<PAGE>
OCC ACCUMULATION TRUST
o MID CAP PORTFOLIO
ANNUAL REPORT
1999
MANAGED BY
[LOGO]
OpCap ADVISORS
<PAGE>
OCC ACCUMULATION TRUST
MANAGED BY
[LOGO]
OpCap ADVISORS
1999 ANNUAL REPORT
The stock market in 1999 was characterized by two contradictory trends: the
rapid price escalation of many technology stocks, especially those associated
with e-commerce and the Internet, and a widespread malaise among stocks in most
other industry sectors. The Standard & Poor's 500 Index (the "S&P 500") rose
21.0% during the year, returning more than 20% for a record fifth consecutive
year. However, this performance distorted the overall direction of the market.
Without its technology stock component, the S&P 500 would have been down 1% in
1999. In fact, approximately 60% of the stocks on the New York Stock Exchange
declined in price during the year.
The year was especially challenging for value investors such as ourselves.
Quality companies with strong competitive positions, high cash flow and
favorable earnings prospects--the types of companies in which we invest
generally did very well. The stocks of these companies, however, were out of
favor, trailing the market indexes by a wide margin. As a result, our investment
returns generally fell short of our benchmarks in 1999.
We have always been thoughtful in our value style to give consideration to
companies across the breadth of the market, including technology companies. In
fact, we did well with several technology investments during the past year,
including Computer Associates and Motorola in the United States and Ericsson and
Alcatel in Europe. However, in the current ebullient market for technology
stocks, it has become increasingly difficult to find value in the sector.
Regardless of whether the current technology stock craze turns out to be a
bubble that bursts, the technology industry is growing rapidly and creating
enormous economic wealth. Our challenge as value investors, therefore, is to
identify solid companies that stand to benefit from this growth.
At OpCap Advisors, we continue to invest in our people and our operation to
ensure we have the necessary resources to meet this challenge. Our firm has
moved aggressively to hire additional investment personnel and has made
important reallocations of people and resources to best apply investment skills
not only to technology stocks, but to other industry sectors as well. We have
established "sector" groups, involving the integration of our domestic and
international analysts, to ensure timely and complete coverage of investment
opportunities wherever they may exist.
By remaining disciplined in our value style, and taking the necessary actions to
keep pace with an ever-evolving stock market, we are focused on delivering
excellent long-term investment results without taking large risks. We believe
many of the stocks we own are significantly undervalued, providing opportunities
for substantial profits as undervalued securities of financially solid, growing
companies return to favor.
As the new year begins, the U.S. economy remains strong, perhaps too strong, and
there are indications of excessive optimism in the stock market. Inflation has
been kept low for the past several years by an internationally competitive
environment, major improvements in technology, corporate mergers and
restructurings, and low inflation expectations. Recently, however, some of these
factors have reversed. Commodity prices have rebounded strongly, while energy
and import prices are on the rise. These factors suggest to us that inflationary
pressures could increase somewhat in the months ahead and that the Federal
Reserve is likely to raise interest rates further, on top of the four rate
increases implemented since June 1999. We believe these conditions will favor
our value style of investing, which emphasizes companies that can generate a
high level of cash flow throughout the economic cycle.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
The Mid Cap Portfolio provided a total return of 21.6% in 1999. The Portfolio
invests in companies with stock market capitalizations (the total market value
of a company's common shares outstanding) between $500 million and $5 billion at
time of purchase. Its 1999 performance compared with a 26.6% return for the
Wilshire Midcap 750 Index with dividends included (the "Wilshire 750"). The
Wilshire 750 is an unmanaged index of 750 mid-sized corporations weighted by
market capitalization.
The Portfolio's return of 16.2% in the second half of 1999 compared with 14.4%
for the Wilshire 750. From inception on February 9, 1998 through December 31,
1999, the Portfolio provided an average annual total return of 10.0% compared
with 16.3% for the Wilshire 750. Returns for the Portfolio take into account
expenses incurred by the Portfolio, but not other charges imposed by the
Variable Accounts.
In managing the Portfolio, we seek to generate excellent long-term results with
below-market risk by investing in mid cap companies with superior fundamentals
and inexpensive valuations. As a group, the mid cap stocks owned by the
Portfolio produce the same or better earnings growth and return on equity as the
broad mid cap indexes, yet their average valuations are lower. We believe this
combination of strong fundamentals and cheaper valuations will lead to higher
share prices over time.
