<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
ANNUAL REPORT
Dear Investor:
Transamerica Occidental's Separate Account Fund B's (the "Fund") total return of
41.15% for 1999 marked the ninth straight year that the Fund has outperformed
the S&P 500. For 1999, the S&P 500 returned 21.04%. During the past 5 years, the
Fund has earned an annualized total return of 42.85%, compared to 28.56% earned
by the S&P 500. For the last 10 years, the Fund has earned an annualized total
return of 27.12%, while the S&P 500 has returned 18.21%.*
Our recent research has driven us toward the world of wireless communications
and optical component suppliers to the internet. We believe that the demand for
wireless data services and increased bandwidth on the internet are in their
infant stages. Consistent with our long-term investment approach, we look for
the emerging leaders.
Two new additions to our wireless investments were Qualcomm and RF Micro
Devices. Qualcomm is the leader in CDMA (Code Division Multiple Access) wireless
technology, a technology standard we believe will prevail as the dominant
wireless technology. RF Micro Devices is the leading provider of integrated
circuits that enable rapid wireless data applications. We also added JDS
Uniphase to the Fund this year. By virtue of the merger of JDS Fitel with
Uniphase, the company is now the dominant provider of optical components used in
fiber optic systems.
We continue to hold a long-term bullish outlook on the stock market because of
the rapid technological innovation driving the economy. We believe that this
innovation will continue to keep productivity high and inflation and interest
rates low. We are interested in owning the dominant "creators" and "deployers"
of technology. Companies that have learned to create or deploy technology to
their benefit often garner tremendous competitive advantage. They are
"masterpieces," and we believe that investments in masterpieces are the key to
long-term wealth accumulation and superior investment performance.
Thank you for your continued investment in Separate Account Fund B.
/s/ Gary U. Rolle
Gary U. Rolle
President and
Chairman Board of Managers
Transamerica Occidental's
Separate Account Fund B
* Past performance is no guarantee of future results. The value of your account
value will fluctuate.
1
<PAGE>
TABLE OF ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
Accumulation
End of Quarter Unit Value
-------------- ------------
<S> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Accumulation
End of Quarter Unit Value
-------------- ------------
<S> <C>
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
September, 1999................ 33.766134
December, 1999................. 43.812753
</TABLE>
The table above covers the period from December, 1989, to December, 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
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stocks Value(1)
- ------ ------------- --------
<C> <S> <C>
BROADCASTING (3.96%)
60,000 Clear Channel Communications, Inc.*.... $ 5,355,000
------------
BUSINESS SERVICES (4.20%)
115,000 First Data Corporation................. 5,670,880
------------
CHEMICALS (2.08%)
70,000 Minerals Technologies, Inc. ........... 2,804,340
------------
COMMERCIAL SERVICES (1.92%)
200,000 Sodexho Marriott Services, Inc......... 2,600,000
------------
COMMUNICATION SERVICES (3.50%)
110,000 Qwest Communications international, 4,730,000
Inc.*.................................
------------
COMPUTERS & BUSINESS EQUIPMENT (14.83%)
200,000 Dell Computer Corporation*............. 10,200,000
90,000 EMC Corporation*....................... 9,832,500
------------
20,032,500
------------
DRUGS & HEALTH CARE (2.19%)
45,000 Kervasion Inc.*........................ 275,625
40,000 Merck & Co., Inc....................... 2,682,480
------------
2,958,105
------------
ELECTRONICS (17.60%)
100,000 Applied Materials, Inc.*............... 12,668,700
135,000 Intel Corporation...................... 11,112,120
------------
23,780,820
------------
FINANCIAL SERVICES (5.68%)
200,000 Charles Schwab Corp.................... 7,675,000
------------
HOTELS & RESTAURANTS (2.69%)
90,000 McDonalds Corporation.................. 3,628,080
------------
</TABLE>
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stocks Value(1)
- ------ ------------- --------
<C> <S> <C>
RETAIL (3.06%)
90,000 Gap Inc................................ $ 4,140,000
------------
RETAIL GROCERY(6.03%)
300,000 Kroger Company*........................ 5,662,500
70,000 Safeway, Inc.*......................... 2,489,340
------------
8,151,840
------------
SOFTWARE (8.56%)
125,000 IMS Health, Inc........................ 3,398,375
70,000 Microsoft Corporation*................. 8,172,500
------------
11,570,875
------------
TECHNOLOGY (5.09%)
36,000 Verisign, Inc. ........................ 6,873,732
------------
TELECOMMUNICATIONS (2.87%)
24,000 JDS Uniphase Corp* .................... 3,871,462
------------
TELECOMMUNICATION EQUIPMENT (13.10%)
60,000 QUALCOMM, Inc. ........................ 10,567,500
50,000 RF Micro Devises, Inc.* ............... 3,421,850
75,000 Vodaphone Airtouch PLC ADR............. 3,712,500
------------
17,701,850
------------
TRUCKING & FREIGHT FORWARDING (2.56%)
50,000 United Parcel Services, Inc. .......... 3,450,000
------------
134,994,484
TOTAL COMMON STOCK (99.92%)............
============
110,565
Cash, Cash Equivalents and Receivables
Less Liabilities (.08%)...............
------------
$135,105,049
NET ASSETS (100.00%)...................
