<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
ANNUAL REPORT
1997
MANAGED BY
[LOGO]
<PAGE>
OCC ACCUMULATION TRUST
MANAGED BY
[LOGO]
We are pleased to report on the investment activities and results of the
portfolios in the OCC Accumulation Trust in 1997, an excellent year for
investors. The U.S. stock market rose sharply for the third year in a row, and
long-term Treasury bonds advanced also, providing total returns well above the
rate of inflation. International stock markets as a group provided positive
returns, although generally below those of the U.S. stock market.
All the equity portfolios in the OCC Accumulation Trust performed well in
this strong market environment, with each ranking in the upper half of its
mutual fund category. We consider this performance to be quite favorable,
especially in light of our risk-averse investment approach which does not always
keep up with the popular stock market indexes when prices are rising sharply. By
investing in superior businesses that we consider to be undervalued, we seek to
achieve consistent results in rising markets and avoid large losses in declining
markets. Our objective is to deliver superior investment returns over time, with
less volatility and risk than the market indexes. In fact, each of the equity
portfolios in the OCC Accumulation Trust has an excellent long-term performance
record.
A dominant factor driving the U.S. stock market for most of 1997 was a
continued favorable economic environment of low inflation, declining interest
rates, moderate economic growth and improving corporate profits. However, late
in the year investment markets worldwide were affected by the Asian 'financial
crisis.' The U.S. stock market became more volatile in November and December and
stock prices in some markets outside the United States fell precipitously,
especially in Asia.
We believe it is unlikely the Asian crisis will drag the U.S. economy into
a severe recession. Nonetheless, we would not be surprised to see a high level
of stock market volatility until the full extent and impact of the Asian
economic downturn becomes more clear. We are not overly concerned about this
prospect, since volatility creates opportunities to buy stocks we like at
favorable prices.
We continue to invest for the long term in superior businesses that are
reasonably valued, especially those which generate a high level of cash
throughout the economic cycle. By being disciplined in our value approach, we
seek to control risk and match or exceed our benchmarks regardless of economic
or market trends.
<PAGE>
GLOBAL EQUITY PORTFOLIO
The Global Equity Portfolio performed well in 1997 in a challenging global
investment environment, delivering favorable returns with what we believe to be
below-market risk. The Portfolio seeks long-term growth by investing worldwide
in superior businesses which trade in the stock market at reasonable values.
The Portfolio's total return of 14.0% in 1997 compared with an average
total return of 13.3% for the global funds in Lipper's Variable Insurance
Products Performance Analysis Service Report and a return of 15.8% on Morgan
Stanley Capital International's World Index in U.S. dollars with dividends net
of local taxes included (World Index). The Portfolio's performance was 17th
among the 40 funds in the Lipper global funds category.
In the second half of the year, the Portfolio had a slightly negative total
return of less than 0.1%, compared with a positive total return of 0.3% for the
World Index. The Portfolio's average annual total return from inception on March
1, 1995 through December 31, 1997 was 16.9% compared with 17.7% for the World
Index. Returns for the Portfolio take into account expenses incurred by the
Portfolio, but not separate account charges imposed by the insurance company.
Global markets, especially those in Asia, experienced a high level of
volatility in the second half of 1997 following a relatively calm first half of
the year. This volatility escalated, driven primarily by the Asian financial
crisis, as the year neared an end. In December alone, the Financial Times World
Index was up the first week, down the second, up the third, down the fourth and
up in the partial fifth week. The South Korean market was a major contributor to
this volatility, declining 11% in a matter of days late in the month.
One thought dominated our strategy in the second half of the year: minimize
the Portfolio's exposure to the Asian crisis and the contagion that was likely
to follow. Fortunately, this did not require dramatic adjustments to the
Portfolio's holdings. In comparison to the country allocations in the World
Index, the Portfolio was already underweighted in Asia, and continues to be so,
for the simple reason that we could not find many stocks there that met our
criteria of superior businesses available at reasonable prices. Late in the
year, we trimmed our Asian holdings further, selling such stocks as Daiwa Bank
and Takeda Chemical Industries.
While underweighted in Japan and Asia outside Japan, the Portfolio was
overweighted in Europe at the end of the year and approximately market weighted
in the United States and Canada.
We continue to find many investment opportunities in Europe. We believe the
positive impact of European monetary union, to be implemented January 1, 1999,
is not yet reflected in the stock prices of many European companies. During the
second half, we initiated or added to positions in an eclectic group of European
businesses, such as Munters (industrial services) in Sweden and NOVARTIS AG
(pharmaceuticals) in Switzerland.
In the United States, the Portfolio owns a diverse group of undervalued
companies with high cash flow and strong niche business positions. We added
selectively to the Portfolio's U.S. holdings in the half, establishing new
positions in Caterpillar, Inc. and Time Warner, Inc. and increasing such
holdings as Federal Home Loan Mortgage Corp. (Freddie Mac) and McDonald's Corp.
