<PAGE>
OCC ACCUMULATION TRUST
o GLOBAL EQUITY PORTFOLIO
ANNUAL REPORT
1998
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 1998, a year of generally favorable
returns in both the stock and bond markets.
As measured by the Standard & Poor's 500 Index, the U.S. stock market
continued its remarkable advance, benefiting from a sustained U.S. economic
environment of moderate growth, declining interest rates and extremely low
inflation. The total return of that index was 28.6% in 1998, the fourth
consecutive year in which the S&P 500 has increased more than 20%.
Although economic conditions in Asia, Russia and Latin America were less
than robust, non-U.S. stock markets delivered positive returns on balance, but
in many cases with a high degree of price volatility. The total return of Morgan
Stanley Capital International's World Index was 24.3% in U.S. dollars.
Fixed income securities also provided generally strong results in 1998,
benefiting from declining interest rates and low inflation. Long-term U.S.
Treasury bonds led the way, with their prices being bid up by investors wanting
to own the safest fixed income securities at a time of global economic
uncertainty.
Beneath the surface, however, there were many crosscurrents in the U.S.
stock market. The year's sharp increase for the S&P 500 Index was driven
primarily by a limited group of super-large company stocks. Many other stocks
were left behind. For instance, the Wilshire Midcap 750 Index was up only 3.7%
in 1998, while the Russell 2000 Index, a benchmark of small company stocks in
the U.S., declined 2.6%. The strong relative performance of large versus small
stocks reflected the preference of many investors for owning highly liquid large
issues--especially those with predictable earnings--at a time when the
international economic outlook is uncertain and widespread concern exists that
the rate of economic growth in the U.S. may be slowing.
There was also a wide disparity between the performance of growth stocks
(those projected to have high future earnings growth rates) and value stocks
(those considered to be undervalued in relation to their inherent worth). The
S&P 500/BARRA Growth Index rose 42.2% in 1998 while the S&P 500/BARRA Value
Index increased 14.7%. Performance gaps of this type, favoring either growth or
value, are common. Nonetheless, the 1998 differential was one of the largest in
history. Many quality stocks that are inexpensive languished or even fell in
price, while some growth stocks with high valuations became even more expensive.
Even though we employ a value philosophy of investing, we are not against
growth. Indeed, we always want to buy good businesses that are growing. It is
just that we are against paying too much for that growth. Overpaying adds to
risk and makes it harder to achieve long-term profit.
The ebbs and flows of growth and value are part of the fabric of markets.
We do not know when the stock market will swing back to value, but we believe it
will swing back. Meanwhile, we will stick with our disciplined value philosophy
because it has proven itself over time and because it offers a way to
participate in the stock market without taking excessive risk. In other words,
we will continue to invest carefully for the long term, rather than chase after
those growth stocks that we believe to be overvalued or buy companies that are
in vogue.
We believe our style works over time precisely because it is based on
investing in quality companies at prices below their inherent worth. While our
style sometimes requires patience, we believe the inherent value of a
company--which is based on earnings, cash flow, strength of balance sheet,
competitive strengths, business outlook and other factors--almost always ends up
being reflected in the share price.
The objective of our strategy is to generate excellent returns over time.
We believe our approach is well suited for the long-term investor seeking to
achieve favorable returns in the stock market without taking large risks.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
The Global Equity Portfolio invests worldwide in undervalued companies with
superior business characteristics, including strong competitive positions, high
cash flow and favorable earnings outlooks. The past year was a generally
positive period for global investing, but also a volatile one. Prices in many
markets rose in the first and second quarters, then plummeted in the third
before recovering in the fourth. Our objective in this environment was to
achieve favorable returns without taking large risks.
The Portfolio's total return in 1998 was 13.3%, compared with 24.3% for
Morgan Stanley Capital International's World Index in U.S. dollars and an
average total return of 15.9% for the global funds in Lipper's Variable
Insurance Products Performance Analysis Service Report. The Portfolio's
performance was 29th among the 46 funds in this Lipper universe. We trailed the
World Index and the category average due in part to our risk-averse investment
style, which sometimes underperforms in rising markets, as well as to our only
limited holdings of technology stocks in the United States. Many technology
issues rose sharply during the year. Technology stocks can be excellent
investments, and indeed the Portfolio owns several chosen for their fundamental
value. However, we do not invest in technology issues that are highly priced or
that we consider to be highly speculative, such as the Internet stocks which
have exploded in price during the past few months. We believe that highly priced
technology stocks, including the Internet issues, may be vulnerable to large
declines when the euphoria that surrounds them subsides.
