or
officer of the Fund. Each director of the Fund who is not an "interested person"
(as that term is defined in the 1940 Act) receives from the Fund a $500 annual
fee, and $250 for each meeting of the Fund's Board attended, and is reimbursed
for expenses incurred in connection with such attendance. For the period ended
June 30, 2000, the Portfolio's expensed fee of $2,126 to all directors who are
not affiliated persons of the Adviser.
3. CAPITAL STOCK TRANSACTIONS
The Fund has one billion shares of $0.001 par value stock authorized. As of June
30, 2000, the Portfolio was authorized to issue two hundred million shares.
<TABLE>
<CAPTION>
Period ended Year ended
June 30, 2000 December 31, 1999
(Unaudited)
Growth Portfolio Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Capital stock sold 1,484,457 $41,392,210 4,242,531 $90,830,811
Capital stock issued upon
reinvestment of dividends
and distributions - - 22,028 506,859
Capital stock redeemed (343,661) (9,461,433) (868,305) (19,012,790)
Net increase 1,140,796 $31,930,777 3,396,254 $72,324,880
</TABLE>
<PAGE>
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
GROWTH PORTFOLIO
MONEY MARKET PORTFOLIO
SEMI-ANNUAL REPORT
PERIOD ENDED
JUNE 30, 2000
Directors
Gary U. Rolle
Chairman
Dr. James H. Garrity
Peter J. Sodini
Jon C. Strauss
Officers
Gary U. Rolle
President
William T. Miller
Treasurer and Assistant Secretary
Regina M. Fink
Secretary
Thomas M. Adams
Assistant Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Independent Auditors
Ernst & Young LLP
725 South Figueroa Street
Los Angeles, California 90017
<PAGE>
MANAGER COMMENTS - GROWTH PORTFOLIO
JUNE 30, 2000
TRANSAMERICA VIF Growth Portfolio
Portfolio Manager: Jeffrey S. Van Harte
Co-Manager: Gary U. Rolle
Fund Performance
The Transamerica VIF Growth Portfolio's total return for the first half of 2000
compared favorably with the S&P 500 Index, registering a total return of 5.64%
versus -0.42% for the S&P 500. For the ten-year period ended June 30, 2000, the
Portfolio has returned an average annual gain of 27.02%, compared to 17.80% for
the Index.
Portfolio Manager Comments
The first half of the year proved to be very volatile. Stocks moved up sharply
during the first quarter but corrected sharply in the second quarter. High
valuations in the Internet and technology sectors, along with excessive margin
debt, contributed to the market's correction. Concerns over rising oil prices
and inflation along with the Federal Reserve's resolve to increase short-term
interest rates also added to the market's worries.
Our long-held belief of investing in high-quality, premier companies continued
to pay off as the market's rally in June focused on high-quality growth
companies with proven business models and demonstrable profitability.
Low-quality companies with unproven business models did not come back in the
June rally.
New positions in the portfolio in the first half of the year included Northern
Trust and 3Com. We believe Northern Trust is extraordinarily well positioned to
serve the needs of high net worth individuals, the fastest growing segment of
financial services. We also added 3Com given its first half announcement to spin
out to the public its most valuable asset, Palm, Inc. The market for personal
digital assistants (PDA's) is dominated by Palm, and we feel the PDA market is
on the verge of explosive growth.
Portfolio Asset Mix
Common Stock 97.9%
Cash and Cash Equivalents 2.1%
Going Forward
We think the market's correction in the second quarter eliminated some of the
unhealthy excesses that were not sustainable. We also believe that the Federal
Reserve is near the end of its tightening cycle and that oil prices will
stabilize in the second half of the year. This should allow the market to focus
on the excellent prospects for corporate earnings growth, and we think the stock
market will do well in the second half of the year. We also believe the market
will refocus on proven companies with excellent growth prospects and that our
portfolio is well positioned.
Thank you for your continued investment in the Transamerica VIF Growth
Portfolio.