At December 31, 1997, net assets of the Portfolio were allocated 55% to
international stocks and corporate notes, 38% to U.S. stocks and 7% to foreign
and domestic cash and cash equivalents. The largest investment positions outside
the United States were in Japan, Germany, the United Kingdom and France.
The Portfolio's largest international holdings at December 31, 1997 were
ACE, Ltd., a Bermuda-based provider of excess directors and officers liability
insurance, representing 4.0% of the Portfolio's net assets; SAP AG, a leading
German developer of software for businesses worldwide, 1.8% of net assets; OY
Nokia, AB, a Finnish telecommunications equipment company, 1.3% of net assets;
NOVARTIS AG, a Swiss-based pharmaceutical company, 1.3% of net assets; and
Sony Corp., the Japanese electronics company, 1.0% of net assets.
<PAGE>
The Portfolio's largest U.S. equity holdings were McDonald's Corp., a
premier fast-food company with growing global markets, 4.5% of net assets; du
Pont (E.I.) de Nemours & Company, a major industrial company operating in
chemicals, fibers, polymers, petroleum and diversified businesses, 4.2% of net
assets; Wells Fargo & Co., a leading bank in the Western United States, 3.9% of
net assets; Citicorp, a leading bank and financial services company, 3.7% of net
assets; and Caterpillar, Inc., which manufactures earth-moving equipment and
diesel engines, 3.4% of net assets.
Major industry positions were in the banking sector, 11.1% of net assets;
chemicals, 6.6% of net assets; drugs and medical products, 6.4% of net assets;
insurance, 5.5% of net assets; and aerospace, 5.1% of net assets.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
OCC ACCUMULATION TRUST GLOBAL EQUITY PORTFOLIO FROM INCEPTION (3/1/95)
THROUGH 12/31/97 AND TOTAL RETURN ON MORGAN STANLEY INT'L. WORLD INDEX+
Global Equity Portfolio Morgan Stanley Int'l. World Index
Date
- -----
3/1/95 $10,000 $10,000
12/31/95 $11,886 $12,086
12/31/96 $13,671 $13,715
12/31/97 $15,588 $15,877
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR SINCE MARCH 1, 1995
14.0% N/A 16.9%
The performance graph does not reflect charges imposed by the Variable Accounts.
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
+ With dividends
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY NOTES - 4.6%
Federal Farm Credit Bank,
$ 375,000 5.58%, 2/11/98..................................................................... $ 372,617
810,000 5.67%, 1/6/98...................................................................... 809,362
------------
Total U.S. Government Agency Notes (cost - $1,181,979)............................. $ 1,181,979
------------
CORPORATE NOTES - .3%
UNITED KINGDOM - .3%
COMPUTER SERVICES - .3%
Viglen Technology plc
(pounds)42,380 6.75%, 12/1/00..................................................................... $ 68,232
(pounds)11,180 6.9875%, 12/1/01................................................................... 18,363
------------
Total Corporate Notes (cost - $0).................................................. $ 86,595
------------
<CAPTION>
SHARES
- -------------
<S> <C> <C>
COMMON STOCKS - 92.2%
AUSTRALIA - .9%
BANKING - .3%
9,200 Macquarie Bank Ltd................................................................. $ 71,042
------------
ENERGY - .4%
37,328 Novus Petroleum Ltd................................................................ 97,314
------------
PAPER PRODUCTS - .2%
17,137 WMC Ltd............................................................................ 59,754
------------
Total Australian Common Stocks..................................................... 228,110
------------
BERMUDA - 4.0%
INSURANCE - 4.0%
10,800 ACE Ltd............................................................................ 1,042,200
------------
BRAZIL - 2.1%
FOOD SERVICES - .4%
5,000 Bompreco SA Supermercado GDR....................................................... 92,250
------------
PAPER PRODUCTS - .3%
5,600 Aracruz Celulose SA ADR............................................................ 79,100
------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
BRAZIL (CONTINUED)
TELECOMMUNICATIONS - 1.1%
3,600 Ericsson Telecomunicacoes SA*...................................................... $ 115,479
1,400 Telecomunicacoes Brasileiras....................................................... 163,013
------------
278,492
------------
TEXTILES/APPAREL - .3%
250 Compahnia de Tecidos Norte de Minas-Coteminas*..................................... 89,602
210 Encorpar*+......................................................................... 163
------------
89,765
------------
Total Brazilian Common Stocks...................................................... 539,607
------------
CANADA - 3.3%
ENERGY - 1.5%
5,200 PanCanadian Petroleum Ltd.......................................................... 82,782
7,500 Precision Drilling Corp.*.......................................................... 180,540
3,600 Suncor, Inc........................................................................ 123,942
------------
387,264
------------
ENTERTAINMENT - .4%
5,000 Imax Corp.*........................................................................ 108,464
------------
MANUFACTURING - .4%
5,100 Bombardier, Inc.................................................................... 104,923
------------
PRINTING/PUBLISHING - .5%
4,550 Thomson Corp....................................................................... 122,581
------------
SECURITY/INVESTIGATION - .5%