For the three years ended December 31, 1998, the Portfolio provided an
average annual total return of 14.1%, compared with an average total return of
15.5% for the funds in the Lipper global category and 17.8% for the World Index.
This three-year performance ranked 19th among the 31 funds in the Lipper
category. Since its inception on March 1, 1995, the Portfolio has provided an
average annual return of 16.0%, compared with 19.4% 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.
Although the Portfolio's investments are split roughly fifty-fifty between
U.S. and non-U.S. stocks, clear distinctions between U.S. and non-U.S. stocks
are fading as companies worldwide become more global in their operations. Many
of the U.S. companies owned by the Portfolio derive a significant portion of
their revenues and earnings from outside the U.S., and many of the non-U.S.
companies derive a significant portion inside the U.S. McDonald's Corp. is an
example of a U.S. company that is thoroughly globalized, generating
approximately half its revenues and more than half its operating income from
outside the U.S. We believe the globalization of business offers exciting
opportunities for investors who view stocks from a worldwide perspective and
invest in those companies with the best prospects regardless of where they
happen to be located.
We own a core group of U.S.-based companies chosen for their superior
business characteristics and attractive relative valuation. Strong contributors
to performance in 1998 included Federal Home Loan Mortgage Corp. (Freddie Mac),
Time Warner, Inc. and McDonald's Corp. We expect the rate of U.S. economic
growth to slow in 1999, and we have positioned the Portfolio to perform well in
such an environment, owning very few cyclical stocks that would be hurt by
economic weakness.
Outside the United States, the Portfolio's major investment focus is
Europe, where a continued active pace of corporate consolidations and
restructurings is a catalyst for enhancing company values. Two of our
pharmaceutical holdings, ASTRA AB in Sweden and Hoechst AG in Germany, recently
announced plans to merge with other drug firms. Also in Europe, our decision in
late September to increase the Portfolio's holdings of several banks and
insurance stocks, which had been battered by global economic uncertainty, paid
off in the fourth quarter.
New investments in the second half of 1998 included, among others, Sony
Corp. in Japan, Koninkliijke (Royal) Philips Electronics NV in the Netherlands,
Siemens AG in Germany, Banque National de Paris in France, and ITT Industries,
Inc. and UAL Corp. in the United States.
Although the Portfolio is currently underweighted in Japan in comparison to
the country weightings in the World Index, we have stepped up our search for
investment opportunities there now that the Japanese economy may be in the early
stages of a long-awaited recovery. Apart from Japan, we have virtually no
investments in Asia at this time. While we welcome the strength of currencies
and financial markets in Asia as an indication that the region's economies may
have bottomed, we remain skeptical about prospects for a rapid recovery. We are
<PAGE>
wary also of investments in Latin America, where severe economic problems in
Brazil may spread to other countries.
At December 31, 1998, the Portfolio's net assets were allocated 51.6% to
non-U.S. stocks, 42.7% to U.S. stocks and 5.7% to foreign and domestic cash and
cash equivalents. The largest investment positions outside the United States
were in the United Kingdom, Japan, Germany, France, the Netherlands and Sweden.
The Portfolio's largest non-U.S. equity holdings at December 31, 1998 were
ACE, Ltd., a Bermuda-based provider of excess directors and officers liability
insurance, representing 3.3% of the Portfolio's net assets; Siemens AG, one of
the world's largest electrical engineering and electronics companies, based in
Germany, 1.6% of net assets; Argentaria SA, a leading Spanish bank, 1.5% of net
assets; Hoechst AG, a pharmaceuticals and chemicals company headquartered in
Germany, 1.5% of net assets; and Koninkliijke (Royal) Philips Electronics NV, a
global electronic products company headquartered in the Netherlands, 1.5% of net
assets.