<TABLE>
<CAPTION>
comparison of change in value of a $10,000 investment in transamerica vif
growth portfolio with the S&P 500 index*
Average Annual Total Return
As of June 30, 2000 One Year Three Year Five Year Ten Year
<S> <C> <C> <C> <C>
Growth Portfolio 28.61% 32.09% 34.95% 27.02%
S&P 500 Index 7.25% 19.67% 23.80% 17.80%
</TABLE>
Growth Portfolio ($113,577 at 6/30/00)
S&P 500 Index ($53,058 at 6/30/00)
* Hypothetical illustration of $10,000 invested on December 31, 1989, assuming
reinvestment of dividends and capital gains at net asset value through June
30, 2000.
The Standard & Poor's 500 Composite Stock Price Index ("S&P 500") consists of
500 widely held, publicly traded common stocks. The S&P 500 Index does not
reflect any commissions or fees which would be incurred by an investor
purchasing the securities it represents.
The Portfolio is only available through the purchase of variable insurance
products. The performance data does not reflect the additional charges
associated with such products. Application of these charges would reduce the
performance of the Portfolio. Variable products pose investment risks, including
loss of capital. Past performance is not predictive of future performance.
The performance of the Growth Portfolio prior to November 1, 1996, is the
performance of its predecessor Transamerica Occidental's Separate Account Fund C
recalculated to reflect the current fees and expenses of the Growth Portfolio.
If the Investment Adviser had not waived fees, the returns of the Portfolio
would have been lower.
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO - SCHEDULE OF INVESTMENTS
June 30, 2000 (Unaudited)
Market
Shares Value
COMMON STOCKS-- 97.9%
Banks-- 3.4%
<S> <C> <C>
Northern Trust Corporation 150,000 $ 9,759,375
Commercial Services & Supplies-- 6.8%
First Data Corporation 235,000 11,661,875
Sodexho Marriott Services, Inc. 475,000 7,600,000
19,261,875
Communication Equipment-- 12.4%
3Com Corporationa 200,000 11,525,000
JDS Uniphase Corporationa 65,000 7,791,875
QUALCOMM, Inc.a 140,000 8,400,000
RF Micro Devices, Inc.a 85,000 7,448,125
35,165,000
Computers & Peripherals-- 10.8%
Dell Computer Corporationa 250,000 12,328,125
EMC Corporationa 240,000 18,465,000
30,793,125
Containers & Packaging-- 3.1%
Sealed Air Corporationa 170,000 8,903,750
Diversified Financials-- 5.4%
Charles Schwab Corporation 452,108 15,202,115
Diversified Telecommunications Services-- 6.9%
Qwest Communications International, Inc.a 250,000 12,421,875
Vodafone AirTouch PLC ADRb 175,000 7,251,562
19,673,437
Electronic Equipment & Instruments-- 2.7%
Agilent Technologies, Inc.a 80,000 5,900,000
Palm, Inc.a 50,000 1,668,750
7,568,750
Food & Drug Retailing-- 12.6%
CVS Corporation 300,000 12,000,000
Kroger Companya 550,000 12,134,375
Safeway, Inc.a 260,000 11,732,500
35,866,875
Internet Software & Services-- 3.0%
DigitalThink, Inc.a 37,000 1,327,375
VeriSign, Inc.a 40,000 7,060,000
8,387,375
Media-- 3.3%
Clear Channel Communications, Inc.a 125,000 9,375,000
Pharmaceuticals-- 2.3%
Merck & Company, Inc. 85,000 6,513,125
Shares or Market
Principal Amount Value
Semiconductor Equipment & Products-- 15.0%
Applied Materials, Inc.a 160,000 $ 14,500,000
Intel Corporation 100,000 13,368,750
Maxim Integrated Products, Inc.a 150,000 10,190,625
QLogic Corporationa 70,000 4,624,375
42,683,750
Software-- 3.5%
Microsoft Corporationa 125,000 10,000,000
Specialty Retail-- 2.9%
Gap, Inc. 265,000 8,281,250
Transportation & Logistics-- 3.8%
United Parcel Service, Inc. 185,000 10,915,000
Total Common Stocks
(cost $179,272,018) 278,349,802
REPURCHASE AGREEMENT -- 3.2% State Street Bank and Trust Company, 4.25%, due
07/03/00, (collateralized by $8,945,000 par value U.S. Treasury Note, 6.500%,
due 08/31/01, with a
value of $9,135,081, cost $8,952,000) $8,952,000 8,952,000
Total Investments-- 101.1%
(cost $188,224,018)* 287,301,802
Liabilities in Excess of Other Assets-- (1.1)% (3,037,372)
Net Assets - 100.0% $284,264,430
</TABLE>
a Non-income producing security
b ADR -- American Depositary Receipt
* Aggregate cost for Federal tax purposes. Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax
cost and aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over value were $106,686,260 and $7,608,476,
respectively. Net unrealized appreciation for tax purposes is $99,077,784.