============
</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
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in common stock -- at market value (cost
$58,323,745).............................................. $134,994,484
Cash and cash equivalents................................... 214,875
Dividend and interest receivable............................ 72,217
Miscellaneous receivables................................... 20,000
------------
TOTAL ASSETS........................................... 135,301,576
LIABILITIES:
Due to Transamerica Occidental's general account............ 196,527
------------
NET ASSETS.................................................. $135,105,049
============
Net assets attributed to variable annuity
contractholders -- 3,072,105 units at $43.812753 per
unit...................................................... $134,597,383
Reserve for retired annuitants.............................. 507,666
------------
$135,105,049
============
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Net investment loss......................................... $ (1,127,106) $ (750,527)
Net realized gain from security transactions................ 20,905,486 18,511,981
Net unrealized appreciation on investments.................. 20,097,581 15,435,710
------------ -----------
Net increase in net assets resulting from operations........ 39,875,961 33,197,164
Variable annuity deposits (net of sales and administration
expenses and applicable state premium taxes).............. 38,703 84,604
Payments to Contract Owners:
Annuity payments.......................................... (80,406) (71,998)
Terminations and withdrawals.............................. (3,892,204) (3,006,584)
Adjustment for mortality guarantees on retired annuitants... 32,477 37,352
------------ -----------
Total increase in net assets................................ 35,974,531 30,240,538
Balance at beginning of period.............................. 99,130,518 68,889,980
------------ -----------
Balance at end of period.................................... $135,105,049 $99,130,518
============ ===========
</TABLE>
See notes to financial statements.
4
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME
INCOME:
Dividends.............................................. $ 207,901
Interest............................................... 95,742
-----------
Total investment income.............................. 303,643
-----------
EXPENSES:
Mortality and expense risk charges..................... 1,100,246
Investment management services......................... 330,503
-----------
Total expenses....................................... 1,430,749
-----------
Net investment loss....................................... (1,127,106)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions.............. 20,905,486
Net change in unrealized appreciation on investments...... 20,097,581
-----------
Net realized and unrealized gain on investments........... 41,003,067
-----------
Net increase in net assets resulting from
operations.......................................... $39,875,961
===========
</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 $37,735,859 and $42,746,650, respectively, in 1999. The Fund had
gross unrealized gains of $81,235,847 and gross unrealized losses of $4,565,108
at December 31, 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 December 31, 1999, Transamerica Occidental Life had deposited
$2,000,000 (current fund value of $93,647,873) 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>
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Investment income................................ $ 0.097 $ 0.098 $ 0.077 $ 0.071 $ 0.044
Expenses......................................... 0.456 0.328 0.244 0.163 0.125
------- ------- ------- ------- -------
Net investment loss.............................. (0.359) (0.230) (0.167) (0.092) (0.081)
Net realized and unrealized gain on investments.. 13.132 10.447 6.701 3.217 3.880
------- ------- ------- ------- -------
Net increase in accumulation unit value...... 12.773 10.217 6.534 3.125 3.799
Accumulation unit value:
Beginning of period............................ 31.040 20.823 14.289 11.164 7.365
------- ------- ------- ------- -------
End of period.................................. $43.813 $31.040 $20.823 $14.289 $11.164
======= ======= ======= ======= =======
Ratio of expenses to average accumulation fund
balance(a)..................................... 1.29% 1.32% 1.33% 1.31% 1.32%
Ratio of net investment loss to average
accumulation fund balance(a)................... (1.02)% (0.92)% (0.91)% (0.74)% (0.86)%
Portfolio turnover............................... 34.45% 53.78% 15.21% 32.94% 17.17%
Number of accumulation units outstanding at end
of period (000's omitted)...................... 3,084 3,193 3,273 3,431 3,598
</TABLE>
(a) On an annualized basis.
7
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
REPORT OF INDEPENDENT AUDITORS
Unitholders and Board Managers, Transamerica Occidental's
Separate Account Fund B
Board of Directors, Transamerica Occidental Life Insurance Company
We have audited the accompanying statement of net assets of Transamerica
Occidental's Separate Account Fund B, including the portfolio of investments, as
of December 31, 1999, 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 and financial highlights are
the responsibility of the 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights 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, 1999 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 and financial highlights referred to
above present fairly, in all material respects, the financial position of
Transamerica Occidental's Separate Account Fund B at December 31, 1999, 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 accounting
principles generally accepted in the United States.
/S/ ERNST & YOUNG LLP
Charlotte, North Carolina
February 15, 2000
8
<PAGE>
TRANSAMERICA
OCCIDENTAL'S SEPARATE
ACCOUNT FUND B
MANAGERS AND OFFICERS
GARY U. ROLLE, President,
Chairman of Board
DR. JAMES H. GARRITY, Manager
PETER J. SODINI, Manager
JON C. STRAUSS, Manager
WILLIAM T. MILLER, Treasurer,
Assistant Secretary
(LOGO)
THOMAS M. ADAMS, Secretary
REGINA M. FINK, Assistant
Secretary
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.
TRANSAMERICA
Pittsburgh, PA 15258
OCCIDENTAL'S
Tel. (800) 234-6356
SEPARATE
Transamerica Occidental
ACCOUNT FUND B
Life Insurance Company
Annuity Service Center
ANNUAL FINANCIAL
P.O. Box 31848
Charlotte, NC 28231-1848
REPORT
800 258-4260
(LOGO)
DECEMBER 31, 1999
This report cannot be used as sales literature.
TFM 1036 Ed. 2-98