The Portfolio's five largest U.S. equity holdings were Federal Home Loan
Mortgage Corp. (Freddie Mac), the second largest insurer of home mortgages in
the United States, representing 6.1% of the Portfolio's net assets; Time Warner,
Inc., a leading media and entertainment company, 5.8% of net assets; McDonald's
Corp., a premier fast-food company with growing global markets, 4.9% of net
assets; Boeing Co., the world's leading aerospace manufacturer, 3.6% of net
assets; and E.I. du Pont de Nemours & Company, a major industrial company
operating in chemicals, fibers, polymers and diversified businesses, 3.5% of net
assets.
Major industry positions were in the banking sector, representing 11.7% of
the Portfolio's net assets; miscellaneous financial services, 9.7% of net
assets; media/broadcasting, 6.8% of net assets; chemicals, 6.7% of net assets;
and food services, 6.0% of net assets.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
OCC ACCUMULATION TRUST GLOBAL EQUITY PORTFOLIO FROM INCEPTION (3/1/95)
THROUGH 12/31/98 AND TOTAL RETURN ON MORGAN STANLEY WORLD INDEX+
[LINE GRAPH]
Date Global Equity Portfolio Morgan Stanley World Index+
---- ----------------------- ---------------------------
3/1/95 $10,000 $10,000
12/31/95 $11,886 $12,086
12/31/96 $13,671 $13,715
12/31/97 $15,810 $15,877
12/31/98 $17,659 $19,741
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
AVERAGE ANNUAL TOTAL RETURN
SINCE
1 YEAR 5 YEAR MARCH 1, 1995
------ ------ -------------
13.3% N/A 16.0%
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- --------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY NOTES -- 6.6%
Federal Home Loan Bank,
$ 1,890,000 4.30%, 1/4/99...................................................................... $1,889,323
410,000 5.12%, 1/5/99...................................................................... 409,767
--------------
Total U.S. Government Agency Notes (cost -- $2,299,090)............................ 2,299,090
--------------
SHARES
- -------------
COMMON STOCKS -- 94.3%
AUSTRALIA -- 0.3%
BANKING -- 0.3%
9,200 Macquarie Bank Ltd................................................................. 90,202
--------------
AUSTRIA -- 0.9%
BANKING -- 0.9%
6,300 Bank Austria AG.................................................................... 320,360
--------------
BERMUDA -- 3.3%
INSURANCE -- 3.3%
33,300 ACE Ltd............................................................................ 1,146,769
--------------
BRAZIL -- 2.0%
AEROSPACE -- 0.6%
16,000,000 Empresa Brasileira de Aeronautica SA +............................................. 198,626
--------------
CHEMICALS -- 0.4%
12,800 Petroleo Brasileiro SA ADR +....................................................... 145,142
--------------
PAPER PRODUCTS -- 0.0%
210,000 Empresa Nacional de Celulosas SA +................................................. 313
--------------
TELECOMMUNICATIONS -- 0.9%
4,000 Embratel Participacoes SA ADR +.................................................... 55,750
3,401 Tele Centro Oeste Celular Participacoes SA ADR +................................... 9,991
800 Tele Centro Sul Participacoes SA ADR +............................................. 33,450
800 Tele Leste Celular Participacoes SA ADR +.......................................... 22,700
5,320 Tele Norte Leste Participacoes SA ADR +............................................ 66,168
800 Tele Sudeste Celular Participacoes SA ADR +........................................ 16,550
1,600 Telesp Celular Participacoes SA ADR +.............................................. 28,000
4,000 Telesp Participacoes SA ADR +...................................................... 88,500
--------------
321,109
--------------
TEXTILES/APPAREL -- 0.1%
250,000 Compahnia de Tecidos Norte de Minas-Coteminas +.................................... 26,897
--------------
Total Brazilian Common Stocks...................................................... 692,087
--------------
CANADA -- 1.1%
ENERGY -- 0.3%
3,621 Suncor Energy, Inc................................................................. 108,974
--------------
ENTERTAINMENT -- 0.5%
5,000 Imax Corp.*........................................................................ 160,288
--------------
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
</TABLE>
<TABLE>
SHARES VALUE
- ------------- --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SECURITY/INVESTIGATION -- 0.3%
4,300 Unican Security Systems Ltd........................................................ $ 101,276
--------------
Total Canadian Common Stocks....................................................... 370,538
--------------
FINLAND -- 1.9%
PAPER PRODUCTS -- 1.1%
40,500 Stora Enso Oyj..................................................................... 362,189
--------------
TELECOMMUNICATIONS -- 0.8%
2,400 Oy Nokia AB........................................................................ 291,822
--------------
Total Finnish Common Stocks........................................................ 654,011
--------------
FRANCE -- 6.2%
BANKING -- 1.1%
4,800 Banque National de Paris........................................................... 395,092
--------------
ELECTRONICS -- 0.6%
4,300 Le Carbone Lorraine................................................................ 203,810
--------------
ENERGY -- 0.4%
1,300 Total SA........................................................................... 131,604
--------------
INSURANCE -- 1.4%
