TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
SEMI-ANNUAL REPORT
Dear Investor:
We are pleased to report that the Transamerica Occidental's Separate Account
Fund B performed extremely well in the first half of 1999, surpassing the broad
market substantially. Fund B generated a total return of 17.3% for the six
months ended June 30, 1999 versus the S&P 500's return of 12.4% for the same
period.
The Separate Account Fund invests largely in growth stocks that possess superior
capacity for significant long-term appreciation. A large portion of our
portfolio is invested in technology, which is undergoing a huge innovation
cycle. Strong performers in the Fund that have demonstrated superior growth in
recent months are EMC, the Gap Corporation, Inc. and Charles Schwab Corporation.
Our outlook for the Fund remains extremely positive and we believe the merits of
its holdings will be reflected well in the coming months. The U.S. economy still
appears strong. Although the rise in interest rates does create a degree of
concern going forward, we do not expect inflation to re-ignite in the near term.
We believe the technological innovation now benefiting our economy is
deflationary for most industries, driving prices lower for consumers. Companies
such as those we have purchased for the Fund are extremely well positioned to
benefit from this economic shift.
Thank you for your continued investment in the Separate Account Fund B.
/s/ Gary U. Rolle
Gary U. Rolle
President and
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>
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
</TABLE>
<TABLE>
<CAPTION>
Accumulation
End of Quarter Unit Value
-------------- ------------
<S> <C>
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
March, 1996.................... 11.495829
June, 1996..................... 12.356950
September, 1996................ 13.007681
December, 1996................. 14.289273
March, 1997.................... 14.574090
June, 1997..................... 18.948025
September, 1997................ 22.762719
December, 1997................. 20.822981
March, 1998.................... 24.769837
June, 1998..................... 26.122076
September, 1998................ 24.532238
December, 1998................. 31.039623
March, 1999.................... 36.274720
June, 1999..................... 36.182643
</TABLE>
The table above covers the period from June, 1989, to June, 1999. 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
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stocks Value(1)
- ------ ------------- --------
<C> <S> <C>
BROADCASTING (3.63%)
60,000 Clear Channel Communications, Inc.*.... $ 4,136,220
------------
BUSINESS SERVICES (4.72%)
110,000 First Data Corporation................. 5,383,070
------------
CHEMICALS (2.94%)
60,000 Minerals Technologies, Inc. ........... 3,348,720
------------
COMMERCIAL SERVICES (2.44%)
145,000 Sodexho Marriott Services, Inc.*....... 2,782,115
------------
COMMUNICATION SERVICES (3.19%)
110,000 Qwest Communications International, 3,636,820
Inc...................................
------------
COMPUTERS & BUSINESS EQUIPMENT (11.81%)
230,000 Dell Computer Corporation*............. 8,510,000
80,000 EMC Corporation........................ 4,950,000
------------
13,460,000
------------
DRUGS & HEALTH CARE (2.60%)
40,000 Merck & Co., Inc....................... 2,960,000
------------
ELECTRONICS (13.78%)
100,000 Applied Materials, Inc.*............... 7,787,500
140,000 Intel Corporation...................... 8,330,000
------------
15,717,500
------------
FINANCIAL SERVICES (12.05%)
125,000 Charles Schwab Corp.................... 13,734,375
------------
HOTELS & RESTAURANTS (3.26%)
90,000 McDonalds Corporation.................. 3,718,080
------------
</TABLE>
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stocks Value(1)
- ------ ------------- --------
<C> <S> <C>
HUMAN RESOURCES (1.14%)
50,000 Robert Half International, Inc.*....... $ 1,300,000
------------
LEISURE & ENTERTAINMENT (2.84%)
75,000 Pixar, Inc.*........................... 3,234,375
------------
RETAIL (3.98%)
90,000 CCA Prison Realty Trust................ 4,533,750
------------
RETAIL GROCERY(7.35%)
300,000 Kroger Company......................... 8,381,100
70,000 Safeway, Inc.*......................... 3,465,000
------------
11,846,100
------------
SOFTWARE (13.31%)
115,000 IMS Health, Inc........................ 3,593,750
120,000 Microsoft Corporation*................. 10,822,440
250,000 Open Text Corporation.................. 750,000
------------
15,166,190
------------
TECHNOLOGY (1.06%)
14,000 Vorisign, Inc.......................... 1,207,500
------------
