<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Global Equity Portfolio
Managed Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary...........................................................3
Principal Investment Strategies...............................................7
Risks.........................................................................8
Investment Policies..........................................................10
Fund Management..............................................................11
Share Price..................................................................14
Distributions and Taxes......................................................14
Financial Highlights.........................................................15
2
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RISK/RETURN SUMMARY
INVESTMENT GOALS Global Equity Portfolio.......Long term capital appreciation
Managed Portfolio.............Growth of capital over time
PRINCIPAL INVESTMENT
STRATEGIES
- The Global Equity Portfolio invests primarily in
equity securities on a worldwide basis and may
invest in U.S. or foreign fixed income
securities.
- The Managed Portfolio invests in common stocks,
bonds and cash equivalents, allocated based on
the investment adviser's judgment.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to all of the
Portfolios. OpCap Advisors has retained Pacific
Investment Management Company ("PIMCO") as sub-adviser
for a portion of the assets of the Managed Portfolio.
For the equity investments it manages directly, i.e.,
the Global Equity Portfolio and the portion of the
assets of the Managed Portfolio not sub-advised by its
affiliates, OpCap Advisors applies principles of value
investing, although the individual portfolio managers
may implement those principles differently.
When selecting equity securities, OpCap Advisors
believes there are two major components of value.
- A company's ability to generate earnings that
contribute to shareholder value. OpCap Advisors
considers discretionary cash flow-cash that
remains after a company spends what is needed to
sustain its industrial position as a primary
determinant of a company's potential to add
economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company analysis to
select securities. Fundamental company analysis involves
intensive evaluation of historic financial data
including:
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- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company analysis to
select companies they believe have one or more of the
following characteristics:
- substantial and growing discretionary cash flow
- strong shareholder value-oriented management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value relationship.
In selecting debt securities, OpCap Advisors analyzes
yield relationships between different sectors and among
securities along the yield curve. OpCap Advisors seeks
to take advantage of maturities and individual issues
that are inexpensive and have the potential to provide
superior returns. In evaluating high yield debt
securities, OpCap Advisors supplements its traditional
credit analysis with an evaluation of an issuer's asset
values.
There can be no assurance that OpCap Advisors will
achieve its goals.
PIMCO acts as the sub-adviser to the Managed Portfolio.
In selecting securities for the Managed Portfolio, PIMCO
develops an outlook for interest rates, currency
exchange rates and the economy; analyzes credit and call
risks, and uses other security selection techniques. The
proportion of the Portfolio's assets committed to
investment in securities with particular characteristics
(such as quality, section interest rate or maturity)
varies based on PIMCO's outlook for the U.S. economy and
the economies of other countries in the world, the
financial markets and other factors.
PIMCO attempts to identify areas of the bond market that
are undervalued relative to the rest of the market.
PIMCO identifies these areas by grouping bonds into the
following sectors: money markets, governments,
corporates, mortgages, asset-backed and international.
Sophisticated proprietary software then assists in
evaluating sectors and pricing specific securities. Once
investment opportunities are identified, PIMCO will
shift assets among sectors
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depending upon changes in relative valuations and credit
spreads. There is no guarantee that PIMCO's security
selection techniques will produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest in equity
securities, you could lose money or those Portfolios
could underperform other investments if any of the
following happens:
- The stock market goes down
- The Portfolio's investment style (i.e., value or
growth) falls out of favor with the stock market
- The Portfolio's investment sector (e.g., small
cap, mid cap or foreign securities, which
generally are more volatile than U.S. large cap
securities) declines or becomes less liquid
- For the Global Equity and Managed Portfolios,
the market undervalues the stocks held for
longer than expected, or the stocks purchased
turn out not to be undervalued
- The stocks selected for growth potential do not
achieve such growth.
If you invest in the Portfolios that invest in debt
securities, you could lose money or your investment may
underperform other investments if any of the following
happens:
- Interest rates rise and the bond market goes
down
- Issuers of debt instruments cannot meet their
obligations
- Bond issuers' call bonds selling at a premium to
their call price before the maturity date
- Loans securing mortgage-backed obligations
prepay principal more rapidly than expected. The
Portfolios may have to reinvest these
prepayments at lower rates.
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of
investing in the Portfolios by showing changes in the
performance of each Portfolio's shares from year to year
for the life of each Portfolio and the highest and
lowest quarterly return during the life of each
Portfolio.
The Portfolios' past performance does not necessarily
indicate how each Portfolio will perform in the future.
The Portfolios' performance does not reflect charges and
deductions which are imposed under the variable
contracts.
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[BAR CHART]
<TABLE>
<CAPTION>
GLOBAL EQUITY
- --------------------------------------------------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
15.02% 14.02% 13.29% 26.53%
</TABLE>
During the period from the inception of the Global Equity Portfolio through
December 31, 1999, the highest quarterly return was 14.89% (for the quarter
ended December 31, 1998) and the lowest quarterly return was (15.04)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through December
31, 1999, the highest quarterly return was 20.80% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.37)% (for the quarter ended
September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Managed Portfolio compared to that of the Standard &
Poor's Composite Index of 500 Stocks and how the average annual returns for the
Global Equity Portfolio compare to the MSCI World Index. The table gives some
indication of the risks of the Portfolios by comparing the performance of each
Portfolio with a broad measure of market performance.
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<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
------ ------ ------
S&P 500 INDEX 21.04% 28.54% 18.98%
------ ------ ------
GLOBAL EQUITY PORTFOLIO 26.53% N/A 18.06%
------ ------ ------
MSCI WORLD INDEX 24.93% N/A 20.50%
------ ------ ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets of the Managed Portfolio immediately after the transaction
were $682,601,380, with respect to the Old Trust and for the Managed Portfolio
$51,345,102, with respect to the Fund. For the period prior to September 16,
1994, the performance figures above for the Managed Portfolio reflects the
performance of the corresponding Portfolio of the Old Trust. The Old Trust
commenced operations on August 1, 1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
GLOBAL EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through pursuit of a global investment
strategy primarily involving equity securities.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies located
throughout the world which OpCap Advisors believes are undervalued in the
marketplace. The Portfolio may invest up to 35% of its total assets in
fixed income securities which may be lower than investment grade.
Q What are the potential rewards of investing in the Portfolio?
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A Foreign securities provide additional opportunities and diversification.
U.S. stocks represent less than half of the world's stock market
capitalization.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will
vary based on OpCap Advisors' and PIMCO's assessments of the relative
outlook for such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase
investment grade U.S. government and corporate bonds and high quality money
market securities. The Portfolio can invest up to 100% of its assets in
debt securities but will only do so if equity securities are not an
attractive investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
RISKS
Q What are the risks of investing in the Portfolios?
A The Global Equity and the Managed Portfolios invest principally in equity
securities which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices
that turn out not to be undervalued or do not achieve expectations for
growth in income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect
the value or credit quality of an
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issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and
have less trading volume than large cap stocks. Small cap stocks are more
volatile and have less trading volume than both large cap and mid cap
stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits
of a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invests in a mix of equity
and fixed income securities. The portfolio manager of the Managed Portfolio
can make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolios,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by
U.S. entities with substantial foreign operations may have additional risks
than U.S. securities. This risk is greater for the Global Equity Portfolio
which invests on a worldwide basis.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the
removal of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign
currencies will be affected by changes in the value of that
currency.
- Liquidity - Some foreign markets are less liquid and more
volatile than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays
in settlement. These delays could cause the Portfolio to miss
investment opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not
yet been determined.
- Emerging Markets - There are greater risks of unstable
governments and economies and restriction on foreign ownership in
these countries. The Portfolios presently intend to limit
investment in emerging markets to no more than 5% of their total
assets.
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To the extent that the Managed and Global Equity Portfolios invest in debt
securities, the Portfolios are exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage underlying a
mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security will
be unable to pay principal and interest payments when they are due.
To the extent that the Global Equity Portfolio invests in lower grade debt
securities, you should know that lower grade debt may have the following
additional risks:
- more volatility
- less liquidity
- greater risk of issuer default or insolvency.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. A
Portfolio's investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. Investment policies are not fundamental and can be
changed by the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
A Yes. The Global Equity and Managed Portfolios may use the following
derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Global Equity Portfolio does not expect to use derivative instruments
significantly, if at
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all. The Managed Portfolio will sometimes use derivative instruments as
part of a strategy designed to reduce exposure to other risks, such as
interest risk or currency risk, and may use derivative instruments to meet
their investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates
during prior fiscal years for the Portfolios that were active during this
period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or
economic conditions are adverse, it may invest up to 100% of its assets in
defensive investments such as U.S. Government securities and money market
instruments. To the extent that a Portfolio takes a defensive position, it
will not be pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of December
31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors L.P. The
mailing address is 1345 Avenue of the Americas, New York, New York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
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On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
12
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<TABLE>
<S> <C>
Global Equity Portfolio........................................0.80%
Managed Portfolio..............................................0.77%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Global
Equity and Managed Portfolios.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGERS
[PHOTO] Elisa A. Mazen, Senior Vice President, has been a
member of the international equity investment team
at Oppenheimer Capital since 1994 and is primarily
responsible for European research within the
firm's global effort. Prior to joining Oppenheimer
Capital, she was a Portfolio Manager/ Analyst at
Clemente Capital, Inc. Ms. Mazen graduated with a
BA in economics/ finance from Douglass College,
Rutgers University in 1983.
[PHOTO] Richard Glasebrook, Managing Director of
Oppenheimer Capital, has managed the domestic
portion of the Global Equity Portfolio since its
inception. Mr. Glasebrook joined Oppenheimer
Capital in 1991. He has a BA from Kenyan College
and a MBA from the Harvard School of Business
Administration. Mr. Glasebrook has been a
portfolio manager of the Managed Portfolio since
its inception.
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[PHOTO] William H. Gross, Managing Director and Chief
Investment Officer of PIMCO, has been a
co-portfolio manager of the Managed Portfolio
since March 2000. Mr. Gross joined PIMCO in June
1971 and is a founding partner of PIMCO.
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = ------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
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FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
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OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31, For the Period
-------------------------------------------------------- March 1, 1995 (1)
1999 1998 1997 1996 to December 31, 1995
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.43 $ 14.32 $ 13.23 $ 11.61 $ 10.00
----------- ------------ ------------ ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.31 0.12 0.06 0.04 0.05
Net realized and unrealized gain
on investments and foreign currency transactions 3.78 1.78 1.79 1.70 1.83
----------- ------------ ------------ ----------- ----------
Total income from investment operations 4.09 1.90 1.85 1.74 1.88
----------- ------------ ------------ ----------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From Net investment income in excess of (0.26) (0.18) (0.04) (0.05) (0.03)
net investment income -- -- (0.03) -- --
From net realized gains (2.70) (0.61) (0.69) (0.07) (0.24)
----------- ------------ ------------ ----------- ----------
Total dividends and distributions to shareholders (2.96) (0.79) (0.76) (0.12) (0.27)
----------- ------------ ------------ ----------- ----------
Net asset value, end of period $ 16.56 $ 15.43 $ 14.32 $ 13.23 $ 11.61
----------- ------------ ------------ ----------- ----------
----------- ------------ ------------ ----------- ----------
TOTAL RETURN (2) 26.5% 13.3% 14.0% 15.0% 18.9%
----------- ------------ ------------ ----------- ----------
----------- ------------ ------------ ----------- ----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 43,412 $ 34,777 $ 25,874 $ 16,972 $ 2,891
Ratio of net operating expenses
to average net assets (3) 1.10% 1.13% 1.19%(4) 1.42%(4) 1.25%(4)(5)
Ratio of net investment income
to average net assets 0.48% 0.79% 0.45%(4) 0.81%(4) 1.02%(4)(5)
Portfolio Turnover 83% 55% 53% 40% 67%
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 (loss) to average net assets would have been 1.20% and 0.44%,
respectively, for the year ended December 31, 1997, 1.83% and 0.40%,
respectively, for the year ended December 31, 1996 and 3.94% (annualized)
and (1.67)% (annualized), respectively, for the period March 1, 1995
(commencement of operations) to December 31, 1995.
(5) Annualized.
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OCC ACCUMULATION TRUST
MANAGED 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 $ 43.74 $ 42.38 $ 36.21 $ 30.14 $ 20.83
------------ ------------ ------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
------------ ------------ ------------ ------------ -----------
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
------------ ------------ ------------ ------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) --
------------ ------------ ------------ ------------ -----------
Total dividends and distributions to
shareholders (2.12) (1.64) (1.62) (0.67) (0.13)
------------ ------------ ------------ ------------ -----------
Net asset value, end of year $ 43.65 $ 43.74 $ 42.38 $ 36.21 $ 30.14
------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ -----------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ -----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $ 804,467 $ 777,087 $ 466,791 $ 180,728 $ 99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the
year ended December 31, 1995.
17
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102
Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
OCC ACCUMULATION TRUST
Global Equity Portfolio
Managed Portfolio
18
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Equity Portfolio
Small Cap Portfolio
Global Equity Portfolio
Managed Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary..........................................................3
Principal Investment Strategies..............................................8
Risks.......................................................................10
Investment Policies.........................................................12
Fund Management.............................................................13
Share Price.................................................................17
Distributions and Taxes.....................................................17
Financial Highlights........................................................17
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Equity Portfolio...............Long term capital appreciation
Small Cap Portfolio............Capital appreciation
Global Equity Portfolio........Long term capital appreciation
Managed Portfolio..............Growth of capital over time
PRINCIPAL INVESTMENT
STRATEGIES - The Equity Portfolio invests primarily
in equity securities listed on the New
York Stock Exchange.
- The Small Cap Portfolio invests
primarily in equity securities of
companies with market capitalizations
under $1 billion.
- The Global Equity Portfolio invests
primarily in equity securities on a
worldwide basis and may invest in U.S.
or foreign fixed income securities.
- The Managed Portfolio invests in common
stocks, bonds and cash equivalents,
allocated based on the investment
adviser's judgment.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to
all of the Portfolios. OpCap Advisors has
retained Pacific Investment Management
Company ("PIMCO") as sub-adviser for a
portion of the assets of the Managed
Portfolio.
For the equity investments it manages
directly, i.e., the Equity, Small Cap and
Global Equity Portfolios and the portion of
the assets of the Managed Portfolios not
sub-advised by its affiliates, OpCap
Advisors applies principles of value
investing, although the individual portfolio
managers may implement those principles
differently.
When selecting equity securities, OpCap
Advisors believes there are two major
components of value.
- A company's ability to generate earnings
that contribute to shareholder value.
OpCap Advisors considers discretionary
cash flow-cash that remains after a
company spends what is
3
<PAGE>
needed to sustain its industrial
position as a primary determinant of a
company's potential to add economic
value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company
analysis to select securities. Fundamental
company analysis involves intensive
evaluation of historic financial data
including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company
analysis to select companies they believe
have one or more of the following
characteristics:
- substantial and growing discretionary cash
flow
- strong shareholder value-oriented
management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value
relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between
different sectors and among securities along
the yield curve. OpCap Advisors seeks to
take advantage of maturities and individual
issues that are inexpensive and have the
potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit
analysis with an evaluation of an issuer's
asset values.
There can be no assurance that OpCap
Advisors will achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the
Managed Portfolio, PIMCO develops an outlook
for interest rates, currency exchange rates
and the economy; analyzes credit and call
risks, and uses other security selection
techniques. The proportion of the
Portfolio's assets committed to investment
in securities with particular
characteristics (such as quality, section
interest rate or maturity)
4
<PAGE>
varies based on PIMCO's outlook for the U.S.
economy and the economies of other countries
in the world, the financial markets and
other factors.
PIMCO attempts to identify areas of the bond
market that are undervalued relative to the
rest of the market. PIMCO identifies these
areas by grouping bonds into the following
sectors: money markets, governments,
corporates, mortgages, asset-backed and
international. Sophisticated proprietary
software then assists in evaluating sectors
and pricing specific securities. Once
investment opportunities are identified,
PIMCO will shift assets among sectors
depending upon changes in relative
valuations and credit spreads. There is no
guarantee that PIMCO's security selection
techniques will produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest
in equity securities, you could lose money
or those Portfolios could underperform other
investments if any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e.,
value or growth) falls out of favor with
the stock market
- The Portfolio's investment sector (e.g.,
small cap, mid cap or foreign securities,
which generally are more volatile than
U.S. large cap securities) declines or
becomes less liquid
- For the Equity, Small Cap, Global Equity
and Managed Portfolios, the market
undervalues the stocks held for longer
than expected, or the stocks purchased
turn out not to be undervalued
- The stocks selected for growth potential
do not achieve such growth.
If you invest in the Portfolios that invest
in debt securities, you could lose money or
your investment may underperform other
investments if any of the following happens:
- Interest rates rise and the bond market
goes down
- Issuers of debt instruments cannot meet
their obligations
- Bond issuers' call bonds selling at a
premium to their call price before the
maturity date
- Loans securing mortgage-backed
obligations prepay principal more rapidly
than expected. The Portfolios may have to
reinvest these prepayments at lower
rates.
5
<PAGE>
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of
investing in the Portfolios by showing changes in the
performance of each Portfolio's shares from year to year
for the life of each Portfolio and the highest and lowest
quarterly return during the life of each Portfolio.
The Portfolios' past performance does not necessarily
indicate how each Portfolio will perform in the future. The
Portfolios' performance does not reflect charges and
deductions which are imposed under the variable contracts.
