ANNUAL REPORT
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
Transamerica Occidental Separate Account Fund B's total return for 1995 was
51.58% after fees compared to a total return of 37.58% for the S&P 500. The
Fund's 5-year compound annual return is 25.98% after fees, or a total return of
217.27% versus the S&P 500 compound annual return of 16.59%, or a total return
of 115.46%. Performance was strong across all areas of the Fund's investments.
In contrast to 1994, 1995 was a plentiful year for the financial markets as many
fundamental factors fell into perfect alignment. The economy slowed, inflation
worries abated, the Federal Reserve eased, and interest rates fell. These
factors set the stage for an explosive rally in the stock market. Investors
flocked to equity funds to take advantage of these favorable conditions pouring
over $100 billion into equity mutual funds -- an all-time record.
The outlook for 1996 is for continued economic growth with low inflation.
Productivity gains and fierce worldwide competition will continue to keep
inflation in check. Real economic growth should slow to a more sustainable pace
of 2.0% to 2.5%. Stock market returns should be good but perhaps not as easy to
come by as in 1995.
The Fund's strategy of being a long-term investor in preeminent companies will
continue in 1996. Investments in companies like Intel, Microsoft, Walt Disney,
and Gillette are one of the reasons the Fund has achieved compound returns in
excess of 25%. These companies are not only leading American companies, but over
the years, have developed into leading international companies.
[SIG]
Gary U. Rolle
Chairman,
Board of Managers
Transamerica Occidental's
Separate Account Fund B
1
<PAGE>
TABLE OF ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
Accumulation
End of Quarter Unit Value
- ---------------------------- ------------
<S> <C>
December, 1985.............. 2.170139
March, 1986................. 2.410619
June, 1986.................. 2.416459
September, 1986............. 2.239661
December, 1986.............. 2.328998
March, 1987................. 3.107777
June, 1987.................. 3.185307
September, 1987............. 3.373161
December, 1987.............. 2.412006
March, 1988................. 2.686389
June, 1988.................. 2.933292
September, 1988............. 3.012913
December, 1988.............. 2.974378
March, 1989................. 3.222322
June, 1989.................. 3.704618
September, 1989............. 4.126660
December, 1989.............. 3.975169
March, 1990................. 3.879319
June, 1990.................. 4.124224
September, 1990............. 3.268967
December, 1990.............. 3.518587
March, 1991................. $ 4.337042
June, 1991.................. 4.288242
September, 1991............. 4.480883
December, 1991.............. 4.908113
March, 1992................. 4.895752
June, 1992.................. 4.798707
September, 1992............. 4.981578
December, 1992.............. 5.580041
March, 1993................. 5.893141
June, 1993.................. 6.139891
September, 1993............. 6.868266
December, 1993.............. 6.851062
March, 1994................. 6.629959
June, 1994.................. 6.325672
September, 1994............. 6.905430
December, 1994.............. 7.364882
March, 1995................. 8.376121
June, 1995.................. 9.806528
September, 1995............. 11.275672
December, 1995.............. 11.163517
</TABLE>
The table above covers the period from December, 1985 to December 31, 1995. The
results shown should not be considered a representation of the gain or loss
which may be realized from an investment made in the Fund today.
2
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
PORTFOLIO OF INVESTMENTS/DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stock Value(1)
- ------ ------------ --------
<C> <S> <C>
CONSUMER & BUSINESS SERVICES 19.2%
40,000 Autodesk Inc. $ 1,370,000
34,000 Broderbund Software, Inc.* 2,065,500
30,000 CUC International* 1,023,750
20,000 Intuit, Inc.* 1,560,000
20,000 Microsoft Corporation* 1,755,000
------------
7,774,250
FINANCIAL SERVICES 8.1%
35,000 Franklin Resources Inc. 1,763,125
75,000 Schwab (Charles) Inc. 1,509,375
------------
3,272,500
INDUSTRIAL TECHNOLOGY 17.9%
40,000 Dell Computer Corp.* 1,385,000
48,000 Intel Corporation 2,724,000
48,000 Millipore Corporation 1,974,000
39,062 Molex Incorporated, CI A 1,196,274
------------
7,279,274
INDUSTRIAL GROWTH/SPECIAL
SITUATIONS 13.0%
20,000 Briggs & Stratton Corp. 867,500
30,000 Gillette Company 1,563,750
50,000 Mattel, Inc. 1,537,500
20,000 United Healthcare Inc. 1,307,500
------------
5,276,250
<CAPTION>
Number
of Market
Shares Common Stock Value(1)
- ------ ------------ --------
<C> <S> <C>
TELECOMMUNICATIONS & ENTERTAINMENT
11.8%
25,000 Motorola Inc. 1,425,000
74,000 Silver King Communications Inc.* 2,571,500
40,000 Tele-communications, Inc.* 795,000
------------
4,791,500
TRANSACTION PROCESSING 12.5%
50,788 First Data Corporation $ 3,396,447
50,000 Transaction Systems Architect* 1,687,500
------------
5,083,947
TRAVEL & LEISURE 15.7%
33,000 Disney (Walt) Company 1,942,875
127,000 Host Marriott Corporation* 1,666,875
80,000 Mirage Resorts Inc.* 2,760,000
------------
6,369,750
TOTAL COMMON STOCK (98.2%) $ 39,847,471
Cash, Cash Equivalents and
Receivables Less Liabilities (1.8%) 744,431
------------
NET ASSETS (100%) $ 40,591,902
============
</TABLE>
- ---------------
(1) Common stocks are valued at the last closing price for securities traded on
a national stock exchange and the bid price for unlisted securities.