TRANSPORTATION/RAIL (4.48%)
80,000 Kansas City Southern Ind., Inc. ....... 5,104,960
------------
TOTAL COMMON STOCKS (97.63%)........... 111,269,775
============
Cash, Cash Equivalents and Receivables
Less Liabilities (2.37%).............. 2,700,682
------------
NET ASSETS (100%)...................... $113,970,457
============
</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 NET ASSETS
JUNE 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in common stock -- at market value (cost
$50,357,535).............................................. $111,269,775
Cash and cash equivalents................................... 2,668,411
Dividend and interest receivable............................ 32,271
------------
TOTAL ASSETS........................................... 113,970,457
LIABILITIES:
Due to Transamerica Occidental's general account............ 189,682
------------
NET ASSETS.................................................. $113,780,775
============
Net assets attributed to variable annuity
contractholders -- 3,133,688 units at $36.182643 per
unit...................................................... $113,385,108
Reserve for retired annuitants (Note C)..................... 395,667
------------
$113,780,775
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
period ended Year ended
June 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Net investment loss......................................... $ (562,243) $ (750,527)
Net realized gain from security transactions................ 12,600,479 18,511,981
Net unrealized appreciation (depreciation) on investments... 4,339,081 15,435,710
------------ -----------
Net increase in net assets resulting from operations........ 16,377,317 33,197,164
Variable annuity deposits (net of sales and administration
expenses and applicable state premium taxes).............. 30,441 84,604
Payments to Contract Owners:
Annuity payments.......................................... (33,172) (71,998)
Terminations and withdrawals.............................. (1,744,941) (3,006,584)
Adjustment for mortality guarantees on retired annuitants... 20,612 37,352
------------ -----------
Total increase in net assets................................ 14,650,257 30,240,538
Balance at beginning of period.............................. 99,130,518 68,889,980
------------ -----------
Balance at end of period.................................... $113,780,775 $99,130,518
============ ===========
</TABLE>
See notes to financial statements.
4
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
STATEMENT OF OPERATIONS
JUNE 30, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME
INCOME:
Dividends.............................................. $ 103,202
Interest............................................... 42,136
-----------
Total investment income.............................. 145,338
-----------
EXPENSES:
Mortality and expense risk charges..................... 707,552
Investment management services......................... 29
-----------
Total expenses....................................... 707,582
-----------
Net investment loss....................................... (562,243)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions.............. 12,600,479
Net change in unrealized appreciation on investments...... 4,339,081
-----------
Net realized and unrealized gain on investments........... 16,939,560
-----------
Net increase in Net Assets resulting from
operations.......................................... $16,377,317
===========
</TABLE>
See notes to financial statements.
5
<PAGE>
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 Fund's investment objective is
long-term capital growth.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions could change in the future as
additional information becomes known which could impact the amounts reported and
disclosed herein.
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 $20,615,411 and $23,446,744, respectively, in 1999. The Fund had
gross unrealized gains of $60,912,239 at June 30, 1999 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.
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. Transamerica Occidental Life will not charge the Fund
for income taxes applicable to its investment in the Fund. 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.
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.
6
<PAGE>
NOTE B -- TRANSAMERICA OCCIDENTAL LIFE INVESTMENT
As of June 30, 1999, Transamerica Occidental Life had deposited $2,000,000
(current fund value of $77,338,841) 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 1999 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.