[BAR CHART]
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- ---------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.22)% 31.22% 17.90% 7.85% 3.81% 38.85% 23.36% 26.63% 11.86% 2.54%
</TABLE>
During the period from the inception of the Equity Portfolio through December
31, 1999, the highest quarterly return was 14.17% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.32)% (for the quarter ended
September 30, 1990).
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- ---------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through December
31, 1999, the highest quarterly return was 19.20% (for the quarter ended March
31, 1991) and the lowest quarterly return was (17.26)% (for the quarter ended
September 30, 1998).
6
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
GLOBAL EQUITY
- --------------------------------------------------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
15.02% 14.02% 13.29% 26.53%
</TABLE>
During the period from the inception of the Global Equity Portfolio through
December 31, 1999, the highest quarterly return was 14.89% (for the quarter
ended December 31, 1998) and the lowest quarterly return was (15.04)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ---------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through December
31, 1999, the highest quarterly return was 20.80% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.37)% (for the quarter ended
September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Equity and Managed Portfolios compare to that of the
Standard & Poor's Composite Index of 500 Stocks, how the average annual returns
for the Small Cap Portfolio compare to the Russell 2000 and how the average
annual returns for the Global Equity Portfolio compare to the MSCI World Index.
The table gives some indication of the risks of the Portfolios by comparing the
performance of each Portfolio with a broad measure of market performance.
7
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
EQUITY PORTFOLIO 2.54% 19.98% 15.66%*
- ---------------- ----- ------ -------
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
GLOBAL EQUITY PORTFOLIO 26.53% N/A 18.06%
- ----------------------- ------ --- ------
MSCI WORLD INDEX 24.93% N/A 20.50%
- ---------------- ------ --- ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Equity, Small Cap and Managed Portfolios
immediately after the transaction were $86,789,755, $139,812,573 and
$682,601,380, respectively, with respect to the Old Trust and for each of the
Equity, Small Cap and Managed Portfolios, $3,764,598, $8,129,274 and
$51,345,102, respectively, with respect to the Fund. For the period prior to
September 16, 1994, the performance figures above for each of the Equity, Small
Cap and Managed Portfolios reflect the performance of the corresponding
Portfolios of the Old Trust. The Old Trust commenced operations on August 1,
1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through investment in a diversified
portfolio of equity securities selected on the basis of a value approach to
investing.
Q What is the Portfolio's investment program?
8
<PAGE>
A The Equity Portfolio invests primarily in equity securities of companies
that OpCap Advisors believes are undervalued in the marketplace. Under
normal conditions, the Portfolio will invest at least 65% of its total
assets in equity securities listed on the New York Stock Exchange. The
Portfolio also may purchase securities listed on other U.S. or foreign
securities exchanges or traded in the U.S. or foreign over the counter
markets.
The Equity Portfolio is managed to follow a composite portfolio constructed
by a group of senior portfolio managers at OpCap Advisors.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. Equity investors should have a long term investment
horizon and should be prepared for the ups and downs of the stock markets.
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily
of securities of companies with market capitalizations of under $1 billion
at time of purchase.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations under $1 billion at the time of purchase that OpCap
Advisors believes are undervalued in the marketplace. The Portfolio may
purchase securities listed on U.S. or foreign securities exchanges or
traded in the U.S. or foreign over the counter markets. The Portfolio also
may purchase securities in initial public offerings or shortly after those
offerings have been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new
management or sale of the company. Small cap companies are followed by
fewer analysts than are large and mid cap companies. So as additional
analysts follow a small cap stock, investor demand for the stock may
increase.
GLOBAL EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through pursuit of a global investment
strategy primarily
9
<PAGE>
involving equity securities.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies located
throughout the world which OpCap Advisors believes are undervalued in the
marketplace. The Portfolio may invest up to 35% of its total assets in
fixed income securities which may be lower than investment grade.
Q What are the potential rewards of investing in the Portfolio?
A Foreign securities provide additional opportunities and diversification.
U.S. stocks represent less than half of the world's stock market
capitalization.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will
vary based on OpCap Advisors' and PIMCO's assessments of the relative
outlook for such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase
investment grade U.S. government and corporate bonds and high quality money
market securities. The Portfolio can invest up to 100% of its assets in
debt securities but will only do so if equity securities are not an
attractive investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
RISKS
Q What are the risks of investing in the Portfolios?
A The Equity, Small Cap, Global Equity and Managed Portfolios invest
principally in equity securities which may be affected by the following:
10
<PAGE>
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices
that turn out not to be undervalued or do not achieve expectations for
growth in income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect
the value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and
have less trading volume than large cap stocks. Small cap stocks are more
volatile and have less trading volume than both large cap and mid cap
stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits
of a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invests in a mix of equity
and fixed income securities. The portfolio manager of the Managed Portfolio
can make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by
U.S. entities with substantial foreign operations may have additional risks
than U.S. securities. This risk is greater for the Global Equity Portfolio
which invests on a worldwide basis.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the
removal of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies
will be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more
volatile than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
11
<PAGE>
- Settlement and clearance - Some foreign markets experience delays
in settlement. These delays could cause the Portfolio to miss
investment opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet
been determined.
- Emerging Markets - There are greater risks of unstable governments
and economies and restriction on foreign ownership in these
countries. The Portfolios presently intend to limit investment in
emerging markets to no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage
underlying a mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security
will be unable to pay principal and interest payments when they
are due.
To the extent that the Global Equity Portfolio invests in lower grade debt
securities, you should know that lower grade debt may have the following
additional risks:
- more volatility
- less liquidity
- greater risk of issuer default or insolvency.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. A
Portfolio's investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. Investment policies are not fundamental and can be
changed by the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
12
<PAGE>
A Yes. The Equity, Small Cap, Global Equity and Managed Portfolios may use
the following derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Equity, Small Cap and Global Equity Portfolios do not expect to use
derivative instruments significantly, if at all. The Managed Portfolio will
sometimes use derivative instruments as part of a strategy designed to
reduce exposure to other risks, such as interest risk or currency risk, and
may use derivative instruments to meet their investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates
during prior fiscal years for the Portfolios that were active during this
period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or
economic conditions are adverse, it may invest up to 100% of its assets in
defensive investments such as U.S. Government securities and money market
instruments. To the extent that a Portfolio takes a defensive position, it
will not be pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of December
31, 1999. They are
13
<PAGE>
indirect wholly-owned subsidiaries of PIMCO Advisors L.P. The mailing address is
1345 Avenue of the Americas, New York, New York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer
14
<PAGE>
Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Equity Portfolio................................0.80%
Small Cap Portfolio.............................0.80%
Global Equity Portfolio.........................0.80%
Managed Portfolio...............................0.77%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Equity,
Global Equity, Managed and Small Cap Portfolios.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGERS
[PHOTO] Mark Degenhart, who has been a
portfolio manager of the Small Cap
Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as
a Vice President with responsibilities
including research, analysis and
investment management. He acts as a
portfolio manager for several small
capitalization funds. Prior to joining
Oppenheimer Capital, he was Director
of Research and
15
<PAGE>
Associate Portfolio Manager at
Palisade Capital Management. From
1990 to 1993, he was a Generalist
for Cazenove & Co. Previously Mr.
Degenhart was a Special Situations
Analyst at Argus Research Corp. for
over three years. He has a BS degree
in marketing from the University of
Scranton.
[PHOTO] Elisa A. Mazen, Senior Vice
President, has been a member of the
international equity investment team
at Oppenheimer Capital since 1994
and is primarily responsible for
European research within the firm's
global effort. Prior to joining
Oppenheimer Capital, she was a
Portfolio Manager/ Analyst at
Clemente Capital, Inc. Ms. Mazen
graduated with a BA in economics/
finance from Douglass College,
Rutgers University in 1983.
[PHOTO] Richard Glasebrook, Managing
Director of Oppenheimer Capital, has
managed the domestic portion of the
Global Equity Portfolio since its
inception. Mr. Glasebrook joined
Oppenheimer Capital in 1991. He has
a BA from Kenyan College and a MBA
from the Harvard School of Business
Administration. Mr. Glasebrook has
been a portfolio manager of the
Managed Portfolio since its
inception.
[PHOTO] William H. Gross, Managing Director
and Chief Investment Officer of
PIMCO, has been a co-portfolio
manager of the Managed Portfolio
since March 2000. Mr. Gross joined
PIMCO in June 1971 and is a founding
partner of PIMCO.
16
<PAGE>
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = ------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
17
<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.
(3) During the fiscal years indicated above, the Investment 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, 1.26% and 1.20%, respectively, for
the year ended December 31, 1995.
18
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
------ ------ ---- ---- ----
operations
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains --- (0.94) (0.92) (0.64) (0.05)
--- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
------ ------ ---- ---- ----
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93% (3) 0.74% (3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03% (3) 1.75% (3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively,
for the year ended December 31, 1996, and 0.99% and 1.50%, respectively,
for the year ended December 31, 1995.
19
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
Year ended December 31, For the Period
----------------------------------------------------- March 1, 1995 (1)
1999 1998 1997 1996 to December 31, 1995
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.43 $14.32 $13.23 $11.61 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.31 0.12 0.06 0.04 0.05
Net realized and unrealized gain
on investments and foreign currency transactions 3.78 1.78 1.79 1.70 1.83
---- ---- ---- ---- ----
Total income from investment operations 4.09 1.90 1.85 1.74 1.88
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From Net investment income in excess of (0.26) (0.18) (0.04) (0.05) (0.03)
net investment income -- -- (0.03) -- --
From net realized gains (2.70) (0.61) (0.69) (0.07) (0.24)
------ ------ ------ ------ ------
Total dividends and distributions to shareholders (2.96) (0.79) (0.76) (0.12) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period $16.56 $15.43 $14.32 $13.23 $11.61
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (2) 26.5% 13.3% 14.0% 15.0% 18.9%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $43,412 $34,777 $25,874 $16,972 $2,891
Ratio of net operating expenses
to average net assets (3) 1.10% 1.13% 1.19%(4) 1.42%(4) 1.25%(4)(5)
Ratio of net investment income
to average net assets 0.48% 0.79% 0.45%(4) 0.81%(4) 1.02%(4)(5)
Portfolio Turnover 83% 55% 53% 40% 67%
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 (loss) to average net assets would have been 1.20% and 0.44%,
respectively, for the year ended December 31, 1997, 1.83% and 0.40%,
respectively, for the year ended December 31, 1996 and 3.94% (annualized)
and (1.67)% (annualized), respectively, for the period March 1, 1995
(commencement of operations) to December 31, 1995.
(5) Annualized.
20
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) ---
------ ------ ------ ------
Total dividends and distributions to
shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the
year ended December 31, 1995.
21
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102
Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
OCC ACCUMULATION TRUST
Equity Portfolio
Small Cap Portfolio
Global Equity Portfolio
Managed Portfolio
22
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company which
includes the following investment portfolios (the "Portfolio"):
Equity Portfolio
Shares of the Portfolio are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved the Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary.......................................................3
Principal Investment Strategies...........................................6
Risks.....................................................................6
Investment Policies.......................................................8
Fund Management...........................................................9
Share Price..............................................................11
Distributions and Taxes..................................................11
Financial Highlights.....................................................11
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Equity Portfolio....Long term capital appreciation
PRINCIPAL INVESTMENT
STRATEGIES - The Equity Portfolio invests primarily in
equity securities listed on the New York
Stock Exchange.
INVESTMENT
PHILOSOPHY
OpCap Advisors is the investment adviser to the
Portfolio.
OpCap Advisors applies principles of value
investing, although the individual portfolio
manager may implement those principles
differently.
When selecting equity securities, OpCap Advisors
believes there are two major components of value.
- A company's ability to generate earnings that
contribute to shareholder value. OpCap
Advisors considers discretionary cash
flow-cash that remains after a company spends
what is needed to sustain its industrial
position as a primary determinant of a
company's potential to add economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company analysis
to select securities. Fundamental company
analysis involves intensive evaluation of
historic financial data including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company analysis
to select companies they believe have one or more
of the following characteristics:
- substantial and growing discretionary cash
flow
3
<PAGE>
- strong shareholder value-oriented management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value
relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between different
sectors and among securities along the yield
curve. OpCap Advisors seeks to take advantage of
maturities and individual issues that are
inexpensive and have the potential to provide
superior returns. In evaluating high yield debt
securities, OpCap Advisors supplements its
traditional credit analysis with an evaluation of
an issuer's asset values.
There can be no assurance that OpCap Advisors
will achieve its goals.
PRINCIPAL RISKS You could lose money in the Equity Portfolio or
the Portfolio could underperform other
investments if any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e., value
or growth) falls out of favor with the stock
market
- The Portfolio's investment sector (e.g.,
small cap, mid cap or foreign securities,
which generally are more volatile than U.S.
large cap securities) declines or becomes
less liquid
- The market undervalues the stocks held for
longer than expected, or the stocks purchased
turn out not to be undervalued
- The stocks selected for growth potential do
not achieve such growth.
You could lose money on your investment (to the
extent that the Portfolio invests in debt
securities) or your investment may underperform
other investments if any of the following
happens:
- Interest rates rise and the bond market goes
down
- Issuers of debt instruments cannot meet their
obligations
- Bond issuers' call bonds selling at a premium
to their call price before the maturity date
- Loans securing mortgage-backed obligations
prepay principal more rapidly than expected.
The Portfolio may have to reinvest these
prepayments at lower rates.
4
<PAGE>
BAR CHART &
PERFORMANCE
TABLE The bar charts provide some indication of the
risks of investing in the Portfolio by showing
changes in the performance of the Portfolio's
shares from year to year for the life of the
Portfolio and the highest and lowest quarterly
return during the life of the Portfolio.
The Portfolio's past performance does not
necessarily indicate how the Portfolio will
perform in the future. The Portfolio's
performance does not reflect charges and
deductions which are imposed under the variable
contracts.
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.22)% 31.22% 17.90% 7.85% 3.81% 38.85% 23.36% 26.63% 11.86% 2.54%
</TABLE>
During the period from the inception of the Equity Portfolio through December
31, 1999, the highest quarterly return was 14.17% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.32)% (for the quarter ended
September 30, 1990).
The table below shows how the average annual returns for one year, five years
and for the life of the Equity Portfolio compare to that of the Standard &
Poor's Composite Index of 500 Stocks. The table gives some indication of the
risks of the Portfolio by comparing the performance of the Portfolio with a
broad measure of market performance.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
EQUITY PORTFOLIO 2.54% 19.98% 15.66%*
----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
------ ------ ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the
5
<PAGE>
Fund, at which time the Fund commenced operations. The total net assets of the
Equity Portfolio immediately after the transaction was $86,789,755, with respect
to the Old Trust and $3,764,598, with respect to the Fund. For the period prior
to September 16, 1994, the performance figures above for the Equity Portfolio
reflect the performance of the corresponding Portfolio of the Old Trust. The Old
Trust commenced operations on August 1, 1988.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through investment in a diversified
portfolio of equity securities selected on the basis of a value approach to
investing.
Q What is the Portfolio's investment program?
A The Equity Portfolio invests primarily in equity securities of companies
that OpCap Advisors believes are undervalued in the marketplace. Under
normal conditions, the Portfolio will invest at least 65% of its total
assets in equity securities listed on the New York Stock Exchange. The
Portfolio also may purchase securities listed on other U.S. or foreign
securities exchanges or traded in the U.S. or foreign over the counter
markets.
The Equity Portfolio is managed to follow a composite portfolio constructed
by a group of senior portfolio managers at OpCap Advisors.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. Equity investors should have a long term investment
horizon and should be prepared for the ups and downs of the stock markets.
RISKS
Q What are the risks of investing in the Portfolio?
A The Equity Portfolio invests principally in equity securities which may be
affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
6
<PAGE>
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices
that turn out not to be undervalued or do not achieve expectations for
growth in income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect
the value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and
have less trading volume than large cap stocks. Small cap stocks are more
volatile and have less trading volume than both large cap and mid cap
stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits
of a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by
U.S. entities with substantial foreign operations may have additional risks
than U.S. securities.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the
removal of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies
will be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more volatile
than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays
in settlement. These delays could cause the Portfolio to miss
investment opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet
been determined.
7
<PAGE>
- Emerging Markets - There are greater risks of unstable governments
and economies and restriction on foreign ownership in these
countries. The Portfolio presently intends to limit investment in
emerging markets to no more than 5% of its total assets.
To the extent that the Equity Portfolio invest in debt securities, the Portfolio
is exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage
underlying a mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security
will be unable to pay principal and interest payments when they
are due.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. A
Portfolio's investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. Investment policies are not fundamental and can be
changed by the Fund's Board of Trustees.
Q Can the Portfolio use derivative instruments?
A Yes. The Equity Portfolio may use the following derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Equity Portfolio does not expect to use derivative instruments
significantly, if at all.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other
8
<PAGE>
investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Does the Portfolio expect to engage in short-term trading?
A The Portfolio do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the Portfolio's
turnover rates during prior fiscal years.
Q Can the Portfolio vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or
economic conditions are adverse, it may invest up to 100% of its assets in
defensive investments such as U.S. Government securities and money market
instruments. To the extent that a Portfolio takes a defensive position, it
will not be pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of December
31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors L.P. The
mailing address is 1345 Avenue of the Americas, New York, New York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has
9
<PAGE>
assets under management of more than $390 billion, and in its last fiscal year
wrote approximately $50 billion in gross insurance premiums. After consummation
of the transaction, the combined firms will have over $650 billion in assets
under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of the Portfolio (and places brokerage
orders) and conducts the business affairs of the Fund. Employees of Oppenheimer
Capital, PIMCO Advisors and OpCap Advisors perform these services.