3,300 AXA................................................................................ 478,090
--------------
MEDIA/BROADCASTING -- 1.0%
1,300 Canal Plus......................................................................... 354,588
--------------
POWER/UTILITIES -- 0.8%
1,149 Vivendi............................................................................ 297,988
--------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 0.9%
1,060 Groupe Danone...................................................................... 303,345
--------------
Total French Common Stocks......................................................... 2,164,517
--------------
GERMANY -- 6.2%
BANKING -- 0.7%
3,150 Bayerishe Vereinsbank AG........................................................... 246,655
--------------
BUILDING & CONSTRUCTION -- 0.2%
6,250 Tarkett Sommer AG.................................................................. 76,128
--------------
CHEMICALS -- 1.5%
12,300 Hoechst AG......................................................................... 509,978
--------------
COMPUTER SERVICES -- 0.6%
500 SAP AG............................................................................. 216,009
--------------
DRUGS & MEDICAL PRODUCTS -- 0.5%
2,700 Gehe AG............................................................................ 186,309
--------------
MANUFACTURING -- 1.6%
8,600 Siemens AG......................................................................... 554,722
--------------
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL -- 1.1%
4,700 Metro AG........................................................................... $ 375,075
--------------
Total German Common Stocks......................................................... 2,164,876
--------------
HONG KONG -- 0.4%
INDUSTRIAL MATERIALS -- 0.4%
70,000 Yue Yuen Industrial Holdings....................................................... 132,815
--------------
HUNGARY -- 0.2%
DRUGS & MEDICAL PRODUCTS -- 0.2%
2,000 Gedeon Richter Ltd., GDR Reg. S.................................................... 84,600
--------------
INDIA -- 0.5%
BANKING -- 0.5%
21,000 State Bank of India GDR Reg. S..................................................... 172,200
--------------
ISRAEL -- 1.2%
DRUGS & MEDICAL PRODUCTS -- 1.2%
10,600 Teva Pharmaceutical Industries Ltd. ADR............................................ 431,288
--------------
ITALY -- 0.9%
INSURANCE -- 0.8%
105,000 Istituto Nazionale delle Assicurazioni............................................. 277,193
--------------
REAL ESTATE -- 0.1%
35,000 Unione Immobiliare SpA............................................................. 18,247
--------------
Total Italian Common Stocks........................................................ 295,440
--------------
JAPAN -- 6.9%
AUTOMOTIVE -- 0.5%
5,000 Honda Motor Co., Ltd............................................................... 164,087
--------------
CONSUMER PRODUCTS -- 1.4%
6,000 Canon, Inc......................................................................... 128,173
9,000 Kao Corp........................................................................... 203,008
2,300 Sony Corp.......................................................................... 167,439
--------------
498,620
--------------
ELECTRONICS -- 0.9%
3,000 Rohm Co............................................................................ 273,065
16,000 Sodick Co.*........................................................................ 33,967
--------------
307,032
--------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.4%
2,500 Aiful Corp......................................................................... 151,703
800 Shohkoh Fund & Co. Ltd............................................................. 257,585
6,000 Takefuji Corp...................................................................... 437,859
--------------
847,147
--------------
TECHNOLOGY -- 0.5%
2,000 Secom Co........................................................................... 165,591
--------------
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 1.2%
19,000 Mikuni Coca-Cola Bottling Co....................................................... $ 405,882
--------------
Total Japanese Common Stocks....................................................... 2,388,359
--------------
NETHERLANDS -- 4.0%
ELECTRONICS -- 1.5%
7,500 Koninkliijke (Royal) Philips Electronics NV........................................ 503,007
--------------
MISCELLANEOUS FINANCIAL SERVICES -- 1.2%
7,000 ING Groep NV....................................................................... 426,625
--------------
PRINTING/PUBLISHING -- 1.3%
7,250 Ver Ned Uitgevers NV............................................................... 273,221
900 Wolters Kluwer NV.................................................................. 192,484
--------------
465,705
--------------
Total Netherlands Common Stocks.................................................... 1,395,337
--------------
SINGAPORE -- 0.0%
PRINTING/PUBLISHING -- 0.0%
1,377 Singapore Press Holdings Ltd....................................................... 15,013
--------------
SPAIN -- 3.1%
BANKING -- 1.5%
20,800 Argentaria SA...................................................................... 537,855
--------------
ELECTRICAL ENGINEERING -- 0.5%
6,500 Endesa SA.......................................................................... 171,968
--------------