Emmis Communications, one of the Portfolio's 10 largest holdings, contributed
significantly to performance during the second half of 1999. Emmis is a major
broadcasting company focused on radio and television operations in large media
markets. Despite one of the industry's best operating records, including strong
revenue and earnings performance, until recently Emmis had inexplicably been one
of the cheapest stocks in the radio sector. That is now changing, as several
developments have helped drive the stock's recent robust performance. The surge
in demand for airtime by Internet companies allows Emmis to increase prices and
the amount of airtime sold out in advance as traditional advertisers fear being
locked out. Increasing prices of network television are also driving advertisers
to seek cheaper alternatives in local television and radio airtime. In addition,
Liberty Media, the communications and broadcasting conglomerate controlled by
John Malone, purchased a 14% stake in Emmis in October, offering the prospect of
increased creative collaboration between Emmis and Liberty. The sale to Liberty
and a subsequent stock offering raised close to $400 million, which Emmis will
use to participate in the ongoing consolidation of the radio and television
industry.
WPP Group was another of our strong performers in 1999. WPP is one of the
world's largest advertising and marketing communications companies and, like
Emmis, is benefiting from growth in advertising demand. Moreover, management
continues to execute strongly in both margin improvement and renewed strength in
new account wins. Reflecting the company's excellent business performance, the
share price more than doubled in 1999.
During the past six months, we established a position in Bob Evans Farms, a
leading family restaurant chain, after the stock price fell in reaction to a
slowing of same-store sales. We believe this slowing has already reversed
itself. We also believe the market may have missed the non-recurring nature of
one-time new product launch expenses. The company has been proactive in taking
measures to increase profitability, including introducing new menu items,
expanding its take-out offerings, opening new restaurants and increasing prices
over time. Other new positions in the second half of 1999, included SFX
Entertainment (a live entertainment event promoter and sports agency) and W.W.
Grainger (distributor of maintenance, repair and operating supplies). In
addition, we received stock in Huttig Building Products, the leading wholesale
building products distributor, in a spin-off from Crane Co., one of our
holdings. We sold Huttig Building Products shortly after the end of the year
because the company's capitalization falls below the Portfolio's mid cap
guidelines.
At December 31, 1999, the Portfolio's net assets were invested 88.8% in common
stocks and 12.6% in short-term investments. The Portfolio's five largest equity
holdings were Applied Power, the largest contract manufacturer of electronic
enclosures, as well as a diversified global producer of tools, equipment and
systems, representing 4.3% of the Portfolio's net assets; Parker-Hannifin, a
worldwide manufacturer of motion control and fluid processing products for
industrial and aerospace markets, 4.2% of net assets; Carlisle Companies, a
multi-industry manufacturing company, 4.1% of net assets; Teva Pharmaceutical,
an Israeli pharmaceutical company, 4.1% of net assets; and Anadarko Petroleum,
an oil and gas exploration and production company, 3.6% of net assets.
The Portfolio's top five industry positions at the end of December were:
electronics, representing 20.5% of the Portfolio's net assets; insurance, 12.0%
of net assets; advertising, 7.6% of net assets; manufacturing, 7.2% of net
assets; and media/broadcasting, 6.2% of net assets.
<PAGE>
OCC ACCUMULATION TRUST--MID CAP PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE PORTFOLIO AND THE WILSHIRE MID CAP 750 UNIVERSE INDEX+
PERIODS ENDED DECEMBER 31, 1999
[LINE CHART APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN
1 YEAR SINCE FEBRUARY 2, 1998*
21.6% 10.0%
2/9/98 12/31/98 12/31/99
------ -------- --------
Mid Cap Portfolio 10,190.00 9,838.46 11,967.04
Wilshire MidCap 750
Universe Index 10,407.00 10,164.00 12,870.27
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
+ The Wilshire MidCap 750 Universe Index is an unmanaged index that is not
available for direct investment. It includes reinvested dividends.