The Equity Portfolio paid OpCap Advisors fees in return for providing or
arranging for the provision of investment advisory services. The Equity
Portfolio of the Fund listed below paid OpCap Advisors the following fees as a
percentage of average daily net assets during the fiscal year ended December 31,
1999:
<TABLE>
<S> <C>
Equity Portfolio..................................0.80%
</TABLE>
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Equity
Portfolio.
10
<PAGE>
SHARE PRICE
The Fund calculates the Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = --------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
The Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
11
<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.
(3) During the fiscal years indicated above, the Investment 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, 1.26% and 1.20%, respectively, for
the year ended December 31, 1995.
12
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102
Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
[SIDENOTE]
OCC ACCUMULATION TRUST
Equity Portfolio
13
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company which
includes the following investment portfolio (the "Portfolio"):
Managed Portfolio
Shares of the Portfolio are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary............................................................3
Principal Investment Strategies................................................7
Risks..........................................................................7
Investment Policies............................................................9
Fund Management...............................................................10
Share Price...................................................................13
Distributions and Taxes.......................................................13
Financial Highlights..........................................................13
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Managed Portfolio............Growth of capital over time
PRINCIPAL INVESTMENT
STRATEGIES - The Managed Portfolio invests in common stocks,
bonds and cash equivalents, allocated based on
the investment adviser's judgment.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to the
Portfolio. OpCap Advisors has retained Pacific
Investment Management Company ("PIMCO") as
sub-adviser for a portion of the assets of the
Managed Portfolio.
For the equity investments it manages directly,
i.e., the portion of the assets of the Managed
Portfolio not sub-advised by its affiliates, OpCap
Advisors applies principles of value investing,
although the individual portfolio manager may
implement those principles differently.
When selecting equity securities, OpCap Advisors
believes there are two major components of value.
- A company's ability to generate earnings that
contribute to shareholder value. OpCap Advisors
considers discretionary cash flow-cash that
remains after a company spends what is needed to
sustain its industrial position as a primary
determinant of a company's potential to add
economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company analysis to
select securities. Fundamental company analysis
involves intensive evaluation of historic
financial data including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
3
<PAGE>
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company analysis to
select companies they believe have one or more
of the following characteristics:
- substantial and growing discretionary cash flow
- strong shareholder value-oriented management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between different
sectors and among securities along the yield curve.
OpCap Advisors seeks to take advantage of
maturities and individual issues that are
inexpensive and have the potential to provide
superior returns. In evaluating high yield debt
securities, OpCap Advisors supplements its
traditional credit analysis with an evaluation of
an issuer's asset values.
There can be no assurance that OpCap Advisors will
achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the Managed
Portfolio, PIMCO develops an outlook for interest
rates, currency exchange rates and the economy;
analyzes credit and call risks, and uses other
security selection techniques. The proportion of
the Portfolio's assets committed to investment in
securities with particular characteristics (such as
quality, section interest rate or maturity) varies
based on PIMCO's outlook for the U.S. economy and
the economies of other countries in the world, the
financial markets and other factors.
PIMCO attempts to identify areas of the bond market
that are undervalued relative to the rest of the
market. PIMCO identifies these areas by grouping
bonds into the following sectors: money markets,
governments, corporates, mortgages, asset-backed
and international. Sophisticated proprietary
software then assists in evaluating sectors and
pricing specific securities. Once investment
opportunities are identified, PIMCO will shift
assets among sectors depending upon changes in
relative valuations and credit spreads. There is no
guarantee that PIMCO's security selection
techniques will produce the desired results.
4
<PAGE>
PRINCIPAL RISKS You could lose money in the Managed Portfolio or
the Portfolio could underperform other investments
if any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e., value or
growth) falls out of favor with the stock market
- The Portfolio's investment sector (e.g., small
cap, mid cap or foreign securities, which
generally are more volatile than U.S. large cap
securities) declines or becomes less liquid
- The market undervalues the stocks held for
longer than expected, or the stocks purchased
turn out not to be undervalued
- The stocks selected for growth potential do not
achieve such growth.
You could lose money on your investment in the
Managed Portfolio (to the extent that the Portfolio
invests in debt securities) or the Portfolio may
underperform other investments if any of the
following happens:
- Interest rates rise and the bond market goes
down
- Issuers of debt instruments cannot meet their
obligations
- Bond issuers' call bonds selling at a premium to
their call price before the maturity date
- Loans securing mortgage-backed obligations
prepay principal more rapidly than expected. The
Portfolio may have to reinvest these prepayments
at lower rates.
BAR CHART &
PERFORMANCE
TABLE
The bar chart provides some indication of the risks of
investing in the Portfolio by showing changes in the
performance of the Portfolio's shares from year to year for the
life of the Portfolio and the highest and lowest quarterly
return during the life of the Portfolio.
The Managed Portfolio's past performance does not necessarily
indicate how the Portfolio will perform in the future. The
Portfolio's performance does not reflect charges and deductions
which are imposed under the variable contracts.
5
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through
December 31, 1999, the highest quarterly return was 20.80% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (13.37)% (for the
quarter ended September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Managed Portfolio compared to that of the Standard &
Poor's Composite Index of 500 Stocks. The table gives some indication of the
risks of the Portfolio by comparing the performance of the Portfolio with a
broad measure of market performance.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets of the Managed Portfolio immediately after the transaction
were $682,601,380, with respect to the Old Trust and $51,345,102, with respect
to the Fund. For the period prior to September 16, 1994, the performance figures
above for the Managed Portfolio reflects the performance of the corresponding
Portfolio of the Old Trust. The Old Trust commenced operations on August 1,
1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
6
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will vary
based on OpCap Advisors' and PIMCO's assessments of the relative outlook for
such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase investment
grade U.S. government and corporate bonds and high quality money market
securities. The Portfolio can invest up to 100% of its assets in debt
securities but will only do so if equity securities are not an attractive
investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
RISKS
Q What are the risks of investing in the Portfolio?
A The Managed Portfolio invests principally in equity securities which may be
affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices that
turn out not to be undervalued or do not achieve expectations for growth in
income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect the
value or credit quality of an issuer's securities.
7
<PAGE>
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and have
less trading volume than large cap stocks. Small cap stocks are more volatile
and have less trading volume than both large cap and mid cap stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits of
a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invests in a mix of equity and
fixed income securities. The portfolio manager of the Managed Portfolio can
make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio, OpCap
Advisors use approximately the same standards that they set for U.S. issuers.
Foreign securities, foreign currencies and securities issued by U.S. entities
with substantial foreign operations may have additional risks than U.S.
securities.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the removal
of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies will
be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more volatile than
the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays in
settlement. These delays could cause the Portfolio to miss investment
opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet been
determined.
- Emerging Markets - There are greater risks of unstable governments and
economies and restriction on foreign ownership in these countries. The
Portfolio presently intends to limit investment in emerging markets to
no more than 5% of its total assets.
To the extent that the Managed Portfolio invests in debt securities, the
Portfolio is exposed to these risks:
8
<PAGE>
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage underlying a
mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security will
be unable to pay principal and interest payments when they are due.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval of
a majority of the outstanding voting shares of the Portfolio. A Portfolio's
investment objective is a fundamental policy. Investment restrictions that
are fundamental policies are listed in the Statement of Additional
Information. Investment policies are not fundamental and can be changed by
the Fund's Board of Trustees.
Q Can the Portfolio use derivative instruments?
A Yes. The Managed Portfolio may use the following derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Managed Portfolio will sometimes use derivative instruments as part of a
strategy designed to reduce exposure to other risks, such as interest risk or
currency risk, and may use derivative instruments to meet their investment
objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
9
<PAGE>
Q Does the Portfolio expect to engage in short-term trading?
A The Portfolio does not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the Portfolio's turnover
rates during prior fiscal years.
Q Can the Portfolio vary from its investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or economic
conditions are adverse, it may invest up to 100% of its assets in defensive
investments such as U.S. Government securities and money market instruments.
To the extent that a Portfolio takes a defensive position, it will not be
pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of
December 31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors
L.P. The mailing address is 1345 Avenue of the Americas, New York, New
York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction,
10
<PAGE>
the combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of the Portfolio (and places brokerage
orders) and conducts the business affairs of the Fund. Employees of Oppenheimer
Capital, PIMCO Advisors and OpCap Advisors perform these services.
The Managed Portfolio paid OpCap Advisors fees in return for providing or
arranging for the provision of investment advisory services. OpCap also pays a
portion of its advisory fees to PIMCO in return for the advisory services PIMCO
performs for the Managed Portfolio. The Managed Portfolio of the Fund listed
below paid OpCap Advisors the following fees as a percentage of average daily
net assets during the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Managed Portfolio......................................0.77%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Managed
Portfolio.
11
<PAGE>
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGERS
[PHOTO] Richard Glasebrook, Managing Director of
Oppenheimer Capital, has been a portfolio manager
of the Managed Portfolio since its inception. Mr.
Glasebrook joined Oppenheimer Capital in 1991. He
has a BA from Kenyan College and a MBA from the
Harvard School of Business Administration.
[PHOTO] William H. Gross, Managing Director and Chief
Investment Officer of PIMCO, has been a
co-portfolio manager of the Managed Portfolio since
March 2000. Mr. Gross joined PIMCO in June 1971 and
is a founding partner of PIMCO.
12
<PAGE>
SHARE PRICE
The Fund calculates the Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = -------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
The Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
13
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) --
------ ------ ------ ------
Total dividends and distributions to
shareholders (2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the year
ended December 31, 1995.
14
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102 Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST
Managed Portfolio
15
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Equity Portfolio
Small Cap Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary.....................................................3
Principal Investment Strategies.........................................7
Risks...................................................................8
Investment Policies....................................................10
Fund Management........................................................11
Share Price............................................................13
Distributions and Taxes................................................13
Financial Highlights...................................................13
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Equity Portfolio..............Long term capital appreciation
Small Cap Portfolio...........Capital appreciation
PRINCIPAL INVESTMENT
STRATEGIES - The Equity Portfolio invests primarily
in equity securities listed on the New
York Stock Exchange.
- The Small Cap Portfolio invests
primarily in equity securities of
companies with market capitalizations
under $1 billion.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to
all of the Portfolios.
For the equity investments it manages
directly, i.e., the Equity, and Small Cap
Portfolios, OpCap Advisors applies
principles of value investing, although the
individual portfolio managers may implement
those principles differently.
When selecting equity securities, OpCap
Advisors believes there are two major
components of value.
- A company's ability to generate earnings
that contribute to shareholder value.
OpCap Advisors considers discretionary
cash flow-cash that remains after a
company spends what is needed to sustain
its industrial position as a primary
determinant of a company's potential to
add economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company
analysis to select securities. Fundamental
company analysis involves intensive
evaluation of historic financial data
including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
2
<PAGE>
OpCap Advisors uses fundamental company
analysis to select companies they believe
have one or more of the following
characteristics:
- substantial and growing discretionary cash
flow
- strong shareholder value-oriented
management
- valuable consumer or commercial
franchises
- high returns on capital
- favorable price to intrinsic value
relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between
different sectors and among securities along
the yield curve. OpCap Advisors seeks to
take advantage of maturities and individual
issues that are inexpensive and have the
potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit
analysis with an evaluation of an issuer's
asset values.
There can be no assurance that OpCap
Advisors will achieve its goals.
PRINCIPAL RISKS If you invest in the Portfolios that
invest in equity securities, you could lose
money or those Portfolios could underperform
other investments if any of the following
happens:
- The stock market goes down
- The Portfolio's investment style (i.e.,
value or growth) falls out of favor with
the stock market
- The Portfolio's investment sector (e.g.,
small cap, mid cap or foreign securities,
which generally are more volatile than
U.S. large cap securities) declines or
becomes less liquid
- For the Equity and Small Cap Portfolios,
the market undervalues the stocks held
for longer than expected, or the stocks
purchased turn out not to be undervalued
- The stocks selected for growth potential
do not achieve such growth.
If you invest in the Portfolios that invest
in debt securities, you could lose money or
your investment may underperform other
investments if any of the following happens:
- Interest rates rise and the bond market
goes down
- Issuers of debt instruments cannot meet
their obligations
- Bond issuers' call bonds selling at a
premium to their call price
4
<PAGE>
before the maturity date
- Loans securing mortgage-backed obligations
prepay principal more rapidly than
expected. The Portfolios may have to
reinvest these prepayments at lower
rates.
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of
investing in the Portfolios by showing changes in the
performance of each Portfolio's shares from year to year
for the life of each Portfolio and the highest and lowest
quarterly return during the life of each Portfolio.
The Portfolios' past performance does not necessarily
indicate how each Portfolio will perform in the future. The
Portfolios' performance does not reflect charges and
deductions which are imposed under the variable contracts.
[BAR CHART]
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.22)% 31.22% 17.90% 7.85% 3.81% 38.85% 23.36% 26.63% 11.86% 2.54%
</TABLE>
During the period from the inception of the Equity Portfolio through December
31, 1999, the highest quarterly return was 14.17% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.32)% (for the quarter ended
September 30, 1990).
5
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- ------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through December
31, 1999, the highest quarterly return was 19.20% (for the quarter ended March
31, 1991) and the lowest quarterly return was (17.26)% (for the quarter ended
September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Equity Portfolio compare to that of the Standard &
Poor's Composite Index of 500 Stocks and how the average annual returns for the
Small Cap Portfolio compare to the Russell 2000. The table gives some indication
of the risks of the Portfolios by comparing the performance of each Portfolio
with a broad measure of market performance.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
EQUITY PORTFOLIO 2.54% 19.98% 15.66%*
- ---------------- ----- ------ -------
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Equity and Small Cap Portfolios immediately
after the transaction were $86,789,755 and $139,812,573, respectively, with
respect to the Old Trust and for each of the Equity and Small Cap Portfolios,
6
<PAGE>
$3,764,598 and $8,129,274, respectively, with respect to the Fund. For the
period prior to September 16, 1994, the performance figures above for each of
the Equity and Small Cap Portfolios reflect the performance of the corresponding
Portfolios of the Old Trust. The Old Trust commenced operations on August 1,
1988.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through investment in a diversified
portfolio of equity securities selected on the basis of a value approach to
investing.
Q What is the Portfolio's investment program?
A The Equity Portfolio invests primarily in equity securities of companies
that OpCap Advisors believes are undervalued in the marketplace. Under
normal conditions, the Portfolio will invest at least 65% of its total
assets in equity securities listed on the New York Stock Exchange. The
Portfolio also may purchase securities listed on other U.S. or foreign
securities exchanges or traded in the U.S. or foreign over the counter
markets.
The Equity Portfolio is managed to follow a composite portfolio constructed
by a group of senior portfolio managers at OpCap Advisors.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. Equity investors should have a long term investment
horizon and should be prepared for the ups and downs of the stock markets.
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily
of securities of companies with market capitalizations of under $1 billion
at time of purchase.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations under $1 billion at the time of purchase that OpCap
Advisors believes are undervalued in the
7
<PAGE>
marketplace. The Portfolio may purchase securities listed on U.S. or
foreign securities exchanges or traded in the U.S. or foreign over the
counter markets. The Portfolio also may purchase securities in initial
public offerings or shortly after those offerings have been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new
management or sale of the company. Small cap companies are followed by
fewer analysts than are large and mid cap companies. So as additional
analysts follow a small cap stock, investor demand for the stock may
increase.
RISKS
Q What are the risks of investing in the Portfolios?
A The Equity and Small Cap Portfolios invest principally in equity securities
which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices
that turn out not to be undervalued or do not achieve expectations for
growth in income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect
the value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and
have less trading volume than large cap stocks. Small cap stocks are more
volatile and have less trading volume than both large cap and mid cap
stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits
of a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
8
<PAGE>
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by
U.S. entities with substantial foreign operations may have additional risks
than U.S. securities.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the
removal of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies
will be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more
volatile than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays
in settlement. These delays could cause the Portfolio to miss
investment opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet
been determined.
- Emerging Markets - There are greater risks of unstable governments
and economies and restriction on foreign ownership in these
countries. The Portfolios presently intend to limit investment in
emerging markets to no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage
underlying a mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security
will be unable to pay principal and interest payments when they
are due.
9
<PAGE>
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. A
Portfolio's investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. Investment policies are not fundamental and can be
changed by the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
A Yes. The Equity and Small Cap Portfolios may use the following derivative
instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Equity and Small Cap Portfolios do not expect to use derivative
instruments significantly, if at all.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates
during prior fiscal years for the Portfolios that were active during this
period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or
economic conditions are adverse, it may invest up to 100% of its assets in
defensive investments such as U.S. Government securities and money market
instruments. To the extent that a Portfolio takes a defensive position, it
will not be pursuing its investment objective.
10
<PAGE>
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of December
31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors L.P. The
mailing address is 1345 Avenue of the Americas, New York, New York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
11
<PAGE>
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. The Portfolios of the Fund listed
below paid OpCap Advisors the following fees as a percentage of average daily
net assets during the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Equity Portfolio................................0.80%
Small Cap Portfolio.............................0.80%
</TABLE>
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Equity
and Small Cap Portfolios.