ENERGY -- 0.5%
3,300 Repsol SA.......................................................................... 175,774
--------------
RETAIL -- 0.6%
5,000 Aldeasa SA......................................................................... 196,313
--------------
Total Spanish Common Stocks........................................................ 1,081,910
--------------
SWEDEN -- 4.0%
BANKING -- 0.9%
29,000 Skandinaviska Enskilda Banken...................................................... 305,177
--------------
DRUGS & MEDICAL PRODUCTS -- 0.4%
7,500 ASTRA AB........................................................................... 152,773
--------------
ELECTRONICS -- 0.8%
16,000 Electrolux AB...................................................................... 274,715
--------------
HOTELS -- 0.5%
5,000 Scandic Hotels AB.................................................................. 183,389
--------------
PAPER PRODUCTS -- 0.7%
14,700 AssiDoman AB....................................................................... 231,587
--------------
TELECOMMUNICATIONS -- 0.7%
10,300 Telefonaktiebolaget LM Ericsson.................................................... 244,671
--------------
Total Swedish Common Stocks........................................................ 1,392,312
--------------
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SWITZERLAND -- 1.4%
BANKING -- 0.6%
210 Gota Bank*......................................................................... $ 190,631
--------------
DRUGS & MEDICAL PRODUCTS -- 0.8%
150 Novartis AG........................................................................ 294,824
--------------
Total Swiss Common Stocks.......................................................... 485,455
--------------
UNITED KINGDOM -- 7.1%
COMPUTER SERVICES -- 0.1%
52,000 Viglen Technology plc.............................................................. 23,326
--------------
CONGLOMERATES -- 1.1%
190,000 BTR plc............................................................................ 389,849
--------------
CONSUMER PRODUCTS -- 1.6%
27,000 Reckitt & Colman plc............................................................... 357,294
18,000 Unilever plc....................................................................... 202,459
--------------
559,753
--------------
DRUGS & MEDICAL PRODUCTS -- 1.0%
109,000 Smith & Nephew plc................................................................. 331,401
112 SmithKline Beecham plc............................................................. 1,552
--------------
332,953
--------------
ENTERTAINMENT -- 1.2%
61,000 EMI Group plc...................................................................... 408,423
--------------
FOOD SERVICES -- 1.1%
34,461 Diageo plc......................................................................... 382,168
--------------
INDUSTRIAL MATERIALS -- 1.0%
98,000 BPB plc............................................................................ 358,199
--------------
Total United Kingdom Common Stocks................................................. 2,454,671
--------------
UNITED STATES -- 42.7%
AEROSPACE/DEFENSE -- 3.6%
38,000 Boeing Co.......................................................................... 1,239,750
--------------
BANKING -- 5.2%
22,000 Citigroup, Inc..................................................................... 1,089,000
18,000 Wells Fargo & Co. ................................................................. 718,875
--------------
1,807,875
--------------
CHEMICALS -- 4.8%
22,800 du Pont (E.I.) de Nemours & Co..................................................... 1,209,825
9,300 Monsanto Co........................................................................ 441,750
1,000 Solutia, Inc....................................................................... 22,375
--------------
1,673,950
--------------
CONGLOMERATES -- 1.1%
5,300 Minnesota Mining & Manufacturing Co................................................ 376,953
--------------
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONCLUDED)
DECEMBER 31, 1998
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------
<S> <C> <C>
COMMON STOCKS (CONCLUDED)
CONSUMER PRODUCTS -- 0.6%
9,000 Mattel, Inc........................................................................ $ 205,313
--------------
DRUGS & MEDICAL PRODUCTS -- 0.9%
7,100 Becton, Dickinson & Co............................................................. 303,081
--------------
FOOD SERVICES -- 4.9%
22,500 McDonald's Corp.................................................................... 1,724,063
--------------
MACHINERY/ENGINEERING -- 1.9%
14,600 Caterpillar, Inc................................................................... 671,600
--------------
MANUFACTURING -- 1.7%
15,000 ITT Industries, Inc................................................................ 596,250
--------------
MEDIA/BROADCASTING -- 5.8%
32,400 Time Warner, Inc................................................................... 2,010,825
--------------
MISCELLANEOUS FINANCIAL SERVICES -- 6.1%
33,000 Federal Home Loan Mortgage Corp.................................................... 2,126,438
--------------
PAPER PRODUCTS -- 0.9%
7,500 Champion International Corp........................................................ 303,750
--------------
TECHNOLOGY -- 1.1%
5,000 Adaptec, Inc.*..................................................................... 87,813