5,800 Unican Security Systems Ltd........................................................ 127,035
------------
Total Canadian Common Stocks....................................................... 850,267
------------
CHILE - .2%
CONGLOMERATES - .2%
5,500 Quinenco SA ADR*................................................................... 63,250
------------
CZECH REPUBLIC - .3%
MISCELLANEOUS FINANCIAL SERVICES - .3%
2,000 CKD Praha Holding AS*.............................................................. 66,501
------------
FINLAND - 1.3%
TELECOMMUNICATIONS - 1.3%
4,700 Oy Nokia AB........................................................................ 336,272
------------
+ Preferred Stock
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
FRANCE - 5.3%
ELECTRONICS - 1.2%
500 Le Carbone Lorraine................................................................ $ 156,185
2,621 Schneider SA....................................................................... 142,318
------------
298,503
------------
ENERGY - .6%
1,500 Total SA........................................................................... 163,247
------------
INDUSTRIAL MATERIALS - .5%
8,300 Usinor............................................................................. 119,842
------------
INSURANCE - .8%
2,800 AXA................................................................................ 216,659
------------
MANUFACTURING - .6%
3,156 Michelin (CGDE).................................................................... 158,888
------------
POWER/UTILITIES - .6%
1,149 Compagnie Generale des Eaux........................................................ 160,366
------------
TECHNOLOGY - .6%
2,400 SGS-Thomson Microelectronics NV*................................................... 148,542
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS - .4%
630 Groupe Danone...................................................................... 112,528
------------
Total French Common Stocks......................................................... 1,378,575
------------
GERMANY - 6.2%
BANKING - .7%
2,850 Bayerishe Vereinsbank AG........................................................... 186,467
------------
BUILDING & CONSTRUCTION - .6%
6,250 Tarkett AG......................................................................... 144,181
------------
CHEMICALS - .6%
1,300 SGL Carbon AG...................................................................... 167,653
------------
COMPUTER SERVICES - 1.8%
1,500 SAP AG............................................................................. 455,683
------------
CONSUMER PRODUCTS - .9%
1,700 Adidas AG.......................................................................... 223,586
------------
DRUGS & MEDICAL PRODUCTS - .3%
1,800 Gehe AG............................................................................ 90,053
------------
INSURANCE - .6%
175 Koelnische Rueckversicherungs AG................................................... 160,510
------------
RETAIL - .7%
4,800 Metro AG........................................................................... 172,100
------------
Total German Common Stocks....................................................... 1,600,233
------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
HONG KONG - 1.2%
BANKING - .2%
116,000 Manhattan Credit Card Co., Ltd..................................................... $ 40,792
------------
ELECTRICAL ENGINEERING - .4%
27,000 Hong Kong Electric Holdings Ltd.................................................... 102,613
------------
INDUSTRIAL MATERIALS - .6%
14,000 Hutchison Whampoa Ltd.............................................................. 87,805
35,000 Yue Yuen Industrial Holdings....................................................... 74,074
------------
161,879
------------
Total Hong Kong Common Stocks...................................................... 305,284
------------
HUNGARY - 1.0%
CONGLOMERATES - .1%
6,650 Benpres Holdings Corp.* GDR........................................................ 18,786
3,800 Benpres Holdings Corp.* GDR Reg. S................................................. 9,044
------------
27,830
------------
DRUGS & MEDICAL PRODUCTS - .9%
500 Gedeon Richter Ltd., GDR........................................................... 58,125
500 Gedeon Richter Ltd., GDR Reg. S.................................................... 57,125
1,050 Gedeon Richter Ltd., GDS........................................................... 122,063
------------
237,313
------------
Total Hungarian Common Stocks...................................................... 265,143
------------
ITALY - .9%
RETAIL - .9%
33,000 La Rinascente SpA*................................................................. 246,241
------------
JAPAN - 7.9%
AUTOMOTIVE - .9%
15,000 Calsonic Corp...................................................................... 58,589
5,000 Honda Motor Co., Ltd............................................................... 183,427
------------
242,016
------------
BANKING - .2%
62,000 Yasuda Trust & Banking............................................................. 61,729
------------
BUILDING & CONSTRUCTION - .2%
3,000 Sho-Bond Corp...................................................................... 54,224
------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
CHEMICALS - .9%
32,000 Dainippon Ink & Chemicals, Inc..................................................... $ 80,876
5,000 Shin-Etsu Chemical Co. Ltd......................................................... 95,351