PORTFOLIO MANAGERS
[PHOTO] Mark Degenhart, who has been a
portfolio manager of the Small Cap
Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as
a Vice President with responsibilities
including research, analysis and
investment management. He acts as a
portfolio manager for several small
capitalization funds. Prior to joining
Oppenheimer Capital, he was Director
of Research and Associate Portfolio
Manager at Palisade Capital
Management. From 1990 to 1993, he was
a Generalist for Cazenove & Co.
Previously Mr. Degenhart was a Special
Situations Analyst at Argus Research
Corp. for over three years. He has a
BS degree in marketing from the
University of Scranton.
12
<PAGE>
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = -----------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
13
<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.
(3) During the fiscal years indicated above, the Investment 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, 1.26% and 1.20%, respectively, for
the year ended December 31, 1995.
14
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
------ ------ ---- ---- ----
operations
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains --- (0.94) (0.92) (0.64) (0.05)
--- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
------ ------ ------ ------ ------
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93% (3) 0.74% (3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03% (3) 1.75% (3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively,
for the year ended December 31, 1996, and 0.99% and 1.50%, respectively,
for the year ended December 31, 1995.
15
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102 Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
OCC ACCUMULATION TRUST
Equity Portfolio
Small Cap Portfolio
16
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Equity Portfolio
Small Cap Portfolio
Global Equity Portfolio
Managed Portfolio
U.S. Government Income Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary............................................................3
Principal Investment Strategies................................................9
Risks.........................................................................11
Investment Policies...........................................................13
Fund Management...............................................................14
Share Price...................................................................18
Distributions and Taxes.......................................................18
Financial Highlights..........................................................18
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Equity Portfolio..................Long term capital
appreciation
Small Cap Portfolio...............Capital appreciation
Global Equity Portfolio...........Long term capital
appreciation
Managed Portfolio.................Growth of capital over
time
U.S. Gov't Income Portfolio.......High current income and
protection of capital
PRINCIPAL INVESTMENT
STRATEGIES - The Equity Portfolio invests primarily in equity
securities listed on the New York Stock Exchange.
- The Small Cap Portfolio invests primarily in
equity securities of companies with market
capitalizations under $1 billion.
- The Global Equity Portfolio invests primarily in
equity securities on a worldwide basis and may
invest in U.S. or foreign fixed income
securities.
- The Managed Portfolio invests in common stocks,
bonds and cash equivalents, allocated based on
the investment adviser's judgment.
- The U.S. Government Income Portfolio invests
solely in debt obligations including
mortgage-backed securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to all of
the Portfolios. OpCap Advisors has retained Pacific
Investment Management Company ("PIMCO") as
sub-adviser for a portion of the assets of the
Managed Portfolio.
For the equity investments it manages directly,
i.e., the Equity, Small Cap and Global Equity
Portfolios and the portion of the assets of the
Managed Portfolios not sub-advised by its
affiliates, OpCap Advisors applies principles of
value investing, although the individual portfolio
managers may implement those principles differently.
3
<PAGE>
When selecting equity securities, OpCap Advisors
believes there are two major components of value.
- A company's ability to generate earnings that
contribute to shareholder value. OpCap Advisors
considers discretionary cash flow-cash that
remains after a company spends what is needed to
sustain its industrial position as a primary
determinant of a company's potential to add
economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it believes
is modest downward risk.
OpCap Advisors uses fundamental company analysis to
select securities. Fundamental company analysis
involves intensive evaluation of historic financial
data including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company analysis to
select companies they believe have one or more of
the following characteristics:
- substantial and growing discretionary cash flow
- strong shareholder value-oriented management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between different
sectors and among securities along the yield curve.
OpCap Advisors seeks to take advantage of maturities
and individual issues that are inexpensive and have
the potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit analysis
with an evaluation of an issuer's asset values.
There can be no assurance that OpCap Advisors will
achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In
4
<PAGE>
selecting securities for the Managed Portfolio,
PIMCO develops an outlook for interest rates,
currency exchange rates and the economy; analyzes
credit and call risks, and uses other security
selection techniques. The proportion of the
Portfolio's assets committed to investment in
securities with particular characteristics (such as
quality, section interest rate or maturity) varies
based on PIMCO's outlook for the U.S. economy and
the economies of other countries in the world, the
financial markets and other factors.
PIMCO attempts to identify areas of the bond market
that are undervalued relative to the rest of the
market. PIMCO identifies these areas by grouping
bonds into the following sectors: money markets,
governments, corporates, mortgages, asset-backed and
international. Sophisticated proprietary software
then assists in evaluating sectors and pricing
specific securities. Once investment opportunities
are identified, PIMCO will shift assets among
sectors depending upon changes in relative
valuations and credit spreads. There is no guarantee
that PIMCO's security selection techniques will
produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest in
equity securities, you could lose money or those
Portfolios could underperform other investments if
any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e., value or
growth) falls out of favor with the stock market
- The Portfolio's investment sector (e.g., small
cap, mid cap or foreign securities, which
generally are more volatile than U.S. large cap
securities) declines or becomes less liquid
- For the Equity, Small Cap, Global Equity and
Managed Portfolios, the market undervalues the
stocks held for longer than expected, or the
stocks purchased turn out not to be undervalued
- The stocks selected for growth potential do not
achieve such growth.
If you invest in the Portfolios that invest in debt
securities, you could lose money or your investment
may underperform other investments if any of the
following happens:
- Interest rates rise and the bond market goes down
- Issuers of debt instruments cannot meet their
obligations
- Bond issuers' call bonds selling at a premium to
their call price before the maturity date
5
<PAGE>
- Loans securing mortgage-backed obligations prepay
principal more rapidly than expected. The
Portfolios may have to reinvest these prepayments
at lower rates.
The U.S. Government Income Portfolio principally
buys fixed income securities that are issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities, so credit risk should below.
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of investing
in the Portfolios by showing changes in the performance of each
Portfolio's shares from year to year for the life of each
Portfolio and the highest and lowest quarterly return during the
life of each Portfolio.
The Portfolios' past performance does not necessarily indicate
how each Portfolio will perform in the future. The Portfolios'
performance does not reflect charges and deductions which are
imposed under the variable contracts.
[BAR CHART]
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.22)% 31.22% 17.90% 7.85% 3.81% 38.85% 23.36% 26.63% 11.86% 2.54%
</TABLE>
During the period from the inception of the Equity Portfolio through
December 31, 1999, the highest quarterly return was 14.17% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (13.32)% (for the
quarter ended September 30, 1990).
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
6
<PAGE>
During the period from the inception of the Small Cap Portfolio through
December 31, 1999, the highest quarterly return was 19.20% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (17.26)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
GLOBAL EQUITY
- --------------------------------------------------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
15.02% 14.02% 13.29% 26.53%
</TABLE>
During the period from the inception of the Global Equity Portfolio through
December 31, 1999, the highest quarterly return was 14.89% (for the quarter
ended December 31, 1998) and the lowest quarterly return was (15.04)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through
December 31, 1999, the highest quarterly return was 20.80% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (13.37)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME PORTFOLIO
- --------------------------------------------------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
3.02% 7.04% 8.15% (1.61)%
</TABLE>
7
<PAGE>
During the period from the inception of the U.S. Government Income Portfolio
through December 31, 1999, the highest quarterly return was 4.68% (for the
quarter ended September 30, 1998) and the lowest quarterly return was (1.05)%
(for the quarter ended June 30, 1999).
The table below shows how the average annual returns for one year, five years
and for the life of the Equity and Managed Portfolios compare to that of the
Standard & Poor's Composite Index of 500 Stocks, how the average annual returns
for the Small Cap Portfolio compare to the Russell 2000, how the average annual
returns for the Global Equity Portfolio compare to the MSCI World Index and how
the returns for the U.S. Government Income Portfolio compare to the Lehman
Intermediate Government Bond Index. The table gives some indication of the risks
of the Portfolios by comparing the performance of each Portfolio with a broad
measure of market performance.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
EQUITY PORTFOLIO 2.54% 19.98% 15.66%*
- ---------------- ----- ------ -------
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
GLOBAL EQUITY PORTFOLIO 26.53% N/A 18.06%
- ----------------------- ------ --- ------
MSCI WORLD INDEX 24.93% N/A 20.50%
- ---------------- ------ --- ------
U.S. GOVERNMENT INCOME PORTFOLIO (1.61)% N/A 5.78%
- -------------------------------- ------- --- -----
LEHMAN INTERMEDIATE GOVERNMENT
BOND INDEX 0.49% N/A 6.93%
- ---------- ----- --- -----
U.S. GOVERNMENT INCOME PORTFOLIO
YIELD FOR THE 30-DAY PERIOD ENDED
DECEMBER 31, 1999 5.38%
- ----------------- -----
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Equity, Small Cap and Managed Portfolios
immediately after the transaction were $86,789,755,
8
<PAGE>
$139,812,573 and $682,601,380, respectively, with respect to the Old Trust and
for each of the Equity, Small Cap and Managed Portfolios, $3,764,598, $8,129,274
and $51,345,102, respectively, with respect to the Fund. For the period prior to
September 16, 1994, the performance figures above for each of the Equity, Small
Cap and Managed Portfolios reflect the performance of the corresponding
Portfolios of the Old Trust. The Old Trust commenced operations on August 1,
1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through investment in a diversified portfolio
of equity securities selected on the basis of a value approach to investing.
Q What is the Portfolio's investment program?
A The Equity Portfolio invests primarily in equity securities of companies that
OpCap Advisors believes are undervalued in the marketplace. Under normal
conditions, the Portfolio will invest at least 65% of its total assets in
equity securities listed on the New York Stock Exchange. The Portfolio also
may purchase securities listed on other U.S. or foreign securities exchanges
or traded in the U.S. or foreign over the counter markets.
The Equity Portfolio is managed to follow a composite portfolio constructed
by a group of senior portfolio managers at OpCap Advisors.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long term
growth of capital. Equity investors should have a long term investment
horizon and should be prepared for the ups and downs of the stock markets.
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily of
securities of companies with market capitalizations of under $1 billion at
time of purchase.
9
<PAGE>
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with market
capitalizations under $1 billion at the time of purchase that OpCap Advisors
believes are undervalued in the marketplace. The Portfolio may purchase
securities listed on U.S. or foreign securities exchanges or traded in the
U.S. or foreign over the counter markets. The Portfolio also may purchase
securities in initial public offerings or shortly after those offerings have
been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new management
or sale of the company. Small cap companies are followed by fewer analysts
than are large and mid cap companies. So as additional analysts follow a
small cap stock, investor demand for the stock may increase.
GLOBAL EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through pursuit of a global investment
strategy primarily involving equity securities.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies located
throughout the world which OpCap Advisors believes are undervalued in the
marketplace. The Portfolio may invest up to 35% of its total assets in fixed
income securities which may be lower than investment grade.
Q What are the potential rewards of investing in the Portfolio?
A Foreign securities provide additional opportunities and diversification. U.S.
stocks represent less than half of the world's stock market capitalization.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will vary
based on OpCap Advisors' and PIMCO's assessments of the relative outlook for
such investments.
10
<PAGE>
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase investment
grade U.S. government and corporate bonds and high quality money market
securities. The Portfolio can invest up to 100% of its assets in debt
securities but will only do so if equity securities are not an attractive
investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
U.S. GOVERNMENT INCOME PORTFOLIO
Q What is the Portfolio's investment objective?
A High level of current income together with protection of capital by investing
exclusively in debt obligations, including mortgage-backed securities issued
or guaranteed by the United States government, its agencies or
instrumentalities.
Q What is the Portfolio's investment program?
A The Portfolio invests in debt obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities. These securities are
referred to as "U.S. Government Securities." The Portfolio also may purchase
mortgage-backed securities to effectuate this program.
OpCap Advisors observes current and historical yield relationships between
maturities and sectors to seek the best relative values. The Portfolio
generally maintains an average maturity between five and ten years. OpCap
Advisors does not attempt to forecast interest rates in managing the
Portfolio.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio consists of the highest quality debt instruments. Since the
average maturity of the Portfolio's investments are between five and ten
years, the Portfolio should be less volatile than a longer term bond fund.
RISKS
Q What are the risks of investing in the Portfolios?
11
<PAGE>
A The Equity, Small Cap, Global Equity and Managed Portfolios invest
principally in equity securities which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices that
turn out not to be undervalued or do not achieve expectations for growth in
income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect the
value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and have
less trading volume than large cap stocks. Small cap stocks are more volatile
and have less trading volume than both large cap and mid cap stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits of
a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invests in a mix of equity and
fixed income securities. The portfolio manager of the Managed Portfolio can
make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio, OpCap
Advisors use approximately the same standards that they set for U.S. issuers.
Foreign securities, foreign currencies and securities issued by U.S. entities
with substantial foreign operations may have additional risks than U.S.
securities. This risk is greater for the Global Equity Portfolio which
invests on a worldwide basis.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the removal of
the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies will
be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more volatile than
the U.S. stock market.
12
<PAGE>
- Limited information - There may be less public information about foreign
issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays in
settlement. These delays could cause the Portfolio to miss investment
opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet been
determined.
- Emerging Markets - There are greater risks of unstable governments and
economies and restriction on foreign ownership in these countries. The
Portfolios presently intend to limit investment in emerging markets to
no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will affect
the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage underlying a
mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security will be
unable to pay principal and interest payments when they are due.
To the extent that the Global Equity Portfolio invests in lower grade debt
securities, you should know that lower grade debt may have the following
additional risks:
- more volatility
- less liquidity
- greater risk of issuer default or insolvency.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval of
a majority of the outstanding voting shares of the Portfolio. A Portfolio's
investment objective is a fundamental policy. Investment restrictions that
are fundamental policies are listed in the Statement of Additional
Information. Investment policies are not fundamental and can be changed by
the Fund's Board of Trustees.
13
<PAGE>
Q Can the Portfolios use derivative instruments?
A Yes. The Equity, Small Cap, Global Equity and Managed Portfolios may use the
following derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Equity, Small Cap and Global Equity Portfolios do not expect to use
derivative instruments significantly, if at all. The Managed Portfolio will
sometimes use derivative instruments as part of a strategy designed to reduce
exposure to other risks, such as interest risk or currency risk, and may use
derivative instruments to meet their investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates during
prior fiscal years for the Portfolios that were active during this period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or economic
conditions are adverse, it may invest up to 100% of its assets in defensive
investments such as U.S. Government securities and money market instruments.
To the extent that a Portfolio takes a defensive position, it will not be
pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
14
<PAGE>
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of
December 31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors
L.P. The mailing address is 1345 Avenue of the Americas, New York, New
York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur
15
<PAGE>
substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Equity Portfolio..........................................0.80%
Small Cap Portfolio.......................................0.80%
Global Equity Portfolio...................................0.80%
Managed Portfolio.........................................0.77%
U.S. Government Income Portfolio..........................0.60%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Equity,
Global Equity, Managed and Small Cap Portfolios. The rate applicable to the U.S.
Government Income Portfolio is .60% of average net assets.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
16
<PAGE>
PORTFOLIO MANAGERS
[PHOTO] Mark Degenhart, who has been a portfolio manager of
the Small Cap Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as a Vice
President with responsibilities including research,
analysis and investment management. He acts as a
portfolio manager for several small capitalization
funds. Prior to joining Oppenheimer Capital, he was
Director of Research and Associate Portfolio Manager
at Palisade Capital Management. From 1990 to 1993,
he was a Generalist for Cazenove & Co. Previously
Mr. Degenhart was a Special Situations Analyst at
Argus Research Corp. for over three years. He has a
BS degree in marketing from the University of
Scranton.
[PHOTO] Elisa A. Mazen, Senior Vice President, has been a
member of the international equity investment team
at Oppenheimer Capital since 1994 and is primarily
responsible for European research within the firm's
global effort. Prior to joining Oppenheimer Capital,
she was a Portfolio Manager/ Analyst at Clemente
Capital, Inc. Ms. Mazen graduated with a BA in
economics/ finance from Douglass College, Rutgers
University in 1983.
[PHOTO] Vikki Hanges, Senior Vice President of Oppenheimer
Capital, has been the portfolio manager of the U.S.
Government Portfolio since its inception. She joined
Oppenheimer Capital in 1982. Ms. Hanges has a BS
from Cornell University.
[PHOTO] Richard Glasebrook, Managing Director of Oppenheimer
Capital, has managed the domestic portion of the
Global Equity Portfolio since its inception. Mr.
Glasebrook joined Oppenheimer Capital in 1991. He
has a BA from Kenyan College and a MBA from the
Harvard School of Business Administration. Mr.
Glasebrook has been a portfolio manager of the
Managed Portfolio since its inception.
17
<PAGE>
[PHOTO] William H. Gross, Managing Director and Chief
Investment Officer of PIMCO, has been a co-portfolio
manager of the Managed Portfolio since March 2000.
Mr. Gross joined PIMCO in June 1971 and is a
founding partner of PIMCO.
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = -------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year. The U.S. Government
Income Portfolio pays dividends from its net investment income once a month.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total
18
<PAGE>
returns in the table represent the rate that an investor would have earned
(or lost) on an investment in a Portfolio (assuming reinvestment of all
dividends and distributions). The information in the financial highlights table
below has been audited by PricewaterhouseCoopers LLP, independent accountants,
whose report, along with the Portfolio's financial statements, is incorporated
by reference in the Fund's SAI, which is available upon request.
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.
(3) During the fiscal years indicated above, the Investment 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, 1.26% and 1.20%, respectively, for
the year ended December 31, 1995.