7,000 Computer Associates International, Inc............................................. 298,375
--------------
386,188
--------------
TELECOMMUNICATIONS -- 2.9%
1,300 Loral Space & Communications Ltd.*................................................. 23,156
11,700 Sprint Corp. (FON Group)........................................................... 984,263
--------------
1,007,419
--------------
TRANSPORTATION -- 1.2%
7,000 UAL Corp........................................................................... 417,813
--------------
Total United States Common Stocks............................................ 14,851,268
--------------
Total Common Stocks (cost -- $28,067,447).......................................... 32,784,028
--------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments (cost -- $30,366,537).................................. 100.9% $ 35,083,118
Liabilites in Excess of Other Assets..................................... (0.9) (305,926)
----- ------------
Total Net Assets......................................................... 100.0% $ 34,777,192
----- ------------
----- ------------
</TABLE>
- ------------------
* Non-income producing security
+ Preferred Stock
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $30,366,537)........................................................ $ 35,083,118
Cash............................................................................................... 5,604
Foreign currencies (cost -- $280).................................................................. 278
Foreign withholding taxes reclaimable.............................................................. 25,717
Receivable from fund shares sold................................................................... 18,098
Dividends receivable............................................................................... 12,964
Receivable from investments sold................................................................... 11,760
Other assets....................................................................................... 478
-------------
Total Assets..................................................................................... 35,158,017
-------------
LIABILITIES
Payable for investments purchased.................................................................. 358,459
Investment advisory fee payable.................................................................... 1,522
Foreign withholding taxes payable.................................................................. 409
Payable for fund shares redeemed................................................................... 247
Net unrealized depreciation on foreign currency contracts.......................................... 223
Other payables and accrued expenses................................................................ 19,965
-------------
Total Liabilities................................................................................ 380,825
-------------
Total Net Assets................................................................................. $ 34,777,192
-------------
-------------
COMPOSITION OF NET ASSETS
Par value ($.01 per share)......................................................................... $ 22,544
Paid-in-capital in excess of par................................................................... 30,240,626
Distribution in excess of net investment income.................................................... (121,949)
Distribution in excess of net realized capital gains............................................... (86,246)
Net unrealized appreciation on investments and translation of other assets and
liabilities denominated in foreign currencies.................................................... 4,722,217
-------------
Total Net Assets................................................................................. $ 34,777,192
-------------
-------------
Fund shares outstanding............................................................................ 2,254,352
-------------
Net asset value per share.......................................................................... $ 15.43
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $32,910)........................................... $ 457,874
Interest.......................................................................................... 134,072
------------
Total investment income........................................................................ 591,946
------------
OPERATING EXPENSES
Investment advisory fees.......................................................................... 247,144
Custodian fees.................................................................................... 68,593
Trustees' fees and expenses....................................................................... 12,274
Audit fees........................................................................................ 10,767
Transfer and dividend disbursing agent fees....................................................... 7,761
Reports and notices to shareholders............................................................... 1,686
Legal fees........................................................................................ 1,398
Miscellaneous..................................................................................... 634
------------
Total operating expenses....................................................................... 350,257
