<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
SEMI-ANNUAL REPORT
Dear Investor:
The first half of the new millennium 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.
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 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, 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
</TABLE>
<TABLE>
<CAPTION>
Accumulation
End of Quarter Unit Value
-------------- ------------
<S> <C>
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
March, 2000.................... 49.902772
June, 2000..................... 46.517366
</TABLE>
The table above covers the period from June, 1990, to June, 2000. 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, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stocks Value(1)
------ ------------- --------
<C> <S> <C>
BANKING (3.21%)
70,000 Northern Trust Corp..................... $ 4,554,340
------------
BROADCASTING (3.17%)
60,000 Clear Channel Communications, Inc.*..... 4,500,000
------------
BUSINESS SERVICES (4.02%)
115,000 First Data Corporation.................. 5,706,875
------------
CAPITAL GOODS (1.84%)
50,000 Sealed Air Corp......................... 2,618,750
------------
COMMERCIAL SERVICES (2.25%)
200,000 Sodexho Marriott Services, Inc.*........ 3,200,000
------------
COMMUNICATION SERVICES (4.38%)
125,000 Qwest Communications International, 6,210,875
Inc.*..................................
------------
COMPUTERS & BUSINESS EQUIPMENT (16.16%)
200,000 Dell Computer Corporation*.............. 9,862,400
170,000 EMC Corporation*........................ 13,079,290
------------
22,941,690
------------
DRUGS & HEALTH CARE (6.10%)
140,000 CVS Corp. .............................. 5,600,000
40,000 Merck & Co., Inc. ...................... 3,065,000
------------
8,665,000
------------
ELECTRONICS (12.81%)
90,000 Applied Materials, Inc.*................ 8,156,250
75,000 Intel Corporation....................... 10,026,525
------------
18,182,775
------------
FINANCIAL SERVICES (7.11%)
300,000 Charles Schwab Corp. ................... 10,087,500
------------
RETAIL (2.64%)
120,000 Gap Inc................................. $ 3,750,000
------------
</TABLE>
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stocks Value(1)
------ ------------- --------
<C> <S> <C>
RETAIL GROCERY(8.16%)
300,000 Kroger Company*......................... 6,618,600
110,000 Safeway, Inc.*.......................... 4,963,750
------------
11,582,350
------------
SOFTWARE (2.82%)
50,000 Microsoft Corporation*.................. 4,000,000
------------
TECHNOLOGY (10.74%)
90,000 3Com Corp............................... 5,186,250
21,400 Digital Think INC....................... 767,725
75,000 Maxim Integrated Products, Inc. ........ 5,095,275
20,000 Palm, Inc. ............................. 667,500
20,000 Verisign, Inc. ......................... 3,530,000
------------
15,246,750
------------
TELECOMMUNICATIONS (2.53%)
30,000 JDS Uniphase Corp* ..................... 3,596,250
------------
TELECOMMUNICATION EQUIPMENT (7.75%)
70,000 QUALCOMM, Inc. ......................... 4,200,000
35,000 RF Micro Devices, Inc.* ................ 3,066,875
90,000 Vodaphone Airtouch PLC ADR.............. 3,729,330
------------
10,996,205
------------
TRUCKING & FREIGHT FORWARDING (4.16%)
100,000 United Parcel Services, Inc. ........... 5,900,000
------------
141,739,360
TOTAL COMMON STOCK (99.85%).............
============
215,566
Cash, Cash Equivalents and Receivables
Less Liabilities (.15%)................