19
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
operations ----- ----- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains -- (0.94) (0.92) (0.64) (0.05)
-- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
----- ----- ----- ----- -----
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93% (3) 0.74% (3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03% (3) 1.75% (3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively, for the
year ended December 31, 1996, and 0.99% and 1.50%, respectively, for the
year ended December 31, 1995.
20
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31, For the Period
------------------------------------------ March 1, 1995 (1)
1999 1998 1997 1996 to December 31, 1995
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.43 $14.32 $13.23 $11.61 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.31 0.12 0.06 0.04 0.05
Net realized and unrealized gain
on investments and foreign currency transactions 3.78 1.78 1.79 1.70 1.83
---- ---- ---- ---- ----
Total income from investment operations 4.09 1.90 1.85 1.74 1.88
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From Net investment income in excess of (0.26) (0.18) (0.04) (0.05) (0.03)
net investment income -- -- (0.03) -- --
From net realized gains (2.70) (0.61) (0.69) (0.07) (0.24)
------ ------ ------ ------ ------
Total dividends and distributions to shareholders (2.96) (0.79) (0.76) (0.12) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period $16.56 $15.43 $14.32 $13.23 $11.61
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (2) 26.5% 13.3% 14.0% 15.0% 18.9%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $43,412 $34,777 $25,874 $16,972 $2,891
Ratio of net operating expenses
to average net assets (3) 1.10% 1.13% 1.19%(4) 1.42%(4) 1.25%(4)(5)
Ratio of net investment income
to average net assets 0.48% 0.79% 0.45%(4) 0.81%(4) 1.02%(4)(5)
Portfolio Turnover 83% 55% 53% 40% 67%
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 (loss) to average net assets would have been 1.20% and 0.44%,
respectively, for the year ended December 31, 1997, 1.83% and 0.40%,
respectively, for the year ended December 31, 1996 and 3.94% (annualized)
and (1.67)% (annualized), respectively, for the period March 1, 1995
(commencement of operations) to December 31, 1995.
(5) Annualized.
21
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) --
------ ------ ------ ------
Total dividends and distributions to shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the year
ended December 31, 1995.
22
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31, For the Period
----------------------------------------------------- January 3, 1995 (1)
1999 1998 1997 1996 to December 31, 1995
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.66 $10.51 $10.38 $10.62 $10.00
------ ------ ------ ------ -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.49 0.53 0.57 0.55 0.60
Net realized and unrealized gain (loss) on
investments (0.66) 0.31 0.14 (0.24) 0.68
------ ---- ---- ------ ----
Total income (loss) from investment operations (0.17) 0.84 0.71 0.31 1.28
------ ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.49) (0.53) (0.57) (0.55) (0.60)
Net realized gains --- (0.16) (0.01) --- (0.06)
------ ------ ------
Total dividends and distributions to shareholders (0.49) (0.69) (0.58) (0.55) (0.66)
------ ------ ------ ------ ------
Net asset value, end of period $10.00 $10.66 $10.51 $10.38 $10.62
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (2) (1.6)% 8.1% 7.0% 3.0% 13.1%
------ ---- ---- ---- -----
------ ---- ---- ---- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $9,830 $10,542 $6,983 $3,422 $1,442
Ratio of expenses
to average net assets (3) 0.95% 1.00%(4) 0.93%(4) 0.96%(4) 0.75%(4)(5)
Ratio of net investment income
to average net assets 4.78% 4.96%(4) 5.51%(4) 5.27%(4) 5.75%(4)(5)
Portfolio Turnover 69% 80% 80% 31% 65%
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 1.19% and 4.77%, respectively,
for the year ended December 31, 1998, 1.06% and 5.38%, respectively, for
the year ended December 31, 1997, 2.34% and 3.89%, respectively, for the
year ended December 31, 1996, and 4.73% (annualized) and 1.77%,
(annualized), respectively, for the period January 3, 1995 (commencement of
operations) to December 31, 1995.
(5) Annualized.
23
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102 Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST
Equity Portfolio
Small Cap Portfolio
Global Equity Portfolio
Managed Portfolio
U.S. Government Income Portfolio
24
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Small Cap Portfolio
Managed Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary..........................................................3
Principal Investment Strategies..............................................7
Risks........................................................................8
Investment Policies.........................................................10
Fund Management.............................................................11
Share Price.................................................................14
Distributions and Taxes.....................................................14
Financial Highlights........................................................15
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Small Cap Portfolio...........Capital appreciation
Managed Portfolio.............Growth of capital over time
PRINCIPAL INVESTMENT
STRATEGIES - The Small Cap Portfolio invests
primarily in equity securities of
companies with market capitalizations
under $1 billion.
- The Managed Portfolio invests in common
stocks, bonds and cash equivalents,
allocated based on the investment
adviser's judgment.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to
all of the Portfolios. OpCap Advisors has
retained Pacific Investment Management
Company ("PIMCO") as sub-adviser for a
portion of the assets of the Managed
Portfolio.
For the equity investments it manages
directly, i.e., the Small Cap Portfolio and
the portion of the assets of the Managed
Portfolio not sub-advised by its affiliates,
OpCap Advisors applies principles of value
investing, although the individual portfolio
managers may implement those principles
differently.
When selecting equity securities, OpCap
Advisors believes there are two major
components of value.
- A company's ability to generate earnings
that contribute to shareholder value.
OpCap Advisors considers discretionary
cash flow-cash that remains after a
company spends what is needed to sustain
its industrial position as a primary
determinant of a company's potential to
add economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company
analysis to select securities. Fundamental
company analysis involves intensive
evaluation of historic financial data
including:
- Company financial statements
3
<PAGE>
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company
analysis to select companies they believe
have one or more of the following
characteristics:
- substantial and growing discretionary
cash flow
- strong shareholder value-oriented
management
- valuable consumer or commercial
franchises
- high returns on capital
- favorable price to intrinsic value
relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between
different sectors and among securities along
the yield curve. OpCap Advisors seeks to
take advantage of maturities and individual
issues that are inexpensive and have the
potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit
analysis with an evaluation of an issuer's
asset values.
There can be no assurance that OpCap
Advisors will achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the
Managed Portfolio, PIMCO develops an outlook
for interest rates, currency exchange rates
and the economy; analyzes credit and call
risks, and uses other security selection
techniques. The proportion of the
Portfolio's assets committed to investment
in securities with particular
characteristics (such as quality, section
interest rate or maturity) varies based on
PIMCO's outlook for the U.S. economy and the
economies of other countries in the world,
the financial markets and other factors.
PIMCO attempts to identify areas of the bond
market that are undervalued relative to the
rest of the market. PIMCO identifies these
areas by grouping bonds into the following
sectors: money markets, governments,
corporates, mortgages, asset-backed and
international. Sophisticated proprietary
software then assists in evaluating sectors
and pricing specific securities. Once
investment opportunities are identified,
PIMCO will shift assets among sectors
depending upon changes in relative
valuations and credit spreads.
4
<PAGE>
There is no guarantee that PIMCO's security
selection techniques will produce the
desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest
in equity securities, you could lose money
or those Portfolios could underperform other
investments if any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e.,
value or growth) falls out of favor with
the stock market
- The Portfolio's investment sector (e.g.,
small cap, mid cap or foreign securities,
which generally are more volatile than
U.S. large cap securities) declines or
becomes less liquid
- For the Small Cap and Managed Portfolios,
the market undervalues the stocks held
for longer than expected, or the stocks
purchased turn out not to be undervalued
- The stocks selected for growth potential
do not achieve such growth.
If you invest in the Portfolios that invest
in debt securities, you could lose money or
your investment may underperform other
investments if any of the following happens:
- Interest rates rise and the bond market
goes down
- Issuers of debt instruments cannot meet
their obligations
- Bond issuers' call bonds selling at a
premium to their call price before the
maturity date
- Loans securing mortgage-backed
obligations prepay principal more rapidly
than expected. The Portfolios may have to
reinvest these prepayments at lower
rates.
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of
investing in the Portfolios by showing changes in the
performance of each Portfolio's shares from year to year
for the life of each Portfolio and the highest and lowest
quarterly return during the life of each Portfolio.
The Portfolios' past performance does not necessarily
indicate how each Portfolio will perform in the future. The
Portfolios' performance does not reflect charges and
deductions which are imposed under the variable contracts.
5
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through December
31, 1999, the highest quarterly return was 19.20% (for the quarter ended March
31, 1991) and the lowest quarterly return was (17.26)% (for the quarter ended
September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through December
31, 1999, the highest quarterly return was 20.80% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.37)% (for the quarter ended
September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Managed Portfolio compared to that of the Standard &
Poor's Composite Index of 500 Stocks and how the average annual returns for the
Small Cap Portfolio compare to the Russell 2000. The table gives some indication
of the risks of the Portfolios by comparing the performance of each Portfolio
with a broad measure of market performance.
6
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Small Cap and Managed Portfolios
immediately after the transaction were $139,812,573 and $682,601,380,
respectively, with respect to the Old Trust and for each of the Small Cap and
Managed Portfolios, $8,129,274 and $51,345,102, respectively, with respect to
the Fund. For the period prior to September 16, 1994, the performance figures
above for each of the Small Cap and Managed Portfolios reflect the performance
of the corresponding Portfolios of the Old Trust. The Old Trust commenced
operations on August 1, 1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily
of securities of companies with market capitalizations of under $1 billion
at time of purchase.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations under $1 billion at the time of purchase that OpCap
Advisors believes are undervalued in the marketplace. The Portfolio may
purchase securities listed on U.S. or foreign securities exchanges or
traded in the U.S. or foreign over the counter markets. The Portfolio also
may purchase securities in initial public offerings or shortly after those
offerings have been completed.
7
<PAGE>
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new
management or sale of the company. Small cap companies are followed by
fewer analysts than are large and mid cap companies. So as additional
analysts follow a small cap stock, investor demand for the stock may
increase.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will
vary based on OpCap Advisors' and PIMCO's assessments of the relative
outlook for such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase
investment grade U.S. government and corporate bonds and high quality money
market securities. The Portfolio can invest up to 100% of its assets in
debt securities but will only do so if equity securities are not an
attractive investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
RISKS
Q What are the risks of investing in the Portfolios?
A The Small Cap and Managed Portfolios invest principally in equity
securities which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
8
<PAGE>
STOCK PICKING - The portfolio manager may select stocks that have prices
that turn out not to be undervalued or do not achieve expectations for
growth in income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect
the value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and
have less trading volume than large cap stocks. Small cap stocks are more
volatile and have less trading volume than both large cap and mid cap
stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits
of a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invest in a mix of equity and
fixed income securities. The portfolio manager of the Managed Portfolio can
make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolios,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by
U.S. entities with substantial foreign operations may have additional risks
than U.S. securities.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the
removal of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies
will be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more
volatile than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays
in settlement. These delays could cause the Portfolio to miss
investment opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not
yet been determined.
9
<PAGE>
- Emerging Markets - There are greater risks of unstable governments
and economies and restriction on foreign ownership in these
countries. The Portfolios presently intend to limit investment in
emerging markets to no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage
underlying a mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security
will be unable to pay principal and interest payments when they
are due.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. A
Portfolio's investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. Investment policies are not fundamental and can be
changed by the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
A Yes. The Small Cap and Managed Portfolios may use the following derivative
instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Small Cap Portfolio does not expect to use derivative instruments
significantly, if at all. The Managed Portfolio will sometimes use
derivative instruments as part of a strategy designed to reduce exposure to
other risks, such as interest risk or currency risk, and may use derivative
instruments to meet their investment objectives.
Q What are the risks of derivative instruments?
10
<PAGE>
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates
during prior fiscal years for the Portfolios that were active during this
period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or
economic conditions are adverse, it may invest up to 100% of its assets in
defensive investments such as U.S. Government securities and money market
instruments. To the extent that a Portfolio takes a defensive position, it
will not be pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of December
31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors L.P. The
mailing address is 1345 Avenue of the Americas, New York, New York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
11
<PAGE>
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Small Cap Portfolio..........................0.80%
Managed Portfolio............................0.77%
</TABLE>
12
<PAGE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Managed
and Small Cap Portfolios.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGER
[PHOTO] Mark Degenhart, who has been a
portfolio manager of the Small Cap
Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as
a Vice President with responsibilities
including research, analysis and
investment management. He acts as a
portfolio manager for several small
capitalization funds. Prior to joining
Oppenheimer Capital, he was Director
of Research and Associate Portfolio
Manager at Palisade Capital
Management. From 1990 to 1993, he was
a Generalist for Cazenove & Co.
Previously Mr. Degenhart was a Special
Situations Analyst at Argus Research
Corp. for over three years. He has a
BS degree in marketing from the
University of Scranton.
13
<PAGE>
[PHOTO] Richard Glasebrook, Managing Director
of Oppenheimer Capital, has been a
portfolio manager of the Managed
Portfolio since its inception. Mr.
Glasebrook joined Oppenheimer Capital
in 1991. He has a BA from Kenyan
College and a MBA from the Harvard
School of Business Administration.
[PHOTO] William H. Gross, Managing Director and
Chief Investment Officer of PIMCO, has
been a co-portfolio manager of the
Managed Portfolio since March 2000. Mr.
Gross joined PIMCO in June 1971 and is
a founding partner of PIMCO.
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = -----------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
14
<PAGE>
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
15
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
operations ------ ------ ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains --- (0.94) (0.92) (0.64) (0.05)
------ ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
------ ------ ------ ------ ------
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93% (3) 0.74% (3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03% (3) 1.75% (3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively,
for the year ended December 31, 1996, and 0.99% and 1.50%, respectively,
for the year ended December 31, 1995.
16
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) ---
------ ------ ------ ------
Total dividends and distributions to
shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the
year ended December 31, 1995.
17
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102
Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
OCC ACCUMULATION TRUST
Small Cap Portfolio
Managed Portfolio
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Small Cap Portfolio
Managed Portfolio
U.S. Government Income Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary............................................................3
Principal Investment Strategies................................................8
Risks.........................................................................10
Investment Policies...........................................................11
Fund Management...............................................................12
Share Price...................................................................16
Distributions and Taxes.......................................................16
Financial Highlights..........................................................16
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Small Cap Portfolio.............Capital appreciation
Managed Portfolio...............Growth of capital over
time
U.S. Gov't Income Portfolio.....High current income and
protection of capital
PRINCIPAL INVESTMENT
STRATEGIES - The Small Cap Portfolio invests primarily in
equity securities of companies with market
capitalizations under $1 billion.
- The Managed Portfolio invests in common stocks,
bonds and cash equivalents, allocated based on
the investment adviser's judgment.
- The U.S. Government Income Portfolio invests
solely in debt obligations including
mortgage-backed securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to all of
the Portfolios. OpCap Advisors has retained Pacific
Investment Management Company ("PIMCO") as
sub-adviser for a portion of the assets of the
Managed Portfolio.
For the equity investments it manages directly,
i.e., the Small Cap Portfolio and the portion of the
assets of the Managed Portfolio not sub-advised by
its affiliates, OpCap Advisors applies principles of
value investing, although the individual portfolio
managers may implement those principles differently.
When selecting equity securities, OpCap Advisors
believes there are two major components of value.
- A company's ability to generate earnings that
contribute to shareholder value. OpCap Advisors
considers discretionary cash flow-cash that
remains after a company spends what is needed to
sustain its industrial position as a primary
determinant of a company's potential to add
economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
3
<PAGE>
believes is modest downward risk.
OpCap Advisors uses fundamental company analysis to
select securities. Fundamental company analysis
involves intensive evaluation of historic financial
data including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company analysis to
select companies they believe have one or more of
the following characteristics:
- substantial and growing discretionary cash flow
- strong shareholder value-oriented management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between different
sectors and among securities along the yield curve.
OpCap Advisors seeks to take advantage of maturities
and individual issues that are inexpensive and have
the potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit analysis
with an evaluation of an issuer's asset values.
There can be no assurance that OpCap Advisors will
achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the Managed
Portfolio, PIMCO develops an outlook for interest
rates, currency exchange rates and the economy;
analyzes credit and call risks, and uses other
security selection techniques. The proportion of the
Portfolio's assets committed to investment in
securities with particular characteristics (such as
quality, section interest rate or maturity) varies
based on PIMCO's outlook for the U.S. economy and
the economies of other countries in the world, the
financial markets and other factors.
PIMCO attempts to identify areas of the bond market
that are
4
<PAGE>
undervalued relative to the rest of the market.
PIMCO identifies these areas by grouping bonds into
the following sectors: money markets, governments,
corporates, mortgages, asset-backed and
international. Sophisticated proprietary software
then assists in evaluating sectors and pricing
specific securities. Once investment opportunities
are identified, PIMCO will shift assets among
sectors depending upon changes in relative
valuations and credit spreads. There is no guarantee
that PIMCO's security selection techniques will
produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest in
equity securities, you could lose money or those
Portfolios could underperform other investments if
any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e., value or
growth) falls out of favor with the stock market
- The Portfolio's investment sector (e.g., small
cap, mid cap or foreign securities, which
generally are more volatile than U.S. large cap
securities) declines or becomes less liquid
- For the Small Cap and Managed Portfolios, the
market undervalues the stocks held for longer
than expected, or the stocks purchased turn out
not to be undervalued
- The stocks selected for growth potential do not
achieve such growth.
If you invest in the Portfolios that invest in debt
securities, you could lose money or your investment
may underperform other investments if any of the
following happens:
- Interest rates rise and the bond market goes down
- Issuers of debt instruments cannot meet their
obligations
- Bond issuers' call bonds selling at a premium to
their call price before the maturity date
- Loans securing mortgage-backed obligations prepay
principal more rapidly than expected. The
Portfolios may have to reinvest these prepayments
at lower rates.