53,000 Showa Denko K.K.................................................................... 46,274
------------
222,501
------------
CONGLOMERATES - .1%
4,000 Inaba Denkisangyo Co. Ltd.......................................................... 33,392
------------
CONSUMER PRODUCTS - 1.0%
5,000 Canon, Inc......................................................................... 116,413
26,000 Minolta Co. Ltd.................................................................... 145,960
------------
262,373
------------
ELECTRICAL ENGINEERING - .0%
100 Kinden Corp........................................................................ 1,065
------------
ELECTRONICS - 2.1%
2,000 Kyocera Corp....................................................................... 90,679
4,000 Omron Corp......................................................................... 62,495
1,000 Rohm Co............................................................................ 101,861
10,000 Sodick Co.*........................................................................ 28,644
3,000 Sony Corp.......................................................................... 266,524
------------
550,203
------------
INSURANCE - .1%
9,000 Fuji Fire & Marine Insurance Co. Ltd............................................... 18,128
------------
METALS & MINING - .2%
5,000 Toho Titanium*..................................................................... 42,123
------------
MISCELLANEOUS FINANCIAL SERVICES - 1.4%
1,300 Acom Co............................................................................ 71,686
2,000 Orix Corp.......................................................................... 139,389
500 Shohkoh Fund & Co. Ltd............................................................. 152,408
------------
363,483
------------
RETAIL - .5%
1,200 Circle K Co. Ltd................................................................... 57,440
1,000 Ryohin Keikaku Co. Ltd............................................................. 65,865
------------
123,305
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS - .3%
6,000 Mikuni Coca-Cola Bottling Co....................................................... 74,902
------------
Total Japanese Common Stocks....................................................... 2,049,444
------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MEXICO - 1.1%
BUILDING & CONSTRUCTION - .6%
26,000 Corporacion GEO, SA de CV*......................................................... $ 159,470
------------
POWER/UTILITY - .5%
66,900 Grupo Elektra, SA de CV............................................................ 117,876
------------
Total Mexican Common Stocks........................................................ 277,346
------------
NETHERLANDS - 2.3%
MISCELLANEOUS FINANCIAL SERVICES - .5%
3,086 ING Groep NV....................................................................... 129,975
------------
PRINTING/PUBLISHING - 1.5%
7,250 Ver Ned Uitgevers NV............................................................... 204,522
1,290 Wolters Kluwer NV.................................................................. 166,622
------------
371,144
------------
PUBLIC SERVICES - .3%
4,580 Vedior NV.......................................................................... 82,445
------------
Total Netherlands Common Stocks.................................................... 583,564
------------
NEW ZEALAND - .4%
BUILDING & CONSTRUCTION - .2%
28,033 Fletcher Challenge Ltd............................................................. 57,296
------------
FOOD SERVICES - .2%
160,392 AFFCO Holdings Ltd................................................................. 35,390
------------
Total New Zealand Common Stocks.................................................... 92,686
------------
NORWAY - .6%
ENERGY - .6%
8,400 Saga Petroleum ASA................................................................. 144,439
------------
POLAND - .5%
BANKING - .5%
7,800 Bank Handlowy W. Warszawie SA GDR*................................................. 103,350
2,500 Bank Handlowy W. Warszawie*........................................................ 31,915
------------
Total Polish Common Stocks......................................................... 135,265
------------
SPAIN - 1.9%
ELECTRICAL ENGINEERING - .6%
9,000 Endesa SA*......................................................................... 159,797
------------
ENERGY - .5%
2,900 Repsol SA.......................................................................... 123,728
------------
MANUFACTURING - .4%
2,600 Vidrala SA......................................................................... 116,219
------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SPAIN (CONTINUED)
RETAIL - .4%
5,000 Aldeasa SA*........................................................................ $ 106,006
------------
Total Spanish Common Stocks........................................................ 505,750
------------
SWEDEN - 3.9%
APPLIANCE & HOUSEHOLD DURABLES - .4%
9,900 Munters AB......................................................................... 85,410
------------
BANKING - .7%
32,900 Norbanken AB*...................................................................... 186,049
------------
DRUGS & MEDICAL PRODUCTS - .5%
8,000 ASTRA AB........................................................................... 138,541
------------
ELECTRONICS - .5%