* Portfolio's inception
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------
<S> <C> <C>
COMMON STOCK -- 88.8%
ADVERTISING -- 7.6%
1,650 Lamar Advertising Co.*............................................................... $ 99,928
2,250 WPP Group plc ADR.................................................................... 187,031
1,700 Young & Rubicam, Inc................................................................. 120,275
----------
407,234
----------
COMPUTER SERVICES -- 2.4%
2,550 Sabre Group Holdings, Inc.*.......................................................... 130,688
----------
CONGLOMERATES -- 2.6%
3,400 PerkinElmer, Inc..................................................................... 141,737
----------
CONSUMER PRODUCTS -- 2.8%
4,650 Avon Products, Inc................................................................... 153,450
----------
CONTAINERS -- 1.4%
5,700 American National Can Group, Inc..................................................... 74,100
----------
DRUGS & MEDICAL PRODUCTS -- 4.1%
3,050 Teva Pharmaceutical Industries Ltd. ADR.............................................. 218,647
----------
ELECTRONICS -- 20.5%
6,300 Applied Power, Inc................................................................... 231,525
6,700 Arrow Electronics, Inc.*............................................................. 170,013
2,300 Avnet, Inc........................................................................... 139,150
1,600 Flextronics International Ltd.*...................................................... 73,600
5,100 General Semiconductor, Inc.*......................................................... 72,356
800 Jabil Circuit, Inc.*................................................................. 58,400
2,300 Molex, Inc........................................................................... 130,381
4,400 Parker-Hannifin Corp................................................................. 225,775
----------
1,101,200
----------
ENERGY -- 3.6%
5,700 Anadarko Petroleum Corp.............................................................. 194,513
----------
ENTERTAINMENT -- 0.9%
1,300 SFX Entertainment, Inc.*............................................................. 47,044
----------
FINANCIAL SERVICES -- 1.3%
2,900 Countrywide Credit Industries, Inc................................................... 73,225
----------
FOOD SERVICES -- 1.7%
5,800 Bob Evans Farms, Inc................................................................. 89,537
----------
HOTELS -- 0.4%
9,800 Homestead Village, Inc.*............................................................. 20,825
----------
INDUSTRIAL MATERIALS -- 1.5%
1,650 W.W. Grainger, Inc................................................................... 78,891
----------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
(CONCLUDED)
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON STOCK (CONCLUDED)
INSURANCE -- 12.0%
3,000 ACE Ltd.............................................................................. $ 50,063
2,928 Conseco, Inc......................................................................... 52,338
3,700 Everest Reinsurance Holdings, Inc.................................................... 82,556
2,850 PartnerRe Ltd........................................................................ 92,447
4,500 Protective Life Corp................................................................. 143,156
1,800 RenaissanceRe Holdings Ltd........................................................... 73,575
2,900 XL Capital Ltd....................................................................... 150,437
----------
644,572
----------
MACHINERY/ENGINEERING -- 2.9%
3,450 Dover Corp........................................................................... 156,544
----------
MANUFACTURING -- 7.2%
6,100 Carlisle Cos., Inc................................................................... 219,600
8,125 Crane Co............................................................................. 161,484
1,806 Huttig Building Products, Inc........................................................ 8,915
----------
389,999
----------
MEDIA/BROADCASTING -- 6.2%
2,043 AMFM, Inc.*.......................................................................... 159,865
1,400 Emmis Communications Corp.*.......................................................... 174,497
----------
334,362
----------
REAL ESTATE -- 4.5%
9,500 ProLogis Trust....................................................................... 182,875
4,700 Security Capital Group, Inc. (Class B)*.............................................. 58,750
----------
241,625
----------
TEXTILES/APPAREL -- 1.0%
3,500 Shaw Industries, Inc................................................................. 54,031
----------
TRANSPORTATION -- 4.2%
4,500 Air Express International Corp....................................................... 145,406
2,000 C.H. Robinson Worldwide.............................................................. 79,500
----------
224,906
----------
Total Common Stock (cost - $4,183,615)............................................... 4,777,130
----------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY NOTES -- 12.6%
$680 Federal Home Loan Bank Discount Notes,
1.50%, 1/3/00 (cost - $679,943).................................................... 679,943
----------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments (cost - $4,863,558)...................................... 101.4% 5,457,073
Liabilities in excess of other assets...................................... (1.4) (75,140)
--------- ----------
Net Assets................................................................. 100.0% $5,381,933
--------- ----------
--------- ----------
</TABLE>
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* Non-income producing security
ADR -- American Depositary Receipt
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost - $4,863,558)........................................................... $ 5,457,073
Cash................................................................................................ 4,545
Dividends receivable................................................................................ 1,332
Other assets........................................................................................ 518
------------
Total Assets...................................................................................... 5,463,468
------------
LIABILITIES:
Payable for investments purchased................................................................... 67,162
Accrued expenses.................................................................................... 14,373
------------
Total Liabilities................................................................................. 81,535
------------
Net Assets........................................................................................ $ 5,381,933
------------
------------
COMPOSITION OF NET ASSETS:
Beneficial interest shares of $0.01 par value (unlimited number authorized)......................... $ 4,627