The U.S. Government Income Portfolio principally
buys fixed income securities that are issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities, so credit risk should be low.
5
<PAGE>
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of investing
in the Portfolios by showing changes in the performance of each
Portfolio's shares from year to year for the life of each
Portfolio and the highest and lowest quarterly return during the
life of each Portfolio.
The Portfolios' past performance does not necessarily indicate
how each Portfolio will perform in the future. The Portfolios'
performance does not reflect charges and deductions which are
imposed under the variable contracts.
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through
December 31, 1999, the highest quarterly return was 19.20% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (17.26)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through
December 31, 1999, the highest quarterly return was 20.80% (for the quarter
ended March 31, 1991) and the lowest
6
<PAGE>
quarterly return was (13.37)% (for the quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME PORTFOLIO
- --------------------------------------------------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
3.02% 7.04% 8.15% (1.61)%
</TABLE>
During the period from the inception of the U.S. Government Income Portfolio
through December 31, 1999, the highest quarterly return was 4.68% (for the
quarter ended September 30, 1998) and the lowest quarterly return was (1.05)%
(for the quarter ended June 30, 1999).
The table below shows how the average annual returns for one year, five years
and for the life of the Managed Portfolio compare to that of the Standard &
Poor's Composite Index of 500 Stocks, how the average annual returns for the
Small Cap Portfolio compare to the Russell 2000 and how the returns for the U.S.
Government Income Portfolio compare to the Lehman Intermediate Government Bond
Index. The table gives some indication of the risks of the Portfolios by
comparing the performance of each Portfolio with a broad measure of market
performance.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
U.S. GOVERNMENT INCOME PORTFOLIO (1.61)% N/A 5.78%
- -------------------------------- ------- --- -----
LEHMAN INTERMEDIATE GOVERNMENT
BOND INDEX 0.49% N/A 6.93%
- ---------- ----- --- -----
7
<PAGE>
<CAPTION>
<S> <C>
U.S. GOVERNMENT INCOME PORTFOLIO
YIELD FOR THE 30-DAY PERIOD ENDED
DECEMBER 31, 1999 5.38%
- ----------------- -----
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Small Cap and Managed Portfolios
immediately after the transaction were $139,812,573 and $682,601,380,
respectively, with respect to the Old Trust and for each of the Small Cap and
Managed Portfolios, $8,129,274 and $51,345,102, respectively, with respect to
the Fund. For the period prior to September 16, 1994, the performance figures
above for each of the Small Cap and Managed Portfolios reflect the performance
of the corresponding Portfolios of the Old Trust. The Old Trust commenced
operations on August 1, 1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily of
securities of companies with market capitalizations of under $1 billion at
time of purchase.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with market
capitalizations under $1 billion at the time of purchase that OpCap Advisors
believes are undervalued in the marketplace. The Portfolio may purchase
securities listed on U.S. or foreign securities exchanges or traded in the
U.S. or foreign over the counter markets. The Portfolio also may purchase
securities in initial public offerings or shortly after those offerings have
been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new management
or sale of the company. Small cap companies are followed by fewer analysts
than are large and mid cap companies. So as additional analysts follow a
small cap stock, investor demand for the stock may increase.
8
<PAGE>
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will vary
based on OpCap Advisors' and PIMCO's assessments of the relative outlook for
such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase investment
grade U.S. government and corporate bonds and high quality money market
securities. The Portfolio can invest up to 100% of its assets in debt
securities but will only do so if equity securities are not an attractive
investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
U.S. GOVERNMENT INCOME PORTFOLIO
Q What is the Portfolio's investment objective?
A High level of current income together with protection of capital by investing
exclusively in debt obligations, including mortgage-backed securities issued
or guaranteed by the United States government, its agencies or
instrumentalities.
Q What is the Portfolio's investment program?
A The Portfolio invests in debt obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities. These securities are
referred to as "U.S. Government Securities." The Portfolio also may purchase
mortgage-backed securities to effectuate this program.
OpCap Advisors observes current and historical yield relationships between
maturities and sectors to seek the best relative values. The Portfolio
generally maintains an average maturity between five and ten years. OpCap
Advisors does not attempt to forecast interest rates in managing the
Portfolio.
Q What are the potential rewards of investing in the Portfolio?
9
<PAGE>
A The Portfolio consists of the highest quality debt instruments. Since the
average maturity of the Portfolio's investments are between five and ten
years, the Portfolio should be less volatile than a longer term bond fund.
RISKS
Q What are the risks of investing in the Portfolios?
A The Small Cap and Managed Portfolios invest principally in equity securities
which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices that
turn out not to be undervalued or do not achieve expectations for growth in
income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect the
value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and have
less trading volume than large cap stocks. Small cap stocks are more volatile
and have less trading volume than both large cap and mid cap stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits of
a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invest in a mix of equity and
fixed income securities. The portfolio manager of the Managed Portfolio can
make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio, OpCap
Advisors use approximately the same standards that they set for U.S. issuers.
Foreign securities, foreign currencies and securities issued by U.S. entities
with substantial foreign operations may have additional risks than U.S.
securities.
- Political Risk - Foreign governments can take over the assets or
operations of a
10
<PAGE>
company or may impose taxes or limits on the removal of the
Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies
will be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more volatile
than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays in
settlement. These delays could cause the Portfolio to miss investment
opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet
been determined.
- Emerging Markets - There are greater risks of unstable governments and
economies and restriction on foreign ownership in these countries. The
Portfolios presently intend to limit investment in emerging markets to
no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage underlying a
mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security will
be unable to pay principal and interest payments when they are due.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval of
a majority of the outstanding voting shares of the Portfolio. A Portfolio's
investment objective is a fundamental policy. Investment restrictions that
are fundamental policies are listed in the Statement of Additional
Information. Investment policies are not fundamental and can be changed by
the Fund's Board of Trustees.
11
<PAGE>
Q Can the Portfolios use derivative instruments?
A Yes. The Small Cap and Managed and Portfolios may use the following
derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Small Cap Portfolio does not expect to use derivative instruments
significantly, if at all. The Managed Portfolio will sometimes use
derivative instruments as part of a strategy designed to reduce exposure to
other risks, such as interest risk or currency risk, and may use derivative
instruments to meet their investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates during
prior fiscal years for the Portfolios that were active during this period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or economic
conditions are adverse, it may invest up to 100% of its assets in defensive
investments such as U.S. Government securities and money market instruments.
To the extent that a Portfolio takes a defensive position, it will not be
pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
12
<PAGE>
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of
December 31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors
L.P. The mailing address is 1345 Avenue of the Americas, New York, New
York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur
13
<PAGE>
substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Small Cap Portfolio..........................................0.80%
Managed Portfolio............................................0.77%
U.S. Government Income Portfolio.............................0.60%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Managed
and Small Cap Portfolios. The rate applicable to the U.S. Government Income
Portfolio is .60% of average net assets.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
14
<PAGE>
PORTFOLIO MANAGERS
[PHOTO] Mark Degenhart, who has been a portfolio manager
of the Small Cap Portfolio since February 1999,
joined Oppenheimer Capital in January 1999 as a
Vice President with responsibilities including
research, analysis and investment management. He
acts as a portfolio manager for several small
capitalization funds. Prior to joining Oppenheimer
Capital, he was Director of Research and Associate
Portfolio Manager at Palisade Capital Management.
From 1990 to 1993, he was a Generalist for
Cazenove & Co. Previously Mr. Degenhart was a
Special Situations Analyst at Argus Research Corp.
for over three years. He has a BS degree in
marketing from the University of Scranton.
[PHOTO] Richard Glasebrook, Managing Director of
Oppenheimer Capital, has been a portfolio manager
of the Managed Portfolio since its inception. Mr.
Glasebrook joined Oppenheimer Capital in 1991. He
has a BA from Kenyan College and a MBA from the
Harvard School of Business Administration.
[PHOTO] Vikki Hanges, Senior Vice President of Oppenheimer
Capital, has been the portfolio manager of the
U.S. Government Portfolio since its inception. She
joined Oppenheimer Capital in 1982. Ms. Hanges has
a BS from Cornell University.
15
<PAGE>
[PHOTO] William H. Gross, Managing Director and Chief
Investment Officer of PIMCO, has been a
co-portfolio manager of the Managed Portfolio
since March 2000. Mr. Gross joined PIMCO in June
1971 and is a founding partner of PIMCO.
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = -------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year. The U.S. Government
Income Portfolio pays dividends from its net investment income once a month.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an
16
<PAGE>
investment in a Portfolio (assuming reinvestment of all dividends and
distributions). The information in the financial highlights table below has been
audited by PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the Portfolio's financial statements, is incorporated by reference in
the Fund's SAI, which is available upon request.
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
operations
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains --- (0.94) (0.92) (0.64) (0.05)
--- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93% (3) 0.74% (3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03% (3) 1.75% (3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively, for the
year ended December 31, 1996, and 0.99% and 1.50%, respectively, for the
year ended December 31, 1995.
17
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) ---
------ ------ ------ ------
Total dividends and distributions to shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the year
ended December 31, 1995.
18
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31, For the Period
----------------------------------------------- January 3, 1995 (1)
1999 1998 1997 1996 to December 31, 1995
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.66 $10.51 $10.38 $10.62 $10.00
------ ------ ------ ------ -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.49 0.53 0.57 0.55 0.60
Net realized and unrealized gain (loss) on
investments (0.66) 0.31 0.14 (0.24) 0.68
------ ---- ---- ------ ----
Total income (loss) from investment operations (0.17) 0.84 0.71 0.31 1.28
------ ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.49) (0.53) (0.57) (0.55) (0.60)
Net realized gains --- (0.16) (0.01) --- (0.06)
------ ------ ------
Total dividends and distributions to shareholders (0.49) (0.69) (0.58) (0.55) (0.66)
------ ------ ------ ------ ------
Net asset value, end of period $10.00 $10.66 $10.51 $10.38 $10.62
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (2) (1.6)% 8.1% 7.0% 3.0% 13.1%
------ ---- ---- ---- -----
------ ---- ---- ---- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $9,830 $10,542 $6,983 $3,422 $1,442
Ratio of expenses
to average net assets (3) 0.95% 1.00%(4) 0.93%(4) 0.96%(4) 0.75%(4)(5)
Ratio of net investment income
to average net assets 4.78% 4.96%(4) 5.51%(4) 5.27%(4) 5.75%(4)(5)
Portfolio Turnover 69% 80% 80% 31% 65%
- ------------------------------------------------------------------------------------------------------------------------------
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 1.19% and 4.77%, respectively,
for the year ended December 31, 1998, 1.06% and 5.38%, respectively, for
the year ended December 31, 1997, 2.34% and 3.89%, respectively, for the
year ended December 31, 1996, and 4.73% (annualized) and 1.77%,
(annualized), respectively, for the period January 3, 1995 (commencement of
operations) to December 31, 1995.
(5) Annualized
19
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102 Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST
Small Cap Portfolio
Managed Portfolio
U.S. Government Income Portfolio
20
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Small Cap Portfolio
Global Equity Portfolio
Managed Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary............................................................3
Principal Investment Strategies................................................8
Risks.........................................................................10
Investment Policies...........................................................12
Fund Management...............................................................13
Share Price...................................................................16
Distributions and Taxes.......................................................16
Financial Highlights..........................................................17
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Small Cap Portfolio.............Capital appreciation
Global Equity Portfolio.........Long term capital
appreciation
Managed Portfolio...............Growth of capital over
time
PRINCIPAL INVESTMENT
STRATEGIES - The Small Cap Portfolio invests primarily in
equity securities of companies with market
capitalizations under $1 billion.
- The Global Equity Portfolio invests primarily in
equity securities on a worldwide basis and may
invest in U.S. or foreign fixed income
securities.
- The Managed Portfolio invests in common stocks,
bonds and cash equivalents, allocated based on
the investment adviser's judgment.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to all of
the Portfolios. OpCap Advisors has retained Pacific
Investment Management Company ("PIMCO") as
sub-adviser for a portion of the assets of the
Managed Portfolio.
For the equity investments it manages directly,
i.e., the Small Cap and Global Equity Portfolios and
the portion of the assets of the Managed Portfolio
not sub-advised by its affiliates, OpCap Advisors
applies principles of value investing, although the
individual portfolio managers may implement those
principles differently.
When selecting equity securities, OpCap Advisors
believes there are two major components of value.
- A company's ability to generate earnings that
contribute to shareholder value. OpCap Advisors
considers discretionary cash flow-cash that
remains after a company spends what is needed to
sustain its industrial position as a primary
determinant of a company's potential to add
economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
3
<PAGE>
believes is modest downward risk.
OpCap Advisors uses fundamental company analysis to
select securities. Fundamental company analysis
involves intensive evaluation of historic financial
data including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company analysis to
select companies they believe have one or more of
the following characteristics:
- substantial and growing discretionary cash flow
- strong shareholder value-oriented management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between different
sectors and among securities along the yield curve.
OpCap Advisors seeks to take advantage of maturities
and individual issues that are inexpensive and have
the potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit analysis
with an evaluation of an issuer's asset values.
There can be no assurance that OpCap Advisors will
achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the Managed
Portfolio, PIMCO develops an outlook for interest
rates, currency exchange rates and the economy;
analyzes credit and call risks, and uses other
security selection techniques. The proportion of the
Portfolio's assets committed to investment in
securities with particular characteristics (such as
quality, section interest rate or maturity) varies
based on PIMCO's outlook for the U.S. economy and
the economies of other countries in the world, the
financial markets and other factors.
PIMCO attempts to identify areas of the bond market
that are
4
<PAGE>
undervalued relative to the rest of the market.
PIMCO identifies these areas by grouping bonds into
the following sectors: money markets, governments,
corporates, mortgages, asset-backed and
international. Sophisticated proprietary software
then assists in evaluating sectors and pricing
specific securities. Once investment opportunities
are identified, PIMCO will shift assets among
sectors depending upon changes in relative
valuations and credit spreads. There is no guarantee
that PIMCO's security selection techniques will
produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest in
equity securities, you could lose money or those
Portfolios could underperform other investments if
any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e., value or
growth) falls out of favor with the stock market
- The Portfolio's investment sector (e.g., small
cap, mid cap or foreign securities, which
generally are more volatile than U.S. large cap
securities) declines or becomes less liquid
- For the Small Cap, Global Equity and Managed
Portfolios, the market undervalues the stocks
held for longer than expected, or the stocks
purchased turn out not to be undervalued
- The stocks selected for growth potential do not
achieve such growth.
If you invest in the Portfolios that invest in debt
securities, you could lose money or your investment
may underperform other investments if any of the
following happens:
- Interest rates rise and the bond market goes down
- Issuers of debt instruments cannot meet their
obligations
- Bond issuers' call bonds selling at a premium to
their call price before the maturity date
- Loans securing mortgage-backed obligations prepay
principal more rapidly than expected. The
Portfolios may have to reinvest these prepayments
at lower rates.
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of investing
in the Portfolios by showing changes in the performance of each
Portfolio's shares from year to year for the life of each
Portfolio and the highest and lowest quarterly return during the
life of each Portfolio.
5
<PAGE>
The Portfolios' past performance does not necessarily indicate
how each Portfolio will perform in the future. The Portfolios'
performance does not reflect charges and deductions which are
imposed under the variable contracts.
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through
December 31, 1999, the highest quarterly return was 19.20% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (17.26)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
GLOBAL EQUITY
- --------------------------------------------------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
15.02% 14.02% 13.29% 26.53%
</TABLE>
During the period from the inception of the Global Equity Portfolio through
December 31, 1999, the highest quarterly return was 14.89% (for the quarter
ended December 31, 1998) and the lowest quarterly return was (15.04)% (for the
quarter ended September 30, 1998).
6
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- --------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through
December 31, 1999, the highest quarterly return was 20.80% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (13.37)% (for the
quarter ended September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Managed Portfolio compared to that of the Standard &
Poor's Composite Index of 500 Stocks, how the average annual returns for the
Small Cap Portfolio compare to the Russell 2000 and how the average annual
returns for the Global Equity Portfolio compare to the MSCI World Index. The
table gives some indication of the risks of the Portfolios by comparing the
performance of each Portfolio with a broad measure of market performance.
7
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
GLOBAL EQUITY PORTFOLIO 26.53% N/A 18.06%
- ----------------------- ------ --- ------
MSCI WORLD INDEX 24.93% N/A 20.50%
- ---------------- ------ --- ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Small Cap and Managed Portfolios
immediately after the transaction were $139,812,573 and $682,601,380,
respectively, with respect to the Old Trust and for each of the Small Cap and
Managed Portfolios, $8,129,274 and $51,345,102, respectively, with respect to
the Fund. For the period prior to September 16, 1994, the performance figures
above for each of the Small Cap and Managed Portfolios reflect the performance
of the corresponding Portfolios of the Old Trust. The Old Trust commenced
operations on August 1, 1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily of
securities of companies with market capitalizations of under $1 billion at
time of purchase.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with market
capitalizations under $1 billion at the time of purchase that OpCap Advisors
believes are undervalued in the
8
<PAGE>
marketplace. The Portfolio may purchase securities listed on U.S. or foreign
securities exchanges or traded in the U.S. or foreign over the counter
markets. The Portfolio also may purchase securities in initial public
offerings or shortly after those offerings have been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new management
or sale of the company. Small cap companies are followed by fewer analysts
than are large and mid cap companies. So as additional analysts follow a
small cap stock, investor demand for the stock may increase.