See notes to financial statements
<PAGE>
MANAGER COMMENTS - MONEY MARKET PORTFOLIO
June 30, 2000
TRANSAMERICA VIF Money Market Portfolio
Portfolio Manager: Edward S. Han
Co-Manager: Heidi Y. Hu
Fund Performance
The Transamerica VIF Money Market Portfolio's return for the six-month period
ending June 30, 2000 was 2.74%. In comparison, the IBC Money Fund Report(TM) had
a return of 2.72%. The seven-day current and effective yields were 6.06% and
6.25% respectively, as of June 30, 2000. The Fund's average annual return since
inception in January 1998 is 4.94%.
Portfolio Manager Comments
The Portfolio's objective is to provide a high level of current income
consistent with liquidity and the preservation of capital. The Portfolio
continued to perform well relative to its peer group in 2000 despite a
challenging interest rate environment caused by the strength of the U.S.
economy. The year 2000 has thus far seen a continuation of the trends exhibited
in 1999, which included healthy consumer demand, tight labor markets, and rising
energy prices. Due to concerns that inflation risks were rising, the Federal
Reserve raised the federal funds target rate 100 basis points since the
beginning of 2000 in an effort to slow the economy to a more sustainable,
non-inflationary pace. Towards the end of the second quarter, the economy began
showing some signs of moderation, suggesting that the rate increases were
beginning to take effect. We actively managed the Portfolio's maturity structure
in anticipation of the Federal Reserve's actions, and were thus able to generate
consistent outperformance for our investors.
Portfolio Asset Mix
Commercial Paper 100.0%
Going Forward:
We expect the Federal Reserve to remain vigilant for signs of increasing
inflation and to further increase the federal funds rate if the economy shows
signs of reacceleration. As a result, we expect more moderate economic growth in
the second half of 2000. We will continue to invest in high quality companies
and to manage the Portfolio to provide a high level of income, while preserving
safety and liquidity.
Thank you for your continued investment in the Transamerica VIF Money Market
Portfolio.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN TRANSAMERICA VIF
MONEY MARKET PORTFOLIO WITH THE IBC'S MONEY FUND REPORT*
Average Annual Total Return
As of June 30, 2000 One Year Inception to Date
<S> <C> <C>
Money Market Portfolio 5.20% 4.94%
The IBC First Tier Universe 5.15% 4.92%
</TABLE>
-- Money Market Portfolio ($11,281 at 6/30/00) - -The IBC's Money Fund
Report(TM) ($11,273 at 6/30/00)
* Hypothetical illustration of $10,000 invested at inception (January 2, 1998),
assuming reinvestment of dividends and capital gains at net asset value
through June 30, 2000.
The seven-day current yield as of June 30, 2000 was 6.06%.
The IBC's Money Fund ReportTM - All Taxable, First Tier is a composite of
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. It
does not reflect any commissions or fees which would be incurred by an investor
purchasing the securities it represents.
An investment in the Portfolio is neither insured nor guaranteed by the FDIC or
any other U.S. government agency. Although the Portfolio seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in the Portfolio.
The Portfolio is only available through the purchase of variable insurance
products. The performance data does not reflect the additional charges
associated with such products. Application of these charges would reduce the
performance of the Portfolio. Variable products pose investment risks, including
loss of capital. Past performance is not predictive of future performance.
If the Investment Adviser had not waived fees and reimbursed expenses, the
returns of the Portfolio would have been lower.