2,000 Electrolux AB...................................................................... 138,793
------------
MACHINERY/ENGINEERING - 1.3%
11,000 ABB AB............................................................................. 130,228
6,900 Atlas Copco AB..................................................................... 205,960
------------
336,188
------------
PAPER PRODUCTS - .5%
5,100 AssiDoman AB....................................................................... 129,107
------------
Total Swedish Common Stocks........................................................ 1,014,088
------------
SWITZERLAND - 3.4%
BANKING - .9%
1,600 CS Holding AG...................................................................... 247,468
------------
BUILDING & CONSTRUCTION - .3%
100 Holderbank Financiere Glaris AG.................................................... 81,577
------------
DRUGS & MEDICAL PRODUCTS - 2.2%
145 Ares-Serono Group.................................................................. 239,153
200 NOVARTIS AG*....................................................................... 324,391
------------
563,544
------------
Total Swiss Common Stocks.......................................................... 892,589
------------
UNITED KINGDOM - 5.5%
AUTOMOTIVE - .3%
20,263 LucasVarity plc*................................................................... 71,556
------------
COMPUTER SERVICES - .1%
52,000 Viglen Technology plc*............................................................. 33,310
------------
CONSUMER PRODUCTS - .9%
28,000 Unilever plc....................................................................... 240,850
------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
DRUGS & MEDICAL PRODUCTS - 1.0%
25,088 SmithKline Beecham plc............................................................. $ 258,574
------------
ELECTRONICS - .8%
10,900 Siebe plc.......................................................................... 213,944
------------
METALS & MINING - .5%
23,636 Antofagasta Holdings plc........................................................... 126,172
------------
MISCELLANEOUS FINANCIAL SERVICES - 1.0%
18,447 Lloyds TSB Group plc............................................................... 239,988
------------
RETAIL - .9%
13,307 Dixon Group plc.................................................................... 133,545
18,000 Safeway plc........................................................................ 101,408
------------
234,953
------------
Total United Kingdom Common Stocks................................................. 1,419,347
------------
UNITED STATES - 38.0%
AEROSPACE/DEFENSE - 5.1%
13,000 Boeing Co.......................................................................... 636,188
7,000 Lockheed Martin Corp............................................................... 689,500
------------
1,325,688
------------
BANKING - 7.6%
7,500 Citicorp........................................................................... 948,281
3,000 Wells Fargo & Co................................................................... 1,018,313
------------
1,966,594
------------
CHEMICALS - 5.1%
18,000 du Pont (E.I.) de Nemours & Co..................................................... 1,081,125
5,000 Monsanto Co........................................................................ 210,000
1,000 Solutia, Inc....................................................................... 26,687
------------
1,317,812
------------
CONSUMER PRODUCTS - 1.6%
11,000 Mattel, Inc........................................................................ 409,750
------------
DRUGS & MEDICAL PRODUCTS - 1.6%
8,000 Becton, Dickinson & Co............................................................. 400,000
------------
FOOD SERVICES - 4.5%
24,500 McDonald's Corp.................................................................... 1,169,875
------------
MACHINERY/ENGINEERING - 3.4%
18,000 Caterpillar, Inc................................................................... 874,125
------------
MEDIA/BROADCAST - 1.4%
6,000 Time Warner, Inc................................................................... 372,000
------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
UNITED STATES (CONTINUED)
MISCELLANEOUS FINANCIAL SERVICES - 3.1%
19,000 Federal Home Loan Mortgage Corp.................................................... $ 796,812
------------
PAPER PRODUCTS - 1.3%
7,500 Champion International, Inc........................................................ 339,844
------------
TECHNOLOGY - 1.2%
12,000 National Semiconductor Corp.*...................................................... 311,250
------------
TELECOMMUNICATIONS - 2.1%
1,300 Loral Space & Communications Ltd.*................................................. 27,869
18,000 TCI Ventures Group (Class A)*...................................................... 509,625
------------
537,494
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total United States Common Stocks..................................... 9,821,244
------------
Total Common Stocks (cost - $21,120,277).............................. $ 23,857,445
------------
Total Investments (cost - $22,302,256)................................. 97.1% $ 25,126,019
Other Assets in Excess of Liabilities.................................. 2.9 747,609
----- ------------
Total Net Assets....................................................... 100.0% $ 25,873,628
----- ------------
----- ------------
</TABLE>
- ------------------------
*Non-income producing security.