GLOBAL EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through pursuit of a global investment
strategy primarily involving equity securities.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies located
throughout the world which OpCap Advisors believes are undervalued in the
marketplace. The Portfolio may invest up to 35% of its total assets in fixed
income securities which may be lower than investment grade.
Q What are the potential rewards of investing in the Portfolio?
A Foreign securities provide additional opportunities and diversification. U.S.
stocks represent less than half of the world's stock market capitalization.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will vary
based on OpCap Advisors' and PIMCO's assessments of the relative outlook for
such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative
9
<PAGE>
values. The Portfolio may purchase securities listed on U.S. or foreign
securities exchanges or traded in the U.S. or foreign over the counter
markets. The Portfolio also may purchase investment grade U.S. government and
corporate bonds and high quality money market securities. The Portfolio can
invest up to 100% of its assets in debt securities but will only do so if
equity securities are not an attractive investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
RISKS
Q What are the risks of investing in the Portfolios?
A The Small Cap, Global Equity and Managed Portfolios invest principally in
equity securities which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices that
turn out not to be undervalued or do not achieve expectations for growth in
income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect the
value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and have
less trading volume than large cap stocks. Small cap stocks are more volatile
and have less trading volume than both large cap and mid cap stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits of
a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invest in a mix of equity and
fixed income securities. The portfolio manager of the Managed Portfolio can
make the wrong allocation decisions.
10
<PAGE>
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolios,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by U.S.
entities with substantial foreign operations may have additional risks than
U.S. securities. This risk is greater for the Global Equity Portfolio which
invests on a worldwide basis.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the removal of
the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies will
be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more volatile than
the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays in
settlement. These delays could cause the Portfolio to miss investment
opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet been
determined.
- Emerging Markets - There are greater risks of unstable governments and
economies and restriction on foreign ownership in these countries. The
Portfolios presently intend to limit investment in emerging markets to
no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage underlying a
mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security will
be unable to pay principal and interest payments when they are due.
To the extent that the Global Equity Portfolio invests in lower grade debt
securities, you should know that lower grade debt may have the following
additional risks:
11
<PAGE>
- more volatility
- less liquidity
- greater risk of issuer default or insolvency.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval of
a majority of the outstanding voting shares of the Portfolio. A Portfolio's
investment objective is a fundamental policy. Investment restrictions that
are fundamental policies are listed in the Statement of Additional
Information. Investment policies are not fundamental and can be changed by
the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
A Yes. The Small Cap, Global Equity and Managed Portfolios may use the
following derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Small Cap and Global Equity Portfolios do not expect to use derivative
instruments significantly, if at all. The Managed Portfolio will sometimes
use derivative instruments as part of a strategy designed to reduce
exposure to other risks, such as interest risk or currency risk, and may
use derivative instruments to meet their investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial
12
<PAGE>
Highlights table in this prospectus shows the turnover rates during prior
fiscal years for the Portfolios that were active during this period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or economic
conditions are adverse, it may invest up to 100% of its assets in defensive
investments such as U.S. Government securities and money market instruments.
To the extent that a Portfolio takes a defensive position, it will not be
pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of
December 31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors
L.P. The mailing address is 1345 Avenue of the Americas, New York, New
York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and
13
<PAGE>
Hypo Vereinsbank. These entities, as well as certain broker- dealers controlled
by or affiliated with these entities, such as Bankers Trust Company and BT Alex
Brown, Inc. are considered the "Affiliated Brokers." Once the Allianz
transaction is consummated, absent an SEC exemption or other relief, the Fund's
Portfolios would generally be precluded from effecting principal transactions
with the Affiliated Brokers, and each Portfolio's ability to purchase securities
being underwritten by an Affiliated Broker or to utilize the Affiliated Brokers
for agency transactions would be subject to restrictions. OpCap Advisors does
not believe that the restrictions on transactions with the Affiliated Brokers
described above will materially adversely affect its ability, post-closing, to
provide services to the Fund, the ability of the Portfolios to take advantage of
market opportunities, or the overall performance of the Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Small Cap Portfolio......................................0.80%
Global Equity Portfolio..................................0.80%
Managed Portfolio........................................0.77%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Global
Equity, Managed and Small Cap Portfolios.
14
<PAGE>
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGERS
[PHOTO] Mark Degenhart, who has been a portfolio manager of
the Small Cap Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as a Vice
President with responsibilities including research,
analysis and investment management. He acts as a
portfolio manager for several small capitalization
funds. Prior to joining Oppenheimer Capital, he was
Director of Research and Associate Portfolio Manager
at Palisade Capital Management. From 1990 to 1993, he
was a Generalist for Cazenove & Co. Previously Mr.
Degenhart was a Special Situations Analyst at Argus
Research Corp. for over three years. He has a BS
degree in marketing from the University of Scranton.
[PHOTO] Elisa A. Mazen, Senior Vice President, has been a
member of the international equity investment team at
Oppenheimer Capital since 1994 and is primarily
responsible for European research within the firm's
global effort. Prior to joining Oppenheimer Capital,
she was a Portfolio Manager/ Analyst at Clemente
Capital, Inc. Ms. Mazen graduated with a BA in
economics/ finance from Douglass College, Rutgers
University in 1983.
15
<PAGE>
[PHOTO] Richard Glasebrook, Managing Director of Oppenheimer
Capital, has managed the domestic portion of the
Global Equity Portfolio since its inception. Mr.
Glasebrook joined Oppenheimer Capital in 1991. He has
a BA from Kenyan College and a MBA from the Harvard
School of Business Administration. Mr. Glasebrook has
been a portfolio manager of the Managed Portfolio
since its inception.
[PHOTO] William H. Gross, Managing Director and Chief
Investment Officer of PIMCO, has been a co-portfolio
manager of the Managed Portfolio since March 2000.
Mr. Gross joined PIMCO in June 1971 and is a founding
partner of PIMCO.
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = -------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment
16
<PAGE>
for contract owners of variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
17
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
operations ------ ------ ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains --- (0.94) (0.92) (0.64) (0.05)
--- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93%(3) 0.74%(3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03%(3) 1.75%(3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively, for the
year ended December 31, 1996, and 0.99% and 1.50%, respectively, for the
year ended December 31, 1995.
18
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31, For the Period
----------------------------------------------- March 1, 1995 (1)
1999 1998 1997 1996 to December 31, 1995
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.43 $14.32 $13.23 $11.61 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.31 0.12 0.06 0.04 0.05
Net realized and unrealized gain
on investments and foreign currency transactions 3.78 1.78 1.79 1.70 1.83
---- ---- ---- ---- ----
Total income from investment operations 4.09 1.90 1.85 1.74 1.88
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From Net investment income in excess of (0.26) (0.18) (0.04) (0.05) (0.03)
net investment income -- -- (0.03) -- --
From net realized gains (2.70) (0.61) (0.69) (0.07) (0.24)
------ ------ ------ ------ ------
Total dividends and distributions to shareholders (2.96) (0.79) (0.76) (0.12) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period $16.56 $15.43 $14.32 $13.23 $11.61
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (2) 26.5% 13.3% 14.0% 15.0% 18.9%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $43,412 $34,777 $25,874 $16,972 $2,891
Ratio of net operating expenses
to average net assets (3) 1.10% 1.13% 1.19%(4) 1.42%(4) 1.25%(4)(5)
Ratio of net investment income
to average net assets 0.48% 0.79% 0.45%(4) 0.81%(4) 1.02%(4)(5)
Portfolio Turnover 83% 55% 53% 40% 67%
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 (loss) to average net assets would have been 1.20% and 0.44%,
respectively, for the year ended December 31, 1997, 1.83% and 0.40%,
respectively, for the year ended December 31, 1996 and 3.94% (annualized)
and (1.67)% (annualized), respectively, for the period March 1, 1995
(commencement of operations) to December 31, 1995.
(5) Annualized.
19
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) ---
------ ------ ------ ------
Total dividends and distributions to shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the year
ended December 31, 1995.
20
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102 Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST
Small Cap Portfolio
Global Equity Portfolio
Managed Portfolio
21
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Equity Portfolio
Small Cap Portfolio
Managed Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary.................................................3
Principal Investment Strategies.....................................8
Risks..............................................................10
Investment Policies................................................11
Fund Management....................................................12
Share Price........................................................16
Distributions and Taxes............................................16
Financial Highlights...............................................16
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Equity Portfolio............Long term capital appreciation
Small Cap Portfolio.........Capital appreciation
Managed Portfolio...........Growth of capital over time
PRINCIPAL INVESTMENT
STRATEGIES - The Equity Portfolio invests primarily
in equity securities listed on the New
York Stock Exchange.
- The Small Cap Portfolio invests
primarily in equity securities of
companies with market capitalizations
under $1 billion.
- The Managed Portfolio invests in common
stocks, bonds and cash equivalents,
allocated based on the investment
adviser's judgment.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to
all of the Portfolios. OpCap Advisors has
retained Pacific Investment Management
Company ("PIMCO") as sub-adviser for a
portion of the assets of the Managed
Portfolio.
For the equity investments it manages
directly, i.e., the Equity and Small Cap
Portfolios and the portion of the assets of
the Managed Portfolio not sub-advised by its
affiliates, OpCap Advisors applies
principles of value investing, although the
individual portfolio managers may implement
those principles differently.
When selecting equity securities, OpCap
Advisors believes there are two major
components of value.
- A company's ability to generate earnings
that contribute to shareholder value.
OpCap Advisors considers discretionary
cash flow-cash that remains after a
company spends what is needed to sustain
its industrial position as a primary
determinant of a company's potential to
add economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company
analysis to select
3
<PAGE>
securities. Fundamental company analysis
involves intensive evaluation of historic
financial data including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company
analysis to select companies they believe
have one or more of the following
characteristics:
- substantial and growing discretionary
cash flow
- strong shareholder value-oriented
management
- valuable consumer or commercial
franchises
- high returns on capital
- favorable price to intrinsic value
relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between
different sectors and among securities along
the yield curve. OpCap Advisors seeks to
take advantage of maturities and individual
issues that are inexpensive and have the
potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit
analysis with an evaluation of an issuer's
asset values.
There can be no assurance that OpCap
Advisors will achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the
Managed Portfolio, PIMCO develops an outlook
for interest rates, currency exchange rates
and the economy; analyzes credit and call
risks, and uses other security selection
techniques. The proportion of the
Portfolio's assets committed to investment
in securities with particular
characteristics (such as quality, section
interest rate or maturity) varies based on
PIMCO's outlook for the U.S. economy and the
economies of other countries in the world,
the financial markets and other factors.
PIMCO attempts to identify areas of the bond
market that are undervalued relative to the
rest of the market. PIMCO identifies these
areas by grouping bonds into the following
sectors: money markets, governments,
corporates, mortgages, asset-backed and
4
<PAGE>
international. Sophisticated proprietary
software then assists in evaluating sectors
and pricing specific securities. Once
investment opportunities are identified,
PIMCO will shift assets among sectors
depending upon changes in relative
valuations and credit spreads. There is no
guarantee that PIMCO's security selection
techniques will produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest
in equity securities, you could lose money
or those Portfolios could underperform other
investments if any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e.,
value or growth) falls out of favor with
the stock market
- The Portfolio's investment sector (e.g.,
small cap, mid cap or foreign securities,
which generally are more volatile than
U.S. large cap securities) declines or
becomes less liquid
- For the Equity, Small Cap and Managed
Portfolios, the market undervalues the
stocks held for longer than expected, or
the stocks purchased turn out not to be
undervalued
- The stocks selected for growth potential
do not achieve such growth.
If you invest in the Portfolios that invest
in debt securities, you could lose money or
your investment may underperform other
investments if any of the following happens:
- Interest rates rise and the bond market
goes down
- Issuers of debt instruments cannot meet
their obligations
- Bond issuers' call bonds selling at a
premium to their call price before the
maturity date
- Loans securing mortgage-backed
obligations prepay principal more rapidly
than expected. The Portfolios may have to
reinvest these prepayments at lower
rates.
5
<PAGE>
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of
investing in the Portfolios by showing changes in the
performance of each Portfolio's shares from year to year
for the life of each Portfolio and the highest and lowest
quarterly return during the life of each Portfolio.
The Portfolios' past performance does not necessarily
indicate how each Portfolio will perform in the future. The
Portfolios' performance does not reflect charges and
deductions which are imposed under the variable contracts.
[BAR CHART]
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- -----------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.22)% 31.22% 17.90% 7.85% 3.81% 38.85% 23.36% 26.63% 11.86% 2.54%
</TABLE>
During the period from the inception of the Equity Portfolio through December
31, 1999, the highest quarterly return was 14.17% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.32)% (for the quarter ended
September 30, 1990).
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- -------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through December
31, 1999, the highest quarterly return was 19.20% (for the quarter ended March
31, 1991) and the lowest quarterly return was (17.26)% (for the quarter ended
September 30, 1998).
6
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- -------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through December
31, 1999, the highest quarterly return was 20.80% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.37)% (for the quarter ended
September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Equity and Managed Portfolios compare to that of the
Standard & Poor's Composite Index of 500 Stocks and how the average annual
returns for the Small Cap Portfolio compare to the Russell 2000. The table gives
some indication of the risks of the Portfolios by comparing the performance of
each Portfolio with a broad measure of market performance.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
EQUITY PORTFOLIO 2.54% 19.98% 15.66%*
- ---------------- ----- ------ -------
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Equity, Small Cap and Managed Portfolios
immediately after the transaction were $86,789,755,
7
<PAGE>
$139,812,573 and $682,601,380, respectively, with respect to the Old Trust and
for each of the Equity, Small Cap and Managed Portfolios, $3,764,598, $8,129,274
and $51,345,102, respectively, with respect to the Fund. For the period prior to
September 16, 1994, the performance figures above for each of the Equity, Small
Cap and Managed Portfolios reflect the performance of the corresponding
Portfolios of the Old Trust. The Old Trust commenced operations on August 1,
1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through investment in a diversified
portfolio of equity securities selected on the basis of a value approach to
investing.
Q What is the Portfolio's investment program?
A The Equity Portfolio invests primarily in equity securities of companies
that OpCap Advisors believes are undervalued in the marketplace. Under
normal conditions, the Portfolio will invest at least 65% of its total
assets in equity securities listed on the New York Stock Exchange. The
Portfolio also may purchase securities listed on other U.S. or foreign
securities exchanges or traded in the U.S. or foreign over the counter
markets.
The Equity Portfolio is managed to follow a composite portfolio constructed
by a group of senior portfolio managers at OpCap Advisors.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. Equity investors should have a long term investment
horizon and should be prepared for the ups and downs of the stock markets.
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily
of securities of companies with market capitalizations of under $1 billion
at time of purchase.
8
<PAGE>
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations under $1 billion at the time of purchase that OpCap
Advisors believes are undervalued in the marketplace. The Portfolio may
purchase securities listed on U.S. or foreign securities exchanges or
traded in the U.S. or foreign over the counter markets. The Portfolio also
may purchase securities in initial public offerings or shortly after those
offerings have been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new
management or sale of the company. Small cap companies are followed by
fewer analysts than are large and mid cap companies. So as additional
analysts follow a small cap stock, investor demand for the stock may
increase.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will
vary based on OpCap Advisors' and PIMCO's assessments of the relative
outlook for such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase
investment grade U.S. government and corporate bonds and high quality money
market securities. The Portfolio can invest up to 100% of its assets in
debt securities but will only do so if equity securities are not an
attractive investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
9
<PAGE>
RISKS
Q What are the risks of investing in the Portfolios?
A The Equity, Small Cap and Managed Portfolios invest principally in equity
securities which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices
that turn out not to be undervalued or do not achieve expectations for
growth in income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect
the value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and
have less trading volume than large cap stocks. Small cap stocks are more
volatile and have less trading volume than both large cap and mid cap
stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits
of a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invest in a mix of equity and
fixed income securities. The portfolio manager of the Managed Portfolio can
make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by
U.S. entities with substantial foreign operations may have additional risks
than U.S. securities.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the
removal of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies
will be affected by changes in the value of that currency.
10
<PAGE>
- Liquidity - Some foreign markets are less liquid and more
volatile than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays
in settlement. These delays could cause the Portfolio to miss
investment opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not
yet been determined.
- Emerging Markets - There are greater risks of unstable governments
and economies and restriction on foreign ownership in these
countries. The Portfolios presently intend to limit investment in
emerging markets to no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage
underlying a mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security
will be unable to pay principal and interest payments when they
are due.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. A
Portfolio's investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. Investment policies are not fundamental and can be
changed by the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
A Yes. The Equity, Small Cap and Managed Portfolios may use the following
derivative instruments:
11
<PAGE>
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Equity and Small Cap Portfolios do not expect to use derivative
instruments significantly, if at all. The Managed Portfolio will sometimes
use derivative instruments as part of a strategy designed to reduce
exposure to other risks, such as interest risk or currency risk, and may
use derivative instruments to meet their investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates
during prior fiscal years for the Portfolios that were active during this
period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or
economic conditions are adverse, it may invest up to 100% of its assets in
defensive investments such as U.S. Government securities and money market
instruments. To the extent that a Portfolio takes a defensive position, it
will not be pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of December
31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors L.P. The
mailing address is 1345 Avenue of the Americas, New York, New York 10105.