------------
$141,954,926
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
JUNE 30, 2000
<TABLE>
<S> <C>
ASSETS:
Investments in common stock -- at market value (cost
$70,345,660).............................................. $141,954,926
Cash and cash equivalents................................... 519,631
Dividend and interest receivable............................ 57,861
Miscellaneous receivables................................... 0
------------
TOTAL ASSETS........................................... 142,532,418
LIABILITIES:
Due to Transamerica Occidental's general account............ 804,250
------------
NET ASSETS.................................................. $141,728,168
============
Net assets attributed to variable annuity
contractholders -- 3,037,283 units at $46.517366 per
unit...................................................... $141,286,402
Reserve for retired annuitants.............................. 441,766
------------
$141,728,168
============
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
period ended Year ended
June 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Net investment loss......................................... $ (762,048) $ (1,127,106)
Net realized gain from security transactions................ 14,176,498 20,905,486
Net unrealized appreciation (depreciation) on investments... (5,061,473) 20,097,581
------------ ------------
Net increase in net assets resulting from operations........ 8,352,976 39,875,961
Variable annuity deposits (net of sales and administration
expenses and applicable state premium taxes).............. 36,453 38,703
Payments to Contract Owners:
Annuity payments.......................................... (68,655) (80,406)
Terminations and withdrawals.............................. (1,775,674) (3,892,204)
Adjustment for mortality guarantees on retired annuitants... 78,018 32,477
------------ ------------
Total increase in net assets................................ 6,623,119 35,974,531
Balance at beginning of period.............................. 135,105,049 99,130,518
------------ ------------
Balance at end of period.................................... $141,728,168 $135,105,049
============ ============
</TABLE>
See notes to financial statements.
4
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
STATEMENT OF OPERATIONS
JUNE 30, 2000
<TABLE>
<S> <C>
NET INVESTMENT INCOME
INCOME:
Dividends.............................................. $ 121,067
Interest............................................... 15,554
-----------
Total investment income.............................. 136,621
-----------
EXPENSES:
Investment management services......................... 207,597
Mortality and expense risk charges..................... 691,072
-----------
Total expenses....................................... 898,669
-----------
Net investment loss....................................... (762,048)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions.............. 14,176,498
Net change in unrealized appreciation on investments...... (5,061,473)
-----------
Net realized and unrealized gain on investments........... 9,115,024
-----------
Net increase in net assets resulting from
operations.......................................... $ 8,352,976
===========
</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 $38,501,647 and $41,305,758, respectively, in 2000. The Fund had
gross unrealized gains of $71,924,268 and gross unrealized losses of $3,996,389
at June 30, 2000 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, 2000, Transamerica Occidental Life had deposited $2,000,000
(current fund value of $99,428,867) 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 2000 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,
2000 1999 1998 1997 1996
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Investment income................................ $ 0.044 $ 0.097 $ 0.098 $ 0.077 $ 0.071
Expenses......................................... 0.290 0.456 0.328 0.244 0.163
------- ------- ------- ------- -------
Net investment loss.............................. (0.246) (0.359) (0.230) (0.167) (0.092)
Net realized and unrealized gain on investments.. 2.950 13.132 10.447 6.701 3.217
------- ------- ------- ------- -------
Net increase in accumulation unit value...... 2.704 12.773 10.217 6.534 3.125
Accumulation unit value:
Beginning of period............................ 43.813 31.040 20.823 14.289 11.164
------- ------- ------- ------- -------
End of period.................................. $46.517 $43.813 $31.040 $20.823 $14.289
======= ======= ======= ======= =======
Ratio of expenses to average accumulation fund
balance(a)..................................... 0.715% 1.29% 1.32% 1.33% 1.31%
Ratio of net investment loss to average
accumulation fund balance(a)................... (0.607)% (1.02)% (0.92)% (0.91)% (0.74)%
Portfolio turnover............................... 22.57% 34.45% 53.78% 15.21% 32.94%
Number of accumulation units outstanding at end
of period (000's omitted)...................... 3,047 3,084 3,193 3,273 3,431
</TABLE>
(a) On an annualized basis.
7
<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
SEMI-ANNUAL
P.O. Box 31848
Charlotte, NC 28231-1848
FINANCIAL REPORT
800 258-4260
(LOGO)
JUNE 30, 2000
This report cannot be used as sales literature.
TFM 1036 Ed. 2-98