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO - SCHEDULE OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
Principal Amortized
Amount Cost
COMMERCIAL PAPER -- DOMESTIC -- 124.6% Beverages -- 8.1%
<S> <C> <C> <C> <C> <C>
Anheuser-Busch Companies, Inc. 6.800% 07/03/00 $770,000 $769,709
Coca Cola Company
6.510% 07/06/00 440,000 439,602
1,209,311
Commercial Financial Services-- 22.7%
Assets Securitization Cooperative Corporation
6.600% 07/12/00 510,000 508,971
6.550% 08/18/00 400,000 396,507
Associates Corporation of North America
6.520% 07/10/00 775,000 773,737
General Electric Capital Corporation
6.550% 07/13/00 748,000 746,367
6.700% 07/17/00 194,000 193,422
IBM Credit Corporation
6.550% 07/05/00 500,000 499,636
6.750% 07/05/00 280,000 279,790
3,398,430
Commercial Services & Supplies-- 4.6%
R.R. Donnelley & Sons Company
6.650% 07/24/00 695,000 692,047
Communication Equipment-- 2.0%
Motorola, Inc.
6.530% 08/23/00 300,000 297,116
Consumer Financial Services-- 12.3%
Ford Motor Credit Company
6.600% 07/03/00 910,000 909,666
USAA Capital Corporation
6.640% 07/14/00 940,000 937,746
1,847,412
Diversified Financials-- 12.6%
Exxon Capital Corporation
6.850% 07/05/00 450,000 449,658
Goldman Sachs Group LP
6.580% 07/05/00 560,000 559,590
6.650% 07/06/00 350,000 349,677
Merrill Lynch & Company, Inc.
6.680% 07/20/00 400,000 398,590
6.540% 08/23/00 130,000 128,748
1,886,263
Diversified Telecommunications Services-- 5.6%
AT&T Corporation
6.700% 07/14/00 100,000 99,758
BellSouth Telecommunications, Inc.
6.550% 07/07/00 745,000 744,187
843,945
Electric Utilities-- 5.6%
Florida Power Corporation
6.560% 08/02/00 748,000 743,639
Northern States Power Company
6.550% 07/10/00 100,000 99,836
843,475
Principal Amortized
Amount Cost
Electrical Equipment-- 5.1%
Emerson Electric Company
6.920% 07/05/00 $770,000 $769,408
Financial Services-- 18.1%
Ciesco LP
6.530% 07/05/00 830,000 829,398
Corporate Asset Funding Corporation
6.550% 07/11/00 550,000 548,999
Delaware Funding Corporation
6.580% 07/27/00 300,000 298,574
6.580% 08/28/00 300,000 296,820
Receivables Capital Corporation
6.710% 07/17/00 340,000 338,986
6.610% 09/15/00 400,000 394,418
2,707,195
Food & Drug Retailing-- 5.2%
Albertson's, Inc.
6.510% 07/07/00 775,000 774,159
Food Products-- 4.9%
H.J. Heinz Company
6.550% 08/17/00 750,000 743,587
Hotels, Restaurants & Leisure-- 3.7%
McDonald's Corporation
6.950% 07/05/00 550,000 549,575
Leisure Equipment & Products-- 3.5%
Eastman Kodak Company
6.700% 07/10/00 400,000 399,330
6.540% 08/23/00 130,000 128,748
528,078
Multiline Retail-- 3.3%
Wal-Mart Stores, Inc.
