<PAGE>
OCC ACCUMULATION TRUST
o EQUITY PORTFOLIO
ANNUAL REPORT
1999
MANAGED BY
[LOGO]
OPCAP ADVISORS
<PAGE>
OCC ACCUMULATION TRUST
MANAGED BY
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 stock 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
EQUITY PORTFOLIO
The Equity Portfolio provided a total return of 2.5% in 1999, compared with a
21.0% increase for the Standard & Poor's 500 Index with dividends included (the
"S&P 500"). The S&P 500 is an unmanaged index of 500 of the largest corporations
weighted by market capitalization. During the second half of the year, the
Portfolio's return of (6.4)% compared with a 7.7% increase in the S&P 500 Index.
In trailing its benchmarks, the Portfolio's results were affected by a difficult
environment for value stocks, which lagged the returns of growth stocks during
the period. In addition, results for the Portfolio were affected by its
significant holdings of financial stocks, one of the stock market's weakest
sectors in 1999. Holdings such as Freddie Mac (home mortgage insurance) and XL
Capital (specialty insurance) declined in price due primarily to investor
concerns about the potential impact of rising interest rates on their business
results. Apart from the Portfolio's financial holdings, stocks which detracted
from performance included Waste Management (solid waste collection and disposal)
and American Home Products (pharmaceuticals, over-the-counter healthcare
products and agricultural products), both of which fell because of
company-specific problems.
Some of the stocks which contributed positively to performance in the year
included Computer Associates International (software), McDonald's (fast food)
and Minnesota Mining & Manufacturing (diversified technology-based company).
Another contributor was Citigroup, the global financial services company, which
bucked the downward trend of the financial stocks and advanced in price,
propelled by continued strong earnings growth.
For the three years ended December 31, 1999, the Portfolio provided an average
annual total return of 13.3%, compared with 27.6% for the S&P 500. The
Portfolio's average annual total return of 20.0% for the five years ended
December 31, 1999 compared with 28.5% for the S&P 500. In the ten years ended
December 31, 1999, the Portfolio provided an average annual total return of
15.5%* versus 18.2% for the S&P 500. From its inception on August 1, 1988
through December 31, 1999, the Portfolio delivered an average annual total
return of 15.7%* compared with 19.0% for the S&P 500. Returns for the Portfolio
take into account expenses incurred by the Portfolio, but not other charges
imposed by the Variable Accounts.
The Portfolio invests in a diverse group of stocks chosen for their superior
business characteristics and reasonable prices. Our goal is to generate
favorable long-term investment results without taking large risks. Although
results in 1999 did not meet our expectations, we believe the Portfolio is well
positioned to deliver strong returns over time through its ownership of quality
undervalued securities which offer significant appreciation potential.
In the second half of 1999, we established new positions in Textron (a global,
multi-industry company which produces business aircraft, helicopters, automotive
components, industrial tools and other products and services) and Unocal
(diversified energy company). We believe both companies are well managed, have
favorable business prospects and are significantly undervalued in relation to
their earnings and cash flow. We sold the Portfolio's investments in Dover and
Raytheon.
- ------------------
* Based on results of the OCC Accumulation Trust and its predecessor. On
September 16, 1994, an investment company which had commenced operations on
August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust"),
was effectively divided into two investment funds--the Old Trust and the
present OCC Accumulation Trust (the "Present Trust")--at which time the
Present Trust commenced operations. The total net assets of the Equity
Portfolio immediately after the transaction were $86,789,755 in the Old Trust
and $3,764,598 in the Present Trust. For the period prior to September 16,
1994, the performance figures for the Equity Portfolio of the Present Trust
reflect the performance of the Equity Portfolio of the Old Trust.
<PAGE>
We have been building a position in the telecommunications sector by investing
in well-managed companies with strong prospects such as Sprint.
Telecommunications stocks represented 10.1% of the Portfolio's net assets at the
end of December 1999, up from 4.5% at the end of July.
At December 31, 1999, the Portfolio's net assets were allocated 94.3% to common
stocks and 5.2% to short-term investments. The Portfolio's five largest equity
positions were Computer Associates International, which designs and markets
computer software, representing 4.9% of the Portfolio's net assets; Freddie Mac,
the second largest insurer of home mortgages in the United States, 4.5% of net
assets; du Pont, a diversified technology and industrial company, 4.0% of net
assets; Citigroup, a leading global banking, insurance and other financial
services company, 3.6% of net assets; and Sprint (FON Group), which provides
long-distance telephone services, 3.6% of net assets.