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $22,302,256).............................................................. $ 25,126,019
Cash..................................................................................................... 4,326
Foreign currencies (cost -- $683,398).................................................................... 679,966
Receivable from investments sold......................................................................... 69,944
Receivable from fund shares sold......................................................................... 17,613
Dividends receivable..................................................................................... 11,202
Foreign withholding taxes reclaimable.................................................................... 7,973
Interest receivable...................................................................................... 325
Other assets............................................................................................. 2,573
-------------
Total Assets........................................................................................... 25,919,941
-------------
LIABILITIES
Investment advisory fee payable.......................................................................... 20,112
Foreign withholding taxes payable........................................................................ 976
Payable for fund shares redeemed......................................................................... 486
Other payables and accrued expenses...................................................................... 24,739
-------------
Total Liabilities...................................................................................... 46,313
-------------
Total Net Assets....................................................................................... $ 25,873,628
-------------
-------------
COMPOSITION OF NET ASSETS
Par value ($.01 per share)............................................................................... $ 18,065
Paid-in-capital in excess of par......................................................................... 23,081,904
Accumulated distribution in excess of net investment income.............................................. (49,195)
Net unrealized appreciation on investments and translation of other assets and
liabilities denominated in foreign currencies.......................................................... 2,822,854
-------------
Total Net Assets....................................................................................... $ 25,873,628
-------------
-------------
Fund shares outstanding.................................................................................. 1,806,526
-------------
Net asset value per share................................................................................ $ 14.32
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $20,917)................................................. $ 272,348
Interest................................................................................................ 105,688
----------
Total investment income.............................................................................. 378,036
----------
OPERATING EXPENSES
Investment advisory fees (note 2A)...................................................................... 184,504
Custodian fees (note 1H)................................................................................ 59,554
Audit fees.............................................................................................. 11,500
Transfer and dividend disbursing agent fees............................................................. 9,217
Trustees' fees and expenses............................................................................. 8,750
Reports and notices to shareholders..................................................................... 2,315
Legal fees.............................................................................................. 450
Miscellaneous........................................................................................... 597
----------
Total operating expenses............................................................................. 276,887
Less: Investment advisory fees waived (note 2A)...................................................... (2,537)
Less: Expenses offset (note 1H)...................................................................... (1,196)
----------
Net operating expenses............................................................................. 273,154
----------
Net investment income.............................................................................. 104,882
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS -- NET
Net realized gain on investments........................................................................ 1,180,309
Net realized loss on foreign currency transactions...................................................... (31,367)
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and
liabilities denominated in foreign currencies........................................................ 1,432,604
----------
Net realized gain and change in unrealized appreciation (depreciation) on investments and translation
of other assets and liabilities denominated in foreign currencies................................... 2,581,546
----------
Net increase in net assets resulting from operations...................................................... $2,686,428
----------
----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income.................................................................... $ 104,882 $ 73,364
Net realized gain on investments......................................................... 1,180,309 85,039
Net realized loss on foreign currency transactions....................................... (31,367) (6,772)
Net change in unrealized appreciation (depreciation) on investments and translation of
other assets and liabilities denominated in foreign currencies......................... 1,432,604 1,247,855
----------- -----------
Net increase in net assets resulting from operations................................ 2,686,428 1,399,486
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income.................................................................... (74,889) (60,776)
In excess of net investment income....................................................... (49,195) --
Net realized gains on investments........................................................ (1,184,153) (89,998)
----------- -----------
Total dividends and distributions to shareholders................................... (1,308,237) (150,774)
----------- -----------
FUND SHARE TRANSACTIONS
Net proceeds from sales.................................................................. 10,888,674 16,110,547
Reinvestment of dividends and distributions.............................................. 1,308,238 150,774
Cost of shares redeemed.................................................................. (4,673,963) (3,428,866)
----------- -----------
Net increase in net assets from fund share transactions............................. 7,522,949 12,832,455
----------- -----------
Total increase in net assets................................................... 8,901,140 14,081,167
NET ASSETS
Beginning of year........................................................................ 16,972,488 2,891,321
----------- -----------
End of year (including accumulated distribution in excess of net investment income of
($49,195) and undistributed net investment income of $2,107, respectively)............. $25,873,628 $16,972,488
----------- -----------
----------- -----------
SHARES ISSUED AND REDEEMED
Issued................................................................................... 741,096 1,304,431
Issued in reinvestment of dividends and distributions.................................... 91,400 11,415
Redeemed................................................................................. (308,572) (282,190)
----------- -----------
Net increase........................................................................ 523,924 1,033,656
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
OCC Accumulation Trust ( the 'Trust') was organized May 12, 1994 as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment company.
The Trust is authorized to issue an unlimited number of seven classes of shares
of beneficial interest at $.01 par value. The Trust is comprised of seven
portfolios: the Equity Portfolio, the Small Cap Portfolio, the Global Equity
Portfolio (the 'Portfolio'), the Managed Portfolio, the U.S. Government Income
Portfolio, the Mid Cap Portfolio and the Money Market Portfolio. The Mid Cap
Portfolio has not commenced operations as of the date of this report. The
accompanying financial statements and notes thereto are those of the Portfolio.
The Trust is an investment vehicle for variable annuity and variable life
insurance contracts of various life insurance companies, and qualified pension
and retirement plans.