6.650% 07/19/00 491,000 489,368
Oil & Gas -- 7.3%
Chevron Corporation
6.550% 07/03/00 770,000 769,720
Exxon Mobil Corporation
6.600% 07/06/00 320,000 319,707
1,089,427
Total Commercial Paper -- Domestic
(amortized cost $18,668,796) 18,668,796
REPURCHASE AGREEMENT-- 0.8%
State Street Bank and Trust Company,
4.25%, due 07/03/00, (collateralized
by $115,000 par value U.S. Treasury
Note, 6.375%, due 06/30/02, with a
value of $115,000, cost $109,000) 109,000 109,000
Total Investments-- 125.4%
(amortized cost $18,777,796) 18,777,796
Liabilities in Excess of Other Assets-- (25.4)% (3,797,888)
Net Assets - 100.0% $14,979,908
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
Growth Money Market
Portfolio Portfolio
Assets
<S> <C> <C>
Investments, at cost $188,224,018 $18,777,796
Investments, at value $287,301,802 $18,777,796
Cash 354 719
Receivables:
Fund shares sold 5,176 19,037
Dividends and interest 50,129 13
Reimbursement from adviser 4,936 9,032
287,362,397 18,806,597
Liabilities
Payables:
Securities purchased 2,795,637 -
Fund shares redeemed 69,934 3,797,416
Advisory fees 170,229 5,144
Custody fees 9,243 9,049
Audit fees 18,185 1,362
Other accrued expenses 34,739 13,718
3,097,967 3,826,689
Total Net Assets $284,264,430 $14,979,908
Net Assets Consist of
Paid in capital $166,044,956 $14,979,908
Undistributed net investment loss (820,133) -
Accumulated net realized gain on investments 19,961,823 -
Net unrealized appreciation of investments 99,077,784 -
Total Net Assets $284,264,430 $14,979,908
Shares Outstanding 10,110,700 14,979,908
Net Asset Value Per Share $28.12 $1.00
See notes to financial statements
<PAGE>
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
Growth Money Market
Portfolio Portfolio
Investment Income
Interest income $103,773 $530,844
Dividend income 201,902* -
Total Income 305,675 530,844
Expenses
Investment adviser fee 993,361 30,661
Administration fees 58,267 24,865
Custodian fees 36,556 35,400
Audit fees 20,272 1,492
Transfer agent fees 14,848 11,934
Legal fees 123 25
Printing expenses 2,685 270
Directors' fees 2,126 114
Insurance and miscellaneous expenses 2,506 335
Total expenses before waiver and reimbursement 1,130,744 105,096
Reimbursed expenses and waived fees (4,936) (52,525)
Net Expenses 1,125,808 52,571
Net Investment Income (Loss) (820,133) 478,273
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments 21,886,429 -
Net change in unrealized appreciation
of investments (7,387,869) -
Net Realized and Unrealized Gain (Loss)
on Investments 14,498,560 -
Net Increase In Net Assets
Resulting From Operations $13,678,427 $478,273
* Net of foreign tax withholding, the amount withheld in the Growth Portfolio
was $1,949.
See notes to financial statements
<PAGE>
GROWTH PORTFOLIO - STATEMENTS OF CHANGES IN NET ASSETS
Period ended Year ended
June 30, 2000 December 31,
(Unaudited) 1999
Increase In Net Assets
Operations
Net investment loss $(820,133) $(788,317)
Net realized gain (loss) on investments 21,886,429 (1,924,606)
Net change in unrealized
appreciation of investments (7,387,869) 61,657,926
Net increase in net assets resulting
from operations 13,678,427 58,945,003
Dividends and Distributions to Shareholders
Net realized gains - (506,836)
Fund Share Transactions (Note 3) 31,930,777 72,324,880
Net Increase in Net Assets 45,609,204 130,763,047
Net Assets
Beginning of period 238,655,226 107,892,179
End of period1 $284,264,430 $238,655,226
1 Includes undistributed
net investment loss of: $(820,133) -
See notes to financial statements
<PAGE>
MONEY MARKET PORTFOLIO - STATEMENTS OF CHANGES IN NET ASSETS
Period ended Year ended
June 30, 2000 December 31,
(Unaudited) 1999
Increase In Net Assets
Operations
Net investment income $478,273 $547,228
Net realized gain on investments - -
Net change in unrealized appreciation of investments - -
Net increase in net assets resulting from operations 478,273 547,228
Dividends and Distributions to Shareholders
Net investment income (478,273) (547,228)
Fund Share Transactions (Note 3) (2,498,895) 10,675,749
Net Increase (Decrease) in Net Assets (2,498,895) 10,675,749
Net Assets
Beginning of period 17,478,803 6,803,054
End of period $14,979,908 $17,478,803
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO - FINANCIAL HIGHLIGHTS
Six months
ended
June 30, 2000 Years ended December 31,
(Unaudited) 1999 1998 1997 1996 1995
Net Asset Value
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $26.610 $19.360 $14.750 $10.930 $8.582 $5.615
Operations
Net investment loss (0.081) (0.088) (0.013) (0.050) (0.065) (0.069)
Net realized and
unrealized gain 1.591 7.395 6.380 5.130 2.413 3.036
Total from investment
operations 1.510 7.307 6.367 5.080 2.348 2.967
Dividends/Distributions to Shareholders
Net realized gains - (0.057) (1.757) (1.260) - -
Net Asset Value
End of period $28.120 $26.610 $19.360 $14.750 $10.930 $8.582
Total Return 5.64%a 37.79% 43.28% 46.50% 27.36 52.84%
Ratios and Supplemental Data
Expenses to average net assets1 0.85%3 0.85% 0.85% 0.85% 1.27% 1.41%
Net investment loss to
average net assets 2 (0.62%)3 (0.49%) (0.32%) (0.39%) (0.68%) (0.94%)
Portfolio turnover rate 19.89% 28.79% 34.41% 20.54% 34.58% 18.11%
Net Assets, end of
period (in thousands) $284,264 $238,655 $107,892 $46,378 $32,238 $25,738
</TABLE>
* Prior to November 1, 1996, activity represents accumulated unit values of
Transamerica Occidental's Separate Account Fund C which have been converted
to share values for presentation purposes.