Less: Expenses offset.......................................................................... (843)
------------
Net operating expenses....................................................................... 349,414
------------
Net investment income........................................................................ 242,532
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS -- NET
Net realized gain on investments.................................................................. 1,274,387
Net realized gain on foreign currency transactions................................................ 23,150
Net change in unrealized appreciation (depreciation) on investments and translation of other
assets and liabilities denominated in foreign currencies....................................... 1,899,363
------------
Net realized gain and change in unrealized appreciation (depreciation) on investments and
translation of other assets and liabilities denominated in foreign currencies............... 3,196,900
------------
Net increase in net assets resulting from operations................................................ $ 3,439,432
------------
------------
</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,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income........................................................... $ 242,532 $ 104,882
Net realized gain on investments................................................ 1,274,387 1,180,309
Net realized gain (loss) on foreign currency transactions....................... 23,150 (31,367)
Net change in unrealized appreciation (depreciation) on investments
and translation of other assets and liabilities denominated in
foreign currencies............................................................ 1,899,363 1,432,604
----------- -----------
Net increase in net assets resulting from operations.......................... 3,439,432 2,686,428
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income........................................................... (375,199) (124,084)
Net realized gains.............................................................. (1,323,870) (1,184,153)
----------- -----------
Total dividends and distributions to shareholders............................. (1,699,069) (1,308,237)
----------- -----------
FUND SHARE TRANSACTIONS
Net proceeds from sales......................................................... 11,034,344 10,888,674
Reinvestment of dividends and distributions..................................... 1,699,069 1,308,238
Cost of shares redeemed......................................................... (5,570,212) (4,673,963)
----------- -----------
Net increase in net assets from fund share transactions....................... 7,163,201 7,522,949
----------- -----------
Total increase in net assets............................................... 8,903,564 8,901,140
NET ASSETS
Beginning of year............................................................... 25,873,628 16,972,488
----------- -----------
End of year (including distribution in excess of net investment
income of ($121,949) and ($49,195), respectively)............................. $34,777,192 $25,873,628
----------- -----------
----------- -----------
SHARES ISSUED AND REDEEMED
Issued.......................................................................... 692,242 741,096
Issued in reinvestment of dividends and distributions........................... 110,115 91,400
Redeemed........................................................................ (354,531) (308,572)
----------- -----------
Net increase.................................................................. 447,826 523,924
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(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 six classes of shares of
beneficial interest at $.01 par value. The Trust is comprised of six portfolios:
the Equity Portfolio, the Small Cap Portfolio, the Global Equity Portfolio (the
"Portfolio"), the Managed Portfolio, the U.S. Government Income Portfolio and
the Mid Cap Portfolio. OpCap Advisors (the "Adviser"), a subsidiary of
Oppenheimer Capital, serves as the Trust's investment adviser. 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.
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 U.S. or
foreign 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, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the Portfolio is
informed of 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.
(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
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
(D) FOREIGN CURRENCY TRANSLATION (CONCLUDED)
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 are 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.
The following table discloses the cumulative effect between the respective
capital accounts:
DISTRIBUTION IN DISTRIBUTION IN
EXCESS OF NET EXCESS OF NET
REALIZED INVESTMENT
CAPITAL GAINS INCOME
---------------- ---------------
($59,913) $ 59,913
(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.
(I) TRUSTEES' FEES AND EXPENSES
On October 19, 1998, the Trust adopted a retirement plan that provides for
payments upon retirement to independent trustees based on the average annual
compensation paid to them during their five highest paid years of service. An
independent trustee must serve for a minimum of seven years (or such lessor
period as may be approved by the board) to become eligible to receive benefits.