Paid-in-capital in excess of par.................................................................... 4,627,543
Accumulated net realized gain on investments........................................................ 156,248
Net unrealized appreciation on investments.......................................................... 593,515
------------
Net Assets........................................................................................ $ 5,381,933
------------
------------
Shares outstanding.................................................................................. 462,671
------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................................... $11.63
------
------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $255)................................................ $ 43,649
Interest............................................................................................ 12,590
----------
Total investment income.......................................................................... 56,239
----------
EXPENSES:
Investment advisory fees............................................................................ 27,810
Custodian fees...................................................................................... 14,947
Audit and tax service fees.......................................................................... 12,112
Transfer agent fees................................................................................. 3,016
Reports to shareholders............................................................................. 543
Trustees' fees and expenses......................................................................... 197
Miscellaneous....................................................................................... 1,466
----------
Total expenses................................................................................... 60,091
Less: investment advisory fees waived............................................................ (24,246)
Less: expense offset............................................................................. (1,082)
----------
Net expenses..................................................................................... 34,763
----------
Net investment income.......................................................................... 21,476
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................................................... 268,712
Net change in unrealized appreciation/depreciation on investments................................... 582,994
----------
Net realized and unrealized gain on investments.................................................. 851,706
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $ 873,182
----------
----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FEBRUARY 9, 1998 *
DECEMBER 31, 1999 TO DECEMBER 31, 1998
----------------- --------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................... $ 21,476 $ 9,196
Net realized gain (loss) on investments.................................. 268,712 (8,419)
Net change in unrealized appreciation/depreciation on investments........ 582,994 10,521
----------- ----------
Net increase in net assets resulting from operations................... 873,182 11,298
----------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... (21,476) (9,196)
Net realized gains....................................................... (104,145) --
----------- ----------
Total dividends and distributions to shareholders...................... (125,621) (9,196)
----------- ----------
SHARE TRANSACTIONS:
Net proceeds from the sale of shares..................................... 4,615,546 2,061,371
Reinvestment of dividends and distributions.............................. 125,621 4,411
Cost of shares redeemed.................................................. (1,991,819) (182,860)
----------- ----------
Net increase in net assets from share transactions..................... 2,749,348 1,882,922
----------- ----------
Total increase in net assets........................................ 3,496,909 1,885,024
NET ASSETS:
Beginning of period...................................................... 1,885,024 --
----------- ----------
End of period............................................................ $ 5,381,933 $1,885,024
----------- ----------
----------- ----------
SHARES ISSUED AND REDEEMED:
Issued................................................................... 462,769 211,535
Issued in reinvestment of dividends and distributions.................... 10,801 451
Redeemed................................................................. (203,400) (19,485)
----------- ----------
Net increase........................................................... 270,170 192,501
----------- ----------
----------- ----------
</TABLE>
- ------------------
* Commencement of operations
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FEBRUARY 9, 1998 (1)
DECEMBER 31, 1999 TO DECEMBER 31, 1998
----------------- --------------------
<S> <C> <C>
Net asset value, beginning of period................................. $ 9.79 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............................................. 0.05 0.05
Net realized and unrealized gain (loss) on investments............. 2.07 (0.21)
------- ------
Total income (loss) from investment operations.................. 2.12 (0.16)
------- ------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................. (0.05) (0.05)
Net realized gains................................................. (0.23) --
------- ------
Total dividends and distributions to shareholders............... (0.28) (0.05)
------- ------
Net asset value, end of period....................................... $ 11.63 $ 9.79
------- ------
------- ------
TOTAL RETURN (2)..................................................... 21.6% (1.6)%
------- ------
------- ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's).................................... $ 5,382 $1,885
Ratio of expenses to average net assets (4)(5)....................... 1.03% 1.05%(3)
Ratio of net investment income to average net assets (4)(5).......... 0.62% 0.78%(3)
Portfolio Turnover................................................... 108% 38%
</TABLE>
- ------------------
(1) Commencement of operations
(2) Assumes reinvestment of all dividends and distributions. Total return for a
period of less than one year is not annualized.
(3) Annualized
(4) Inclusive of expenses offset by earnings credits from custodian bank (See 1G
in Notes to Financial Statements).
(5) During the fiscal periods indicated above, the Adviser waived its fee and
assumed a portion of the Portfolio's expenses. If such waivers and
assumptions had not been in effect, the ratios of expenses to average net
assets and the ratios of net investment income (loss) to average net assets
would have been 1.70% and (0.05)%, respectively, for the year ended
December 31, 1999, and 4.28% (annualized) and (2.45)%, (annualized),
respectively, for the period February 9, 1998 (commencement of operations)
to December 31, 1998.