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 0.85%, 0.90%, 0.96%, 0.98% and
1.34% for the periods ended June 30, 2000 and December 31, 1999, 1998, 1997 and
1996, respectively.
2 If the Investment Adviser had not waived expenses, the ratio of net investment
loss to average net assets would have been (0.62%), (0.55%), (0.44%), (0.52%)
and (0.75%) for the periods ended June 30, 2000 and December 31, 1999, 1998,
1997 and 1996, respectively.
3 Annualized.
See notes to financial statements
MONEY MARKET PORTFOLIO - FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected data for a share outstanding throughout each period are as follows
Period ended Year ended Period ended
June 20, 2000 December 31, December 31,
(Unaudited) 1999 1998*
Net Asset Value
<S> <C> <C> <C>
Beginning of period $1.000 $1.000 $1.000
Operations
Net investment income 0.027 0.045 0.048
Dividends/Distributions to Shareholders
Net investment income (0.027) (0.045) (0.048)
Net Asset Value
End of period $1.000 $1.000 $1.000
Total Return 2.74% a 4.62% 4.93% a
Ratios and Supplemental Data
Expenses to average net assets 1 0.60%3 0.60% 0.60%3
Net investment income to average net assets 2 5.46% 3 4.59% 4.81% 3
Net Assets, end of period (in thousands) $14,980 $17,479 $6,803
</TABLE>
* The Portfolio commenced operations on 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 1.20%, 1.39% and 3.03% for the
periods ended June 30, 2000 and December 31, 1999 and 1998, respectively.
2 If the Investment Adviser had not waived expenses, the ratio of net investment
income to average net assets would have been 4.86%, 3.79% and 2.38% for the
periods ended June 30, 2000 and December 31, 1999 and 1998, respectively.
3 Annualized.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Transamerica Variable Insurance Funds, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as an open-end management investment company. The
Fund was established as a Maryland Corporation on June 23, 1995. The Fund
currently consists of two investment portfolios, the Growth Portfolio and the
Money Market Portfolio (the "Portfolios"). The Growth Portfolio's investment
objective is long-term capital growth and the Money Market Portfolio's
investment objective is to maximize current income.
The Growth Portfolio as the successor to Transamerica Occidental's Separate
Account Fund C (the "Separate Account") which was organized as an open-end
diversified management investment company. On November 1, 1996, all investments
held by the Separate Account, with a fair value of $29,567,077 and a cost basis
of $15,661,836, were transferred to the Growth Portfolio of the Fund. In
exchange for these investments, the Separate Account received all of the
outstanding shares (2,956,116) of the Growth Portfolio. This transaction was
accounted for in a manner similar to a pooling of interests. Thereafter, the
Separate Account's only investment is shares of the Growth Portfolio. Effective
October 31, 1996, the net asset value of the Growth Portfolio was re-priced at
$10 per unit. All previous accumulation unit values of the Separate Account have
been restated for presentation purposes to account for this change. The Money
Market Portfolio commenced operations on January 2, 1998.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements:
(A) Valuation of Securities
Equity securities traded on a national exchange, NASDAQ and over-the-counter
securities are valued at the last sale price. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith pursuant to procedures established by the Fund's Board of Directors.
Debt securities with a maturity of 60 days or less, and all investments in the
Money Market Portfolio are valued at amortized cost, which approximates market
value.