The effective date of the retirement plan is January 1, 1999, therefore, no
expenses have been accrued for the year ended December 31, 1998.
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1998
(2) INVESTMENT ADVISORY FEE
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 is contractually
obligated 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% of average
net assets (net of expenses offset) on an annual basis.
(3) PURCHASES AND SALES OF INVESTMENTS
For the year ended December 31, 1998, purchases and sales of investment
securities, other than short-term securities, were $21,623,389 and $16,004,889,
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 $7,036,400, aggregate gross unrealized
depreciation for securities in which there is an excess of tax cost over value
is $2,519,022 and net unrealized appreciation for Federal income tax purposes is
$4,517,378. Federal income tax cost basis of portfolio securities is $30,565,740
at December 31, 1998. Net capital losses of $96,805 which were incurred after
October 31, 1998 are deemed to arise on the first business day of the following
year.
<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
1998 1997 1996 DECEMBER 31, 1995
------- ------- ------- --------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 14.32 $ 13.23 $ 11.61 $10.00
------- ------- ------- ------
Income from investment operations:
Net investment income.................................. 0.12 0.06 0.04 0.05
Net realized and unrealized gain on
investments......................................... 1.78 1.79 1.70 1.83
------- ------- ------- ------
Total income from investment operations............. 1.90 1.85 1.74 1.88
------- ------- ------- ------
Dividends and distributions to shareholders:
Dividends to shareholders from net investment
income.............................................. (0.18) (0.04) (0.05) (0.03)
Distributions to shareholders in excess of net
investment income................................... -- (0.03) -- --
Distributions to shareholders from net
realized gains...................................... (0.61) (0.69) (0.07) (0.24)
------- ------- ------- ------
Total dividends and distributions to
shareholders...................................... (0.79) (0.76) (0.12) (0.27)
------- ------- ------- ------
Net asset value, end of period........................... $ 15.43 $ 14.32 $ 13.23 $11.61
------- ------- ------- ------
------- ------- ------- ------
Total return (2)......................................... 13.3% 14.0% 15.0% 18.9%
------- ------- ------- ------
------- ------- ------- ------
Net assets, end of period (000's)........................ $34,777 $25,874 $16,972 $2,891
------- ------- ------- ------
Ratio of net operating expenses to average
net assets (5)......................................... 1.13%(4) 1.19%(6) 1.42%(6) 1.25%(3,6)
------- ------- ------- ------
Ratio of net investment income to average
net assets............................................. 0.79%(4) 0.45%(6) 0.81%(6) 1.02%(3,6)
------- ------- ------- ------
Portfolio turnover rate.................................. 55% 53% 40% 67%
------- ------- ------- ------
</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, 1998 were $30,893,014.
(5) 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 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 the Global Equity Portfolio (one of
the six portfolios constituting OCC Accumulation Trust, hereafter referred to as
the "Portfolio") at December 31, 1998, 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 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 audits 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, 1998 by correspondence with the custodian and broker, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 12, 1999
<PAGE>
OCC ACCUMULATION TRUST
TWO WORLD FINANCIAL CENTER
NEW YORK, NY 10281
TRUSTEES AND PRINCIPAL OFFICERS
<TABLE>
<S> <C>
Joseph M. LaMotta........................................ 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 and Portfolio Manager
John C. Giusio, Jr....................................... Vice President
Richard J. Glasebrook, II................................ Vice President and Portfolio Manager
Louis Goldstein.......................................... Vice President and Portfolio Manager
Alan Gutmann............................................. Vice President and Portfolio Manager
Benjamin D. Gutstein..................................... Vice President and Portfolio Manager
Vikki Hanges............................................. Vice President and Portfolio Manager
Timothy J. McCormack..................................... Vice President and Portfolio Manager
Eileen P. Rominger....................................... Vice President and Portfolio Manager
James Sheldon............................................ Vice President and Portfolio Manager
Richard L. Peteka........................................ Treasurer
Deborah Kaback........................................... Secretary
Robert J. Brault......................................... Assistant Treasurer
</TABLE>
INVESTMENT ADVISER
OpCap Advisors
Two World Financial Center
New York, NY 10281
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 1978
Boston, MA 02105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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.