FINANCIAL HIGHLIGHTS
Selected data for an accumulation unit outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
For six
months
ended
June 30,
1999 1998 1997 1996 1995 1994
-------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Investment income...................... $ 0.046 $ 0.098 $ .077 $ .071 $ .044 $ .040
Expenses............................... 0.223 0.328 0.244 .163 .125 .089
------- ------- ------- ------- ------- ------
Net investment loss.................... (0.178) (0.230) (0.167) (.092) (.081) (.049)
Net realized and unrealized gain on
investments.......................... 4.965 10.447 6.701 3.217 3.880 .563
------- ------- ------- ------- ------- ------
Net increase in accumulation unit
value............................ 5.143 10.217 6.534 3.125 3.799 .514
Accumulation unit value:
Beginning of period.................. 31.040 20.823 14.289 11.164 7.365 6.851
------- ------- ------- ------- ------- ------
End of period........................ $36.183 $31.040 $20.823 $14.289 $11.164 $7.365
======= ======= ======= ======= ======= ======
Ratio of expenses to average
accumulation fund balance(a)......... 1.31% 1.32% 1.33% 1.31% 1.32% 1.31%
Ratio of net investment loss to average
accumulation fund balance(a)......... (1.04)% (.92)% (0.91)% (0.74)% (0.86)% (0.72)%
Portfolio turnover..................... 19.15% 53.78% 15.21% 32.94% 17.17% 30.62%
Number of accumulation units
outstanding at end of period (000's
omitted)............................. 3,146 3,193 3,273 3,431 3,598 3,749
</TABLE>
(a) On an annualized basis.
7
<PAGE>
CONTRACT HOLDERS MEETING
On June 16, 1999 the Separate Account Fund B held a special meeting of
contract holders for the purpose of approving new investment advisory and
sub-advisory agreements, in addition to certain other matters. This meeting was
prompted by the merger agreement between Transamerica Corporation, the parent
company of the Fund's investment adviser, Transamerica Occidental Life Insurance
Company, and the Fund's sub-adviser, Transamerica Investment Services, Inc., and
AEGON, N.V., a Dutch insurance company. The acquisition of Transamerica
Corporation by AEGON occurred on July 21, 1999, at which time the new investment
advisory and sub-advisory agreements became effective.
The following proposals were presented to the contract holders for a vote.
The results of the vote are below.
<TABLE>
<CAPTION>
VOTES VOTES
FOR AGAINST ABSTAIN
------- ------- -------
<S> <C> <C> <C> <C>
1) To approve the new investment advisory agreement between 341,287 3,429 8,838
the Fund and Transamerica Occidental Life Insurance
Company.
2) To approve the new investment sub-advisory agreement, 330,679 20,471 2,404
relating to the Fund, between Transamerica Occidental
Life Insurance Company and Transamerica Investment
Services, Inc.
3) To elect as Board members the nominees listed below:
Gary U. Rolle 344,405 XXX 9,149
Peter J. Sodini 344,521 XXX 9,033
Jon C. Strauss 332,841 XXX 20,713
Dr. James H. Garrity 330,078 XXX 23,476
4) To ratify the selection by the Board of Managers of Ernst & 351,963 XXX 1,591
Young LLP as independent public accountants for the
fiscal year ending December 31, 1999.
</TABLE>
8
<PAGE>
TRANSAMERICA
OCCIDENTAL'S SEPARATE
ACCOUNT FUND B
MANAGERS AND OFFICERS
GARY U. ROLLE, President and
Chairman of Board
PETER J. SODINI, Manager
JON C. STRAUSS, Manager
DR. JAMES H. GARRITY, Manager
SANDRA C. BROWN, Vice President
SALLY S. YAMADA, Treasurer,
Assistant Secretary
THOMAS M. ADAMS, Secretary
REGINA M. FINK, Assistant
Secretary
SUSAN R. HUGHES, Assistant
Treasurer
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
Transamerica Occidental (LOGO)
Life Insurance Company
Annuity Service Center
P.O. Box 31848
Charlotte, NC 28231-1848
800 258-4260
(LOGO)
TRANSAMERICA
OCCIDENTAL'S
SEPARATE
ACCOUNT FUND B
SEMI-ANNUAL
FINANCIAL REPORT
JUNE 30, 1999
This report cannot be used as sales literature.
TFM 1036 Ed. 2-98
<PAGE>