* Indicates non-income producing stocks.
See notes to financial statements.
3
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in common stock -- at market value (cost $19,563,219)............... $39,847,471
Cash and cash equivalents...................................................... 774,798
Dividends and interest receivable.............................................. 26,391
Miscellaneous accounts receivable.............................................. 12,405
-----------
TOTAL ASSETS.............................................................. $40,661,065
===========
LIABILITIES:
Due to Transamerica Occidental's general account............................... $ 69,163
-----------
TOTAL LIABILITIES......................................................... 69,163
NET ASSETS..................................................................... $40,591,902
===========
Net assets attributable to variable annuity contractholders -- 3,598,239.30
units at $11.163517 (Note E)................................................. $40,169,006
Reserves for retired annuitants (Note C)....................................... 422,896
-----------
$40,591,902
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Net investment loss............................................... $ (301,346) $ (186,642)
Net realized gain from security transactions...................... 1,632,093 2,062,280
Net unrealized appreciation of investments........................ 12,765,938 67,406
----------- -----------
Net increase in net assets resulting from operations.............. 14,096,685 1,943,044
Variable annuity deposits (net of sales and administration
expenses and applicable state premium taxes).................... 57,007 66,751
Payments to Contract Owners:
Annuity payments................................................ (26,525) (22,035)
Terminations and withdrawals.................................... (1,447,179) (552,957)
Adjustment for mortality guarantees on retired annuitants......... 11,009 9,384
----------- -----------
Total increase in net assets...................................... 12,690,997 1,444,187
Balance at beginning of year...................................... 27,900,905 26,456,718
----------- -----------
Balance at end of year............................................ $40,591,902 $27,900,905
=========== ===========
</TABLE>
See notes to financial statements.
4
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME
INCOME:
Dividends................................................................ $ 132,312
Interest................................................................. 28,327
-----------
Total investment income................................................ 160,639
EXPENSES (Note A):
Investment management services........................................... 106,615
Mortality and expense risk charges....................................... 355,370
-----------
Total expenses......................................................... 461,985
-----------
Net investment loss......................................................... (301,346)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain from security transactions.................................... 1,632,093
Change in unrealized appreciation........................................... 12,765,938
-----------
Net realized and unrealized gain on investments............................. 14,398,031
-----------
Net increase in net assets resulting from operations................... $14,096,685
===========
</TABLE>
See notes to financial statements.
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
NOTES TO FINANCIAL STATEMENTS
NOTE A -- ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940 as an
open-end diversified investment company. The funds investment objective is
long-term capital growth.
Investment in Securities
Common stocks are valued at the last closing price for securities traded on
a national stock exchange and the bid price for unlisted securities. The cost of
securities purchased (excluding short-term investments) and proceeds from sales
aggregated $6,086,354 and $7,466,164 in 1995. Investment in common stocks have a
cost basis for federal income tax purposes of $19,563,219. The Fund had gross
unrealized gains of $20,284,252 at December 31, 1995 related to these
investments. Realized gains and losses on investments are determined using the
average cost method.
Cash Equivalents
Cash equivalents consist of money market funds invested daily from excess
cash balances on deposit.
5
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Federal Income Taxes
Operations of the Fund will form a part of, and be taxed with, those of
Transamerica Occidental Life, which is taxed as a "life insurance company" under
the Internal Revenue Code. The Fund will not be taxed as a regulated investment
company under subchapter M of the Internal Revenue Code. As under current law,
income from assets maintained in the Fund for the exclusive benefit of
Participants is in general not subject to federal income tax. Transamerica
Occidental Life will not charge the Fund for income taxes applicable to its
investment in the Fund.