Major industry positions at the end of December were: financial services,
representing 11.9% of the Portfolio's net assets; telecommunications, 10.1% of
net assets; banking, 8.2% of net assets; technology, 6.9% of net assets; and
food services, 5.9% of net assets.
We remain confident that our value style will generate excellent results over
time.
<PAGE>
OCC ACCUMULATION TRUST--EQUITY PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE PORTFOLIO AND THE S&P 500 INDEX+
PERIODS ENDED DECEMBER 31, 1999
[LINE CHART APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR* SINCE AUGUST 1, 1988
2.5% 19.9% 15.7%
Date Equity Portfolio S&P 500 Index
08/01/88 $10,000 $ 9,660
12/31/88 $10,190 $10,381
12/31/89 $12,502 $13,670
12/31/90 $12,225 $13,235
12/31/91 $16,042 $17,266
12/31/92 $18,913 $18,586
12/31/93 $20,398 $20,457
12/31/94 $21,175 $20,726
12/31/95 $29,404 $28,515
12/31/96 $36,268 $35,061
12/31/97 $45,932 $46,763
12/31/98 $51,375 $60,128
12/31/99 $52,684 $72,774
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 S&P 500 Index is an unmanaged index that is not available for direct
investment. It includes reinvested dividends.
* Based on results of the OCC Accumulation Trust and its predecessor. On
September 16, 1994, an investment company which had commenced operations on
August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust"), was
effectively divided into two investment funds--the Old Trust and the present OCC
Accumulation Trust (the "Present Trust")--at which time the Present Trust
commenced operations. The total net assets of the Equity Portfolio immediately
after the transaction were $86,789,755 in the Old Trust and $3,764,598 in the
Present Trust. For the period prior to September 16, 1994, the performance
figures for the Equity Portfolio of the Present Trust reflect the performance of
the Equity Portfolio of the Old Trust.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ -------------
<S> <C> <C>
COMMON STOCK -- 94.3%
AEROSPACE/DEFENSE -- 2.3%
39,000 Boeing Co........................................................................... $1,620,937
-------------
BANKING -- 8.2%
15,900 Chase Manhattan Corp................................................................ 1,235,231
60,007 FleetBoston Financial Corp.......................................................... 2,088,994
60,330 Wells Fargo & Co.................................................................... 2,439,594
-------------
5,763,819
-------------
CHEMICALS -- 5.4%
24,000 du Pont (E.I.) de Nemours & Co. .................................................... 2,832,625
28,000 Monsanto Co. ....................................................................... 997,500
-------------
3,830,125
-------------
CONGLOMERATES -- 4.7%
26,000 Minnesota Mining & Manufacturing Co................................................. 2,544,750
10,500 Textron Inc......................................................................... 805,219
-------------
3,349,969
-------------
CONSUMER PRODUCTS -- 4.3%
30,000 Avon Products Inc. ................................................................. 990,000
111,000 Kroger Co. ......................................................................... 2,076,250
-------------
3,066,250
-------------
DRUGS & MEDICAL PRODUCTS -- 3.8%
45,000 American Home Products Corp. ....................................................... 1,774,687
35,084 Becton, Dickinson & Co.............................................................. 938,497
-------------
2,713,184
-------------
ELECTRONICS -- 5.3%
38,000 Emerson Electric Co................................................................. 2,180,250
16,000 First Data Corp. ................................................................... 789,000
16,000 Rockwell International Corp......................................................... 766,000
-------------
3,735,250
-------------
ENERGY -- 1.2%
9,200 Anadarko Petroleum Corp............................................................. 313,950
15,900 Unocal Corp......................................................................... 533,644
-------------
847,594
-------------
FINANCIAL SERVICES -- 11.9%
46,085 Citigroup, Inc...................................................................... 2,560,598
19,912 Countrywide Credit Industries, Inc.................................................. 502,778
67,620 Federal Home Loan Mortgage Corp..................................................... 3,182,366
57,500 Household International............................................................. 2,141,875
-------------
8,387,617
-------------
FOOD SERVICES -- 5.9%
58,715 Diageo plc ADR...................................................................... 1,878,880
56,000 McDonald's Corp. ................................................................... 2,257,500
-------------
4,136,380
-------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
( CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
---------- -------------
<S> <C> <C>
COMMON STOCK (CONCLUDED)
HEALTH & HOSPITALS -- 1.6%
23,000 Cardinal Health Inc. ............................................................... $ 1,101,125
-------------
INSURANCE -- 3.0%
33,244 AFLAC, Inc. ........................................................................ 1,568,701
31,161 Conseco, Inc........................................................................ 557,003
-------------
2,125,704
-------------
MACHINERY/ENGINEERING -- 2.6%
39,000 Caterpillar, Inc.................................................................... 1,835,437
-------------
MANUFACTURING -- 2.7%
23,000 Alcoa, Inc. ........................................................................ 1,909,000
-------------
MEDIA/BROADCASTING -- 2.8%
8,000 AMFM Inc.*.......................................................................... 626,000
40,000 News Corp Ltd. ADR++................................................................ 1,337,500
-------------
1,963,500
-------------
PRINTING/PUBLISHING -- 0.7%
21,000 Donnelley (R.R.) & Sons Co.......................................................... 521,063
-------------
RETAIL -- 3.3%
29,500 CVS Corp. .......................................................................... 1,178,156