(B) Repurchase Agreements
The Portfolios may enter into repurchase agreements with Federal Reserve System
member banks or U.S. securities dealers. A repurchase agreement occurs when the
Portfolios purchase an interest-bearing debt obligation and the seller agrees to
repurchase the debt obligation on a specified date in the future at an
agreed-upon price. If the seller is unable to make a timely repurchase, the
Portfolio's expected proceeds could be delayed, or the Portfolio could suffer a
loss in principal or current interest, or incur costs in liquidating the
collateral.
(C) Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date and interest income is recorded daily on an
accrual basis. Realized gains and losses on investments are determined using the
identified cost method for both financial statement and Federal income tax
purposes. The aggregate cost of securities purchased (excluding short-term
investments) and proceeds from sales for the Growth Portfolio were $79,509,112
and $52,263,307 respectively, for the period ended June 30, 2000.
(D) Dividends and Distributions
The Growth Portfolio declares and distributes dividends from net investment
income and net realized capital gains, if any, at least annually. The Money
Market Portfolio declares dividends daily and pays such dividends monthly. Net
realized capital gains, if any, are distributed at least annually. All
distributions are paid in shares of the relevant Portfolio at net asset value.
(E) Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no federal income tax provision
is required. As of December 31, 1999, for Federal income tax purposes, the
Growth Portfolio had a capital loss carry forward of $1,924,606 expiring in
2007.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (UNAUDITED)
(F) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of financial
statements and the reported amounts of revenue and expenses during the period.
Actual results could differ from those estimates.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Investment Advisory Agreement with Transamerica
Investment Management, LLC (the "Adviser"). For its services to the Growth
Portfolio, the Adviser receives an annual advisory fee of 0.75% of the average
daily net assets of the Portfolio. For its services to the Money Market
Portfolio, the Adviser receives an annual advisory fee of 0.35% of the average
daily net assets of the Portfolio.
The Adviser has contracted with Transamerica Investment Services, Inc., a
wholly-owned subsidiary of Transamerica Corporation to provide investment
research and other information and services to the Portfolios. Transamerica
Investment Services receives its fee directly from the Adviser, and receives no
compensation from the Portfolios.
The Adviser, at its discretion, has agreed to waive its fee and assume any other
operating expenses (other than certain extraordinary or non-recurring expenses)
of the Growth and Money Market Portfolios which exceed 0.85% and 0.60%,
respectively, of the average daily net assets of the Portfolios.
No officer, director, or employee of the Adviser or any of their respective
affiliates receives any compensation from the Fund for acting as director or
officer of the Fund. Each director of the Fund who is not an "interested person"
(as that term is defined in the 1940 Act) receives from the Fund a $500 annual
fee, and $250 for each meeting of the Fund's Board attended, and is reimbursed
for expenses incurred in connection with such attendance. For the period ended
June 30, 2000, the Portfolios' expensed aggregate fee of $2,240 to all directors
who are not affiliated persons of the Adviser.
<TABLE>
<CAPTION>
3. CAPITAL STOCK TRANSACTIONS
The Fund has one billion shares of $0.001 par value stock authorized. As of June
30, 2000, the Growth Portfolio was authorized to issue two hundred million
shares.
Period Ended Year Ended
June 30, 2000 December 31, 1999
(Unaudited)
Growth Portfolio Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Capital stock sold 1,484,457 $41,392,210 4,242,531 $90,830,811
Capital stock issued upon
reinvestment of dividends
and distributions - - 22,028 506,859
Capital stock redeemed (343,661) (9,461,433) (868,305) (19,012,790)
Net increase 1,140,796 $31,930,777 3,396,254 $72,324,880
As of June 30, 2000, the Money Market Portfolio was authorized to issue two
hundred million shares.
Period Ended Year Ended
June 30, 2000 December 31, 1999
(Unaudited)
Money Market Portfolio Shares Amount Shares Amount
Capital stock sold 116,758,553 $116,758,553 149,428,213 $149,428,213
Capital stock issued upon
reinvestment of dividends
and distributions 478,239 478,239 547,242 547,242
Capital stock redeemed (119,735,687) (119,735,687) (139,299,706) (139,299,706)
Net increase (decrease) (2,498,895) $(2,498,895) 10,675,749 $10,675,749
</TABLE>
Notes to financial statements