Expenses
The value of the Fund has been reduced by charges on each Valuation Date
for investment management services on the basis of an annual rate of 0.3% and
mortality and expense risks on the basis of an annual rate of 1.0%. These
charges are paid to Transamerica Occidental Life.
Other
The fund follows industry practice and records security transactions on the
trade date. Dividend income is recognized on the ex-dividend date, and interest
income is recognized on an accrual basis.
NOTE B -- TRANSAMERICA OCCIDENTAL LIFE INVESTMENT
As of December 31, 1995, Transamerica Occidental Life had deposited
$2,000,000 (current value of $23,861,537) in the Fund under an amendment to the
California Insurance Code which permits domestic life insurers to allocate
amounts to such accounts. Transamerica Occidental Life is entitled to withdraw
all but $100,000 of its proportionate share of the Fund, in whole or in part, at
any time.
NOTE C -- RESERVES FOR RETIRED ANNUITANTS
Reserves for retired annuitants are computed using The Annuity Table for
1949, ultimate, one year age set back and an assumed investment earnings rate of
3 1/2%.
NOTE D -- REMUNERATION
No remuneration was paid during 1995 by Transamerica Occidental's Separate
Account Fund B to any member of the Board of Managers or officer of Fund B or
any affiliated person of such members or officers.
6
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
FINANCIAL HIGHLIGHTS
Selected data for an accumulation unit outstanding throughout each year are
as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Investment income........................ $ .044 $ .040 $ .046 $ .082 $ .074
Expenses................................. .125 .089 .081 .064 .055
------- ------ ------ ------ ------
Net investment (loss) income............. (.081) (.049) (.035) .018 .019
Net realized and unrealized gain on
investments............................ 3.880 .563 1.306 .654 1.370
------- ------ ------ ------ ------
Net increase in accumulation
unit value........................ 3.799 .514 1.271 .672 1.389
Accumulation unit value:
Beginning of year...................... 7.365 6.851 5.580 4.908 3.519
------- ------ ------ ------ ------
End of year............................ $11.164 $7.365 $6.851 $5.580 $4.908
======= ====== ====== ====== ======
Ratio of expenses to average accumula-
tion fund balance...................... 1.32 % 1.31 % 1.30 % 1.30% 1.32%
Ratio of net investment (loss) income to
average accumulation fund balance...... (.86)% (.72)% (.57)% .37% .48%
Portfolio turnover....................... 17.17 % 30.62 % 41.39 % 43.48% 32.20%
Number of accumulation units outstanding
at end of year (000 omitted)........... 3,598 3,749 3,820 4,062 4,232
</TABLE>
7
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
REPORT OF INDEPENDENT AUDITORS
Unitholders and Board of Managers, Transamerica Occidental's Separate Account
Fund B Board of Directors, Transamerica Occidental Life Insurance Company.
We have audited the accompanying statement of assets and liabilities of
Transamerica Occidental's Separate Account Fund B, including the portfolio of
investments, as of December 31, 1995, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements are the
responsibility of Fund's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Transamerica Occidental's
Separate Account Fund B at December 31, 1995, the results of its operations for
the year then ended, the changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
Los Angeles, California
February 8, 1996
8
<PAGE>
TRANSAMERICA
OCCIDENTAL'S SEPARATE [LOGO]
ACCOUNT FUND B
MANAGERS AND OFFICERS
DONALD E. CANTLAY, Manager
DeWAYNE W. MOORE, Manager
GARY U. ROLLE, Chairman of the Board
PETER J. SODINI, Manager TRANSAMERICA
BARBARA A. KELLEY, President OCCIDENTAL'S
PAUL L. NORRIS, Vice President SEPARATE
SALLY S. YAMADA, Treasurer and ACCOUNT FUND B
Assistant Secretary ANNUAL FINANCIAL
THOMAS M. ADAMS, Secretary REPORT
REGINA M. FINK, Assistant Secretary DECEMBER 31, 1995
Distributor:
Transamerica Financial Resources,
Inc.
1150 South Olive
Los Angeles, California 90015-2211
Tel. (800) 245-8250
Custodian:
Mellon Bank Securities Trust
1 Mellon Bank Ctr.
Pittsburgh, PA 15258
Tel. (800) 234-6356
Auditors:
Ernst & Young LLP
515 South Flower Street
Los Angeles, California 90071
Tel. (213) 977-3200
Transamerica Occidental [LOGO]
Life Insurance Company
1150 South Olive
Los Angeles,
California 90015-2211
Phone (800) 821-9090
This report cannot be used as sales literature.
TFM 1036 Ed. 2-96
<PAGE>