35,332 May Department Stores Co............................................................ 1,139,457
-------------
2,317,613
-------------
TECHNOLOGY -- 6.9%
53,000 Compaq Computer Corp. .............................................................. 1,434,312
49,000 Computer Associates International, Inc. ............................................ 3,426,938
-------------
4,861,250
-------------
TELECOMMUNICATIONS -- 10.1%
27,000 Bell Atlantic Corp.................................................................. 1,662,188
13,500 Ericsson L M Tel Co. ADR............................................................ 886,781
37,500 MCI Worldcom Inc.................................................................... 1,989,844
38,000 Sprint Corp. (FON Group)............................................................ 2,557,875
-------------
7,096,688
-------------
TRANSPORTATION -- 5.5%
31,600 AMR Corp.*.......................................................................... 2,117,200
35,000 Burlington Northern Santa Fe........................................................ 848,750
41,000 Canadian Pacific Ltd................................................................ 884,063
-------------
3,850,013
-------------
WASTE DISPOSAL -- 2.1%
85,000 Waste Management, Inc............................................................... 1,460,938
-------------
Total Common Stock (cost - $63,726,541)............................................. 66,493,456
-------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
(CONCLUDED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
- ------------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY NOTES -- 5.2%
$3,655 Federal Home Loan Bank Discount Notes,
1.50%, 1/3/00 (cost - $3,654,695)....................................... $ 3,654,695
-------------
Total Investments (cost - $67,381,236).................................... 99.5% 70,148,151
Other assets less liabilities............................................. 0.5 364,062
--------- -------------
Net Assets................................................................ 100.0% $ 70,512,213
--------- -------------
--------- -------------
</TABLE>
- ------------------
* Non-income producing security
++ Preferred Stock
ADR--American Depositary Receipt
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost - $67,381,236)......................................................... $70,148,151
Cash............................................................................................... 5,189
Receivable for investments sold.................................................................... 203,877
Receivable for shares of beneficial interest sold.................................................. 173,613
Dividends receivable............................................................................... 42,376
Prepaid expenses................................................................................... 369
-----------
Total Assets..................................................................................... 70,573,575
-----------
LIABILITIES:
Payable for shares of beneficial interest redeemed................................................. 26,117
Investment advisory fee payable.................................................................... 8,132
Accrued expenses................................................................................... 27,113
-----------
Total Liabilities................................................................................ 61,362
-----------
Net Assets....................................................................................... $70,512,213
-----------
-----------
COMPOSTION OF NET ASSETS:
Beneficial interest shares of $0.01 par value (unlimited number authorized)........................ $ 18,774
Paid-in-capital in excess of par................................................................... 60,294,853
Undistributed net investment income................................................................ 533,159
Accumulated net realized gain on investments....................................................... 6,898,512
Net unrealized appreciation on investments......................................................... 2,766,915
-----------
Net Assets....................................................................................... $70,512,213
-----------
-----------
Shares outstanding................................................................................. 1,877,417
-----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE..................................... $37.56
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $8,659)............................................ $ 786,022
Interest.......................................................................................... 309,796
----------
Total investment income........................................................................ 1,095,818
----------
EXPENSES:
Investment advisory fees.......................................................................... 498,512
Custodian fees.................................................................................... 23,016
Audit and tax service fees........................................................................ 15,986
Trustees' fees and expenses....................................................................... 11,121
Transfer agent fees............................................................................... 7,141
Reports to shareholders........................................................................... 4,853
Legal fees........................................................................................ 925
Miscellaneous..................................................................................... 2,819
----------
Total expenses................................................................................. 564,373
Less: expense offset........................................................................... (1,716)
----------
Net expenses................................................................................... 562,657
----------
Net investment income........................................................................ 533,161
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.................................................................. 6,898,512