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(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 shares of beneficial
interest at $.01 par value. The Trust is comprised of: the Equity Portfolio, the
Small Cap Portfolio, the Global Equity Portfolio, the Managed Portfolio, the
U.S. Government Income Portfolio and the Mid Cap Portfolio (the "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 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. 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 their 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 using the effective interest method.
(D) 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 as a
tax return of capital.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(CONCLUDED)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular portfolio are borne by that
portfolio. Other expenses are allocated to each portfolio based on its net
assets in relation to the total net assets of all applicable portfolios of the
Trust or another reasonable basis.
(F) 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.
(G) EXPENSE OFFSET
The Portfolio benefits from an expense offset arrangement with its custodian
bank whereby uninvested cash balanaces earn credits which reduce monthly
custodian fees. Had these cash balances been invested in income producing
securities, they would have generated income for the Portfolio.
(H) TRUSTEES' RETIREMENT PLAN
The Trustees have adopted a Retirement Plan (the "Plan") effective January 1,
1999. The Plan 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 of Trustees) to
become eligible to receive benefits. For the year ended December 31, 1999, the
Portfolio accrued $197 in connection with the retirement plan.
(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 0.80% on the first $400 million, 0.75%
on the next $400 million and 0.70% 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 1.00% of average
net assets (net of any expense offset) on an annual basis.
(3) INVESTMENTS IN SECURITIES
For federal income tax purposes the cost of securities owned at December 31,
1999 was $4,959,016. Accordingly, net unrealized appreciation of investments of
$498,057 was comprised of gross appreciation of $811,547 for those investments
having an excess of value over cost and gross depreciation of $313,490 for those
investments having an excess of cost over value.
For the year ended December 31, 1999, purchases and sales of investment
securities, other than short-term securities, aggregated $5,572,828 and
$3,482,285, respectively.
During the year ended December 31, 1999, the Portfolio utilized $737 of capital
loss carryforwards.
(4) ACQUISITION OF INVESTMENT ADVISER
On October 31, 1999, PIMCO Advisors Holdings L.P. ("PAH"), its operating
subsidiary, PIMCO Advisors L.P. ("PIMCO Advisors"), and Allianz AG ("Allianz")
announced that they have reached a definitive agreement for Allianz, a German
insurance company, to acquire majority ownership of PIMCO Advisors, including
all of the interests held by PAH (the "Allianz Transaction"). For the Portfolio,
the change of control as a result of the consummation of the Allianz Transaction
(expected to close by the end of the first quarter of 2000) will result in the
automatic termination of the current investment advisory agreement with OpCap
Advisors, an indirect wholly-owned subsidiary of PIMCO Advisors. The Board of
Trustees has approved a new agreement with OpCap Advisors to become effective
upon consummation of the Allianz Transaction. The new agreement will be
submitted for approval by the stockholders of the Portfolio.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
OCC Accumulation Trust--Mid Cap 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 Mid Cap Portfolio (one of the
portfolios of OCC Accumulation Trust, hereafter referred to as the "Portfolio")
at December 31, 1999, the results of its operations for the year then ended and
the changes in its net assets and the financial highlights for the year then
ended and for the period February 9, 1998 (commencement of operations) through
December 31, 1998, in conformity with accounting principles generally accepted
in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 11, 2000
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OCC ACCUMULATION TRUST
1345 AVENUE OF THE AMERICAS
NEW YORK, NY 10105
<TABLE>
<S> <C>
TRUSTEES AND PRINCIPAL OFFICERS
Joseph M. LaMotta Trustee, President
V. Lee Barnes Trustee
Paul Y. Clinton Trustee
Thomas W. Courtney Trustee
Lacy B. Herrmann Trustee
Theodore T. Mason Trustee
Steven Calabria Vice President
Bernard H. Garil Vice President
Mark F. Degenhart Vice President and Portfolio Manager
John C. Giusio, Jr. Vice President
Richard J. Glasebrook, II Vice President and Portfolio Manager
Colin Glinsman Vice President and Portfolio Manager
Louis Goldstein Vice President and Portfolio Manager
Benjamin D. Gutstein Vice President and Portfolio Manager
Vikki Hanges Vice President and Portfolio Manager
Jeffrey J. Hughes Vice President
Timothy J. McCormack Vice President and Portfolio Manager
Eric V. Retzlaff Vice President
James Sheldon Vice President and Portfolio Manager
Brian S. Shlissel Treasurer
Elliot M. Weiss Secretary
Maria Camacho Assistant Secretary
</TABLE>
INVESTMENT ADVISER
OpCap Advisors
1345 Avenue of the Americas
New York, NY 10105
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.