On October 14, 1997, the shareholders of the Trust approved a new
investment advisory agreement with OpCap Advisors (the 'Adviser'). This
agreement was substantially similar to the existing agreement and became
effective on November 5, 1997. On November 4, 1997, PIMCO Advisors L.P. and its
affiliates, acquired a one-third managing general partner interest in
Oppenheimer Capital, whose subsidiary, OpCap Advisors, serves as Adviser to the
Trust. On November 30, 1997, Oppenheimer Capital merged with a subsidiary of
PIMCO Advisors and, as a result, Oppenheimer Capital became an indirect
wholly-owned subsidiary of PIMCO Advisors. On November 3, 1997, CIBC Wood Gundy
Securities Corp. acquired the business of Oppenheimer & Co., Inc., which is now
called CIBC Oppenheimer Corp. Accordingly, CIBC Oppenheimer Corp. is no longer
affiliated with OpCap Advisors or the Trust.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment securities, other than debt securities, listed on a national
securities exchange or traded in the over-the-counter National Market System are
valued each business day at the last reported sale price; if there are no such
reported sales, the securities are valued at their last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each business day by an independent pricing
service (approved by the Board of Trustees) using methods which include current
market quotations from a major market maker in the securities and
trader-reviewed 'matrix' prices. Short-term debt securities having a remaining
maturity of sixty days or less are valued at amortized cost or amortized value,
which approximates market value. Any securities or other assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by the Board of Trustees. The ability of issuers of debt instruments
to meet their obligations may be affected by economic developments in a specific
industry or region.
(B) FEDERAL INCOME TAXES
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders; accordingly,
no Federal income tax provision is required.
(C) INVESTMENT TRANSACTIONS AND OTHER INCOME
Investment transactions are accounted for on the trade date. In determining
the gain or loss from the sale of investments, the cost of investments sold has
been determined on the basis of identified cost. Dividend income is recorded on
the ex-dividend date and interest income is accrued as earned. Discounts or
premiums on debt securities purchased are accreted or amortized to interest
income over the lives of the respective securities.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(D) FOREIGN CURRENCY TRANSLATION
The books and records of the Portfolio are maintained in U.S. dollars as
follows: (1) the foreign currency market value of investment securities, other
assets and liabilities stated in foreign currencies are translated at the
exchange rate at the end of the period; and (2) purchases, sales, income and
expenses are translated at the rate of exchange prevailing on the respective
dates of such transactions. The resultant exchange gains and losses are included
in the Portfolio's Statement of Operations. Since the net assets of the
Portfolio are presented at the foreign exchange rates and market prices at the
close of the period, the Portfolio does not isolate the portion of the results
of operations arising as a result of changes in the exchange rates from
fluctuations arising from changes in the market price of securities.
(E) DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders from net investment income and
net realized capital gains, if any, are declared and paid at least annually.
The Portfolio records dividends and distributions to its shareholders on
the ex-dividend date. The amount of dividends and distributions is determined in
accordance with Federal income tax regulations, which may differ from generally
accepted accounting principles. These 'book-tax' differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their Federal income tax treatment; temporary differences do not
require reclassification. To the extent dividends and/or distributions exceed
current and accumulated earnings and profits for Federal income tax purposes,
they are reported as dividends and/or distributions of paid-in-capital or tax
return of capital. Net assets are not affected.
The following table discloses the cumulative effect between the respective
capital accounts substantially all of which related to foreign currency
transactions:
ACCUMULATED NET
REALIZED LOSS ACCUMULATED
PAID-IN ON INVESTMENTS DISTRIBUTION IN
CAPITAL AND FOREIGN EXCESS OF NET
IN EXCESS CURRENCY INVESTMENT
OF PAR TRANSACTIONS INCOME
---------------- --------------- ---------------
($3,111) $35,211 ($32,100)
(F) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular portfolio are borne by
that portfolio. Other expenses are allocated to each portfolio of the Trust
based on its net assets in relation to the total net assets of all applicable
portfolios of the Trust or another reasonable basis.
(G) USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
(H) EXPENSES OFFSET
The Portfolio benefits from an expense offset arrangement with its
custodian bank where uninvested cash balances earn credits that reduce monthly
fees. Had these cash balances been invested in income producing securities, they
would have generated income for the Portfolio.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(2) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
(A) The investment advisory fee is accrued daily and payable monthly to the
Adviser, and is computed as a percentage of the Portfolio's net assets as of the
close of business each day at the annual rate of .80% on the first $400 million,
.75% on the next $400 million and .70% thereafter. The Adviser has voluntarily
agreed to waive that portion of the advisory fee and to assume any necessary
expense to limit total operating expenses of the Portfolio to 1.25% (net of
expenses offset) of average net assets on an annual basis.
(B) Total brokerage commissions paid by the Portfolio for the year ended
December 31, 1997 amounted to $49,976, of which CIBC Oppenheimer Corp. received
$4,675.
(3) PURCHASES AND SALES OF INVESTMENTS
For the year ended December 31, 1997, purchases and sales of investment
securities, other than short-term securities, were $17,513,021 and $11,154,825,
respectively.