Net change in unrealized appreciation/depreciation on investments................................. (6,428,576)
----------
Net realized and unrealized gain on investments................................................ 469,936
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ $1,003,097
----------
----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1999 1998
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 533,161 $ 496,362
Net realized gain on investments........................................... 6,898,512 2,269,575
Net change in unrealized appreciation/depreciation on investments.......... (6,428,576) 1,277,757
----------- -----------
Net increase in net assets resulting from operations..................... 1,003,097 4,043,694
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................................... (496,364) (311,417)
Net realized gains......................................................... (2,260,410) (1,344,997)
----------- -----------
Total dividends and distributions to shareholders........................ (2,756,774) (1,656,414)
----------- -----------
SHARE TRANSACTIONS:
Net proceeds from the sale of shares....................................... 34,572,394 25,006,798
Reinvestment of dividends and distributions................................ 2,756,774 1,656,414
Cost of shares redeemed.................................................... (13,773,989) (9,159,759)
----------- -----------
Net increase in net assets from share transactions....................... 23,555,179 17,503,453
----------- -----------
Total increase in net assets.......................................... 21,801,502 19,890,733
NET ASSETS:
Beginning of year.......................................................... 48,710,711 28,819,978
----------- -----------
End of year (including undistributed net investment income of $533,159 and
$496,362, respectively).................................................. $70,512,213 $48,710,711
----------- -----------
----------- -----------
SHARES ISSUED AND REDEEMED:
Issued..................................................................... 902,799 673,182
Issued in reinvestment of dividends and distributions...................... 77,459 44,976
Redeemed................................................................... (361,604) (248,628)
----------- -----------
Net increase............................................................. 618,654 469,530
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.................................. $38.70 $36.52 $30.07 $25.05 $18.12
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................. 0.25 0.39 0.39 0.21 0.31
Net realized and unrealized gain on investments................... 0.62 3.84 7.34 5.52 6.71
------- ------- ------- ------- -------
Total income from investment operations......................... 0.87 4.23 7.73 5.73 7.02
------- ------- ------- ------- -------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................... (0.36) (0.39) (0.28) (0.24) (0.09)
Net realized gains.................................................. (1.65) (1.66) (1.00) (0.47) --
------- ------- ------- ------- -------
Total dividends and distributions to shareholders............... (2.01) (2.05) (1.28) (0.71) (0.09)
------- ------- ------- ------- -------
Net asset value, end of year........................................ $37.56 $38.70 $36.52 $30.07 $25.05
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN (1).................................................... 2.5% 11.9% 26.6% 23.4% 38.9%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's)..................................... $70,512 $48,711 $28,820 $19,843 $9,036
Ratio of expenses to average net assets (2)......................... 0.91% 0.94% 0.99% 0.93%(3) 0.72%(3)
Ratio of net investment income to average net assets................ 0.86% 1.36% 1.25% 1.29%(3) 1.74%(3)
Portfolio Turnover.................................................. 84% 29% 32% 36% 31%
</TABLE>
- ------------------
(1) Assumes reinvestment of all dividends and distributions.
(2) For fiscal years ended after September 1, 1995, ratios are inclusive of
expenses offset by earnings credits from custodian bank (See 1G in Notes to
Financial Statements).
(3) During the fiscal years indicated above, the Adviser waived a portion or all
of its fees 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 to average net
assets would have been 1.05% and 1.17%, respectively, for the year ended
December 31, 1996, and 1.26% and 1.20%, respectively, for the year ended
December 31, 1995.
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY 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
"Portfolio"), the Small Cap Portfolio, the Global Equity 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 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, 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 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 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
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(CONTINUED)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)
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.
(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 balances 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 $4,381 in connection with the 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 $67,426,150. Accordingly, net unrealized appreciation of investments of
$2,722,001 was comprised of gross appreciation of $7,851,247 for those
investments having an excess of value over cost and gross depreciation of
$5,129,246 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 $71,597,222 and
$46,834,007, respectively.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(CONCLUDED)
(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 -- 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 Equity 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, 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 five years in the period then ended, 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, 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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<PAGE>
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.