(4) UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
Aggregate gross unrealized appreciation for securities in which there is an
excess of value over tax cost is $4,225,022, aggregate gross unrealized
depreciation for securities in which there is an excess of tax cost over value
is $1,442,358 and net unrealized appreciation for Federal income tax purposes is
$2,782,664. Federal income tax cost basis of portfolio securities is $22,343,355
at December 31, 1997. Net capital and currency losses incurred after October 31,
1997 are deemed to arise on the first business day of the following year. During
the fiscal year ended December 31, 1997, the Portfolio incurred and elected to
defer $6,804 in net currency losses.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------- MARCH 1, 1995 (1) TO
1997 1996 DECEMBER 31, 1995
----------- ----------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................ $ 13.23 $ 11.61 $ 10.00
----------- ----------- -----------
Income from investment operations
Net investment income........................................... 0.06 0.04 0.05
Net realized and unrealized gain (loss) on investments.......... 1.79 1.70 1.83
----------- ----------- -----------
Total income from investment operations....................... 1.85 1.74 1.88
----------- ----------- -----------
Dividends and distributions to shareholders
Dividends to shareholders from net investment income............ (0.04) (0.05) (0.03)
Distributions to shareholders in excess of net investment
income........................................................ (0.03) -- --
Distributions to shareholders from net realized gains........... (0.69) (0.07) (0.24)
----------- ----------- -----------
Total dividends and distributions to shareholders............. (0.76) (0.12) (0.27)
----------- ----------- -----------
Net asset value, end of period.................................. $ 14.32 $ 13.23 $ 11.61
----------- ----------- -----------
----------- ----------- -----------
Total return (2)................................................ 14.0% 15.0% 18.9%
----------- ----------- -----------
----------- ----------- -----------
Net assets, end of period....................................... $25,873,628 $16,972,488 $ 2,891,321
----------- ----------- -----------
Ratio of net operating expenses to average net assets (5,6)..... 1.19%(4) 1.42% 1.25%(3)
----------- ----------- -----------
Ratio of net investment income to average net assets (6)........ 0.45%(4) 0.81% 1.02%(3)
----------- ----------- -----------
Portfolio turnover rate......................................... 53% 40% 67%
----------- ----------- -----------
Average commission rate......................................... $ 0.0253 $ 0.0254 --
----------- ----------- -----------
</TABLE>
- ------------------------
(1) Commencement of operations.
(2) Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
(3) Annualized.
(4) Average net assets for the year ended December 31, 1997 were $23,063,042.
(5) For fiscal periods ending after September 1, 1995, the ratios are calculated
to include expenses offset by earnings credits from a custodian bank (See
note 1H in Notes to Financial Statements).
(6) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the Portfolio's operating expenses. If such
waivers and assumptions had not been in effect, the ratios of net operating
expenses to average net assets and the ratios of net investment income
(loss) to average net assets would have been 1.20% and 0.44%, respectively,
for the year ended December 31, 1997, and 1.83% and 0.22%, respectively, for
the year ended December 31, 1996 and 3.94% and (1.67%), annualized,
respectively, for the period March 1, 1995 (commencement of operations) to
December 31, 1995.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
OCC Accumulation Trust -- Global Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Global Equity Portfolio (one of the
seven portfolios constituting OCC Accumulation Trust, hereafter referred to as
the 'Portfolio') at December 31, 1997, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
'financial statements') are the responsibility of the Portfolio's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian and broker and the
application of alternative procedures where a confirmation from a broker was not
received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
February 11, 1998
<PAGE>
OCC ACCUMULATION TRUST
ONE WORLD FINANCIAL CENTER
NEW YORK, NY 10281
TRUSTEES AND PRINCIPAL OFFICERS
Joseph M. La Motta Trustee, President
Paul Y. Clinton Trustee
Thomas W. Courtney Trustee
Lacy B. Herrmann Trustee
George Loft Trustee
Bernard H. Garil Vice President
Gavin Albert Vice President
Robert J. Bluestone Vice President
Timothy J. Curro Vice President
Pierre Daviron Vice President
John C. Giusio, Jr. Vice President
Richard J. Glasebrook, II Vice President
Louis Goldstein Vice President
Alan Gutmann Vice President
Benjamin D. Gutstein Vice President
Vikki Hanges Vice President
Timothy J. McCormack Vice President
Eileen P. Rominger Vice President
Sheldon M. Siegel Treasurer
Deborah Kaback Secretary
Richard L. Peteka Assistant Treasurer
INVESTMENT ADVISER
OpCap Advisors
One World Financial Center
New York, NY 10281
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 1713
Boston, MA 02105
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
This report is authorized for distribution only
to shareholders and to others who have
received a copy of this Trust's prospectus.