12
<PAGE>
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and
13
<PAGE>
conducts the business affairs of the Fund. Employees of Oppenheimer Capital,
PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Equity Portfolio....................................0.80%
Small Cap Portfolio.................................0.80%
Managed Portfolio...................................0.77%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Equity,
Managed and Small Cap Portfolios.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGERS
[PHOTO] Mark Degenhart, who has been a
portfolio manager of the Small Cap
Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as
a Vice President with responsibilities
including research, analysis and
investment management. He acts as a
portfolio manager for several small
capitalization funds. Prior to joining
Oppenheimer Capital, he was Director
of Research and Associate Portfolio
Manager at Palisade Capital
Management. From 1990 to 1993, he was
a Generalist for Cazenove & Co.
Previously Mr. Degenhart was a Special
Situations Analyst at Argus Research
Corp. for over three years. He has a
BS degree in marketing from the
University of Scranton.
14
<PAGE>
[PHOTO] Richard Glasebrook, Managing Director
of Oppenheimer Capital, has been a
portfolio manager of the Managed
Portfolio since its inception. Mr.
Glasebrook joined Oppenheimer Capital
in 1991. He has a BA from Kenyan
College and a MBA from the Harvard
School of Business Administration.
[PHOTO] William H. Gross, Managing Director and
Chief Investment Officer of PIMCO, has
been a co-portfolio manager of the
Managed Portfolio since March 2000. Mr.
Gross joined PIMCO in June 1971 and is
a founding partner of PIMCO.
15
<PAGE>
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
Net Asset Value = TOTAL PORTFOLIO ASSETS - LIABILITIES
-------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Portfolio's financial statements, is incorporated by reference in the Fund's
SAI, which is available upon request.
16
<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.
(3) During the fiscal years indicated above, the Investment 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, 1.26% and 1.20%,
respectively, for the year ended December 31, 1995.
17
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
------ ------ ---- ---- ----
operations
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains --- (0.94) (0.92) (0.64) (0.05)
--- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
------ ------ ------ ------ ------
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93% (3) 0.74% (3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03% (3) 1.75% (3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively,
for the year ended December 31, 1996, and 0.99% and 1.50%, respectively,
for the year ended December 31, 1995.
18
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout each year:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) ---
------ ------ ------ ------
Total dividends and distributions to shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the
year ended December 31, 1995.
19
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102
Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
OCC ACCUMULATION TRUST
Equity Portfolio
Managed Portfolio
Small Cap Portfolio
20
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Equity Portfolio
Mid Cap Portfolio
Small Cap Portfolio
Managed Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary............................................................3
Principal Investment Strategies................................................8
Risks.........................................................................11
Investment Policies...........................................................12
Fund Management...............................................................13
Share Price...................................................................17
Distributions and Taxes.......................................................17
Financial Highlights..........................................................17
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT GOALS Equity Portfolio...............Long term capital
appreciation
Mid Cap Portfolio..............Long term capital
appreciation
Small Cap Portfolio............Capital appreciation
Managed Portfolio..............Growth of capital over time
PRINCIPAL INVESTMENT
STRATEGIES - The Equity Portfolio invests primarily in equity
securities listed on the New York Stock Exchange.
- The Mid Cap Portfolio invests primarily in equity
securities of companies with market
capitalizations between $500 million and $5
billion.
- The Small Cap Portfolio invests primarily in
equity securities of companies with market
capitalizations under $1 billion.
- The Managed Portfolio invests in common stocks,
bonds and cash equivalents, allocated based on
the investment adviser's judgment.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to all of
the Portfolios. OpCap Advisors has retained Pacific
Investment Management Company ("PIMCO") as
sub-adviser for a portion of the assets of the
Managed Portfolio.
For the equity investments it manages directly,
i.e., the Equity, Mid Cap and Small Cap Portfolios
and the portion of the assets of the Managed
Portfolios not sub-advised by its affiliates, OpCap
Advisors applies principles of value investing,
although the individual portfolio managers may
implement those principles differently.
When selecting equity securities, OpCap Advisors
believes there are two major components of value.
- A company's ability to generate earnings that
contribute to shareholder value. OpCap Advisors
considers discretionary cash flow-cash that
remains after a company spends what is needed to
sustain its industrial position as a primary
3
<PAGE>
determinant of a company's potential to add
economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it believes
is modest downward risk.
OpCap Advisors uses fundamental company analysis to
select securities. Fundamental company analysis
involves intensive evaluation of historic financial
data including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company analysis to
select companies they believe have one or more of
the following characteristics:
- substantial and growing discretionary cash flow
- strong shareholder value-oriented management
- valuable consumer or commercial franchises
- high returns on capital
- favorable price to intrinsic value relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between different
sectors and among securities along the yield curve.
OpCap Advisors seeks to take advantage of maturities
and individual issues that are inexpensive and have
the potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit analysis
with an evaluation of an issuer's asset values.
There can be no assurance that OpCap Advisors will
achieve its goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the Managed
Portfolio, PIMCO develops an outlook for interest
rates, currency exchange rates and the economy;
analyzes credit and call risks, and uses other
security selection techniques. The proportion of the
Portfolio's assets committed to investment in
securities with particular characteristics (such as
quality, section interest rate or maturity) varies
based on PIMCO's outlook for the U.S. economy and
the
4
<PAGE>
economies of other countries in the world, the
financial markets and other factors.
PIMCO attempts to identify areas of the bond market
that are undervalued relative to the rest of the
market. PIMCO identifies these areas by grouping
bonds into the following sectors: money markets,
governments, corporates, mortgages, asset-backed and
international. Sophisticated proprietary software
then assists in evaluating sectors and pricing
specific securities. Once investment opportunities
are identified, PIMCO will shift assets among
sectors depending upon changes in relative
valuations and credit spreads. There is no guarantee
that PIMCO's security selection techniques will
produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest in
equity securities, you could lose money or those
Portfolios could underperform other investments if
any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e., value or
growth) falls out of favor with the stock market
- The Portfolio's investment sector (e.g., small
cap, mid cap or foreign securities, which
generally are more volatile than U.S. large cap
securities) declines or becomes less liquid
- For the Equity, Mid Cap, Small Cap and Managed
Portfolios, the market undervalues the stocks
held for longer than expected, or the stocks
purchased turn out not to be undervalued
- The stocks selected for growth potential do not
achieve such growth.
If you invest in the Portfolios that invest in debt
securities, you could lose money or your investment
may underperform other investments if any of the
following happens:
- Interest rates rise and the bond market goes down
- Issuers of debt instruments cannot meet their
obligations
- Bond issuers' call bonds selling at a premium to
their call price before the maturity date
- Loans securing mortgage-backed obligations prepay
principal more rapidly than expected. The
Portfolios may have to reinvest these prepayments
at lower rates.
5
<PAGE>
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of
investing in the Portfolios by showing changes in the
performance of each Portfolio's shares from year to year for
the life of each Portfolio and the highest and lowest quarterly
return during the life of each Portfolio.
The Portfolios' past performance does not necessarily indicate
how each Portfolio will perform in the future. The Portfolios'
performance does not reflect charges and deductions which are
imposed under the variable contracts.
[BAR CHART]
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.22)% 31.22% 17.90% 7.85% 3.81% 38.85% 23.36% 26.63% 11.86% 2.54%
</TABLE>
During the period from the inception of the Equity Portfolio through
December 31, 1999, the highest quarterly return was 14.17% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (13.32)% (for the
quarter ended September 30, 1990).
[BAR CHART]
<TABLE>
<CAPTION>
MID CAP PORTFOLIO
- --------------------------------------------------------------------------------
1999
<S> <C>
21.63%
</TABLE>
During the period from the inception of the Mid Cap Portfolio through
December 31, 1999, the highest quarterly return was 23.78% (for the quarter
ended December 31, 1999) and the lowest quarterly return was (17.87)% (for the
quarter ended September 30, 1998).
6
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- -------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through
December 31, 1999, the highest quarterly return was 19.20% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (17.26)% (for the
quarter ended September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through
December 31, 1999, the highest quarterly return was 20.80% (for the quarter
ended March 31, 1991) and the lowest quarterly return was (13.37)% (for the
quarter ended September 30, 1998).
The table below shows how the average annual returns for one year, five years
and for the life of the Equity and Managed Portfolios compare to that of the
Standard & Poor's Composite Index of 500 Stocks, how the average annual returns
for one year and for the life of the Mid Cap Portfolio compare to those of the
Wilshire 750 Mid Cap Index and how the average annual returns for the Small Cap
Portfolio compare to the Russell 2000. The table gives some indication of the
risks of the Portfolios by comparing the performance of each Portfolio with a
broad measure of market performance.
7
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
--------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
EQUITY PORTFOLIO 2.54% 19.98% 15.66%*
- ---------------- ----- ------ -------
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.83)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
MID CAP PORTFOLIO 21.63% N/A 9.96%
- ----------------- ------ --- -----
WILSHIRE 750 MID CAP INDEX 26.63% N/A 16.29%
- -------------------------- ------ --- ------
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Equity, Small Cap and Managed Portfolios
immediately after the transaction were $86,789,755, $139,812,573 and
$682,601,380, respectively, with respect to the Old Trust and for each of the
Equity, Small Cap and Managed Portfolios, $3,764,598, $8,129,274 and
$51,345,102, respectively, with respect to the Fund. For the period prior to
September 16, 1994, the performance figures above for each of the Equity, Small
Cap and Managed Portfolios reflect the performance of the corresponding
Portfolios of the Old Trust. The Old Trust commenced operations on August 1,
1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through investment in a diversified portfolio
of equity securities selected on the basis of a value approach to investing.
Q What is the Portfolio's investment program?
8
<PAGE>
A The Equity Portfolio invests primarily in equity securities of companies that
OpCap Advisors believes are undervalued in the marketplace. Under normal
conditions, the Portfolio will invest at least 65% of its total assets in
equity securities listed on the New York Stock Exchange. The Portfolio also
may purchase securities listed on other U.S. or foreign securities exchanges
or traded in the U.S. or foreign over the counter markets.
The Equity Portfolio is managed to follow a composite portfolio constructed
by a group of senior portfolio managers at OpCap Advisors.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long term
growth of capital. Equity investors should have a long term investment
horizon and should be prepared for the ups and downs of the stock markets.
MID CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with market
capitalizations between $500 million and $5 billion at the time of purchase
which OpCap Advisors believes are undervalued. The majority of the stocks
purchased by the Portfolio will be listed on a domestic stock exchange or
traded in the U.S. over the counter market. The Portfolio may purchase
foreign securities that are listed on a U.S. or foreign exchange or traded in
the U.S. or foreign over the counter markets. The Portfolio also may purchase
securities in initial public offerings or shortly after those offerings have
been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital. Mid cap
companies generally are studied by fewer analysts than are large cap
companies. Institutional investors may not want to hold large positions in
mid cap companies. Opportunities for capital appreciation for mid cap
companies could result from regional or product line expansion or sale of the
company.
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily of
securities of
9
<PAGE>
companies with market capitalizations of under $1 billion at time of
purchase.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with market
capitalizations under $1 billion at the time of purchase that OpCap Advisors
believes are undervalued in the marketplace. The Portfolio may purchase
securities listed on U.S. or foreign securities exchanges or traded in the
U.S. or foreign over the counter markets. The Portfolio also may purchase
securities in initial public offerings or shortly after those offerings have
been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new management
or sale of the company. Small cap companies are followed by fewer analysts
than are large and mid cap companies. So as additional analysts follow a
small cap stock, investor demand for the stock may increase.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will vary
based on OpCap Advisors' and PIMCO's assessments of the relative outlook for
such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase investment
grade U.S. government and corporate bonds and high quality money market
securities. The Portfolio can invest up to 100% of its assets in debt
securities but will only do so if equity securities are not an attractive
investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
10
<PAGE>
RISKS
Q What are the risks of investing in the Portfolios?
A The Equity, Mid Cap, Small Cap and Managed Portfolios invest principally in
equity securities which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices that
turn out not to be undervalued or do not achieve expectations for growth in
income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect the
value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and have
less trading volume than large cap stocks. Small cap stocks are more volatile
and have less trading volume than both large cap and mid cap stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits of
a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed Portfolio invest in a mix of equity and
fixed income securities. The portfolio manager of the Managed Portfolio can
make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolio, OpCap
Advisors use approximately the same standards that they set for U.S. issuers.
Foreign securities, foreign currencies and securities issued by U.S. entities
with substantial foreign operations may have additional risks than U.S.
securities.
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the removal of
the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies will
be affected by changes in the value of that currency.
11
<PAGE>
- Liquidity - Some foreign markets are less liquid and more volatile than
the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays in
settlement. These delays could cause the Portfolio to miss investment
opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet been
determined.
- Emerging Markets - There are greater risks of unstable governments and
economies and restriction on foreign ownership in these countries. The
Portfolios presently intend to limit investment in emerging markets to
no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage underlying a
mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security will
be unable to pay principal and interest payments when they are due.
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval of
a majority of the outstanding voting shares of the Portfolio. A Portfolio's
investment objective is a fundamental policy. Investment restrictions that
are fundamental policies are listed in the Statement of Additional
Information. Investment policies are not fundamental and can be changed by
the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
A Yes. The Equity, Mid Cap, Small Cap and Managed Portfolios may use the
following derivative instruments:
12
<PAGE>
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Equity, Mid Cap and Small Cap Portfolios do not expect to use
derivative instruments significantly, if at all. The Managed Portfolio will
sometimes use derivative instruments as part of a strategy designed to
reduce exposure to other risks, such as interest risk or currency risk, and
may use derivative instruments to meet their investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates during
prior fiscal years for the Portfolios that were active during this period.
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or economic
conditions are adverse, it may invest up to 100% of its assets in defensive
investments such as U.S. Government securities and money market instruments.
To the extent that a Portfolio takes a defensive position, it will not be
pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of
December 31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors
L.P. The mailing address is 1345 Avenue of the Americas, New York, New
York 10105.
13
<PAGE>
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers." Once
the Allianz transaction is consummated, absent an SEC exemption or other relief,
the Fund's Portfolios would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and each Portfolio's ability to
purchase securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and
14
<PAGE>
conducts the business affairs of the Fund. Employees of Oppenheimer Capital,
PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap also pays a portion of its
advisory fees to PIMCO in return for the advisory services PIMCO performs for
the Managed Portfolio. The Portfolios of the Fund listed below paid OpCap
Advisors the following fees as a percentage of average daily net assets during
the fiscal year ended December 31, 1999:
<TABLE>
<S> <C>
Equity Portfolio...........................................0.80%
Mid Cap Portfolio..........................................0.10%
Small Cap Portfolio........................................0.80%
Managed Portfolio..........................................0.77%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
OpCap Advisors waived a portion of its fees from the MidCap Portfolio for the
fiscal year ended December 31, 1999. Absent such waiver the advisory fee for the
MidCap Portfolio would have been 0.80% of the average daily net assets of the
Portfolio.
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Equity,
Managed, Small Cap and Mid Cap Portfolios.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for many of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGERS
[PHOTO] Louis Goldstein has been the portfolio manager of
the Mid Cap Portfolio since its inception. Mr.
Goldstein, a Senior Vice President of Oppenheimer
Capital, joined Oppenheimer Capital in 1991. He
earned a BS Summa Cum Laude and a MBA in Finance
with honors from the Wharton School of Business.
15
<PAGE>
[PHOTO] Mark Degenhart, who has been a portfolio manager of
the Small Cap Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as a Vice
President with responsibilities including research,
analysis and investment management. He acts as a
portfolio manager for several small capitalization
funds. Prior to joining Oppenheimer Capital, he was
Director of Research and Associate Portfolio Manager
at Palisade Capital Management. From 1990 to 1993,
he was a Generalist for Cazenove & Co. Previously
Mr. Degenhart was a Special Situations Analyst at
Argus Research Corp. for over three years. He has a
BS degree in marketing from the University of
Scranton.
[PHOTO] Richard Glasebrook, Managing Director of Oppenheimer
Capital, has been a portfolio manager of the Managed
Portfolio since its inception. Mr. Glasebrook joined
Oppenheimer Capital in 1991. He has a BA from Kenyan
College and a MBA from the Harvard School of
Business Administration.
[PHOTO] William H. Gross, Managing Director and Chief
Investment Officer of PIMCO, has been a co-portfolio
manager of the Managed Portfolio since March 2000.
Mr. Gross joined PIMCO in June 1971 and is a
founding partner of PIMCO.
16
<PAGE>
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = -------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table for the fiscal periods ended on
or before December 31, 1998 has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with the corresponding
Portfolio's financial statements, is included in the Fund's SAI, which is
available upon request. The information in the financial highlights table for
the year ended on December 31, 1999, along with the corresponding Portfolios'
financial statements are audited. The interim financial statements are
included in the Fund's SAI.
17
<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.
(3) During the fiscal years indicated above, the Investment 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, 1.26% and 1.20%, respectively, for
the year ended December 31, 1995.
18
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
For the Year For the Period
Ended February 9, 1998 (1) to
December 31, 1999 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.
(5) During the fiscal periods indicated above, the Investment 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.
19
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
operations ------ ------ ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains --- (0.94) (0.92) (0.64) (0.05)
--- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
------ ------ ------ ------ ------
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93%(3) 0.74%(3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03%(3) 1.75%(3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively,
for the year ended December 31, 1996, and 0.99% and 1.50%, respectively,
for the year ended December 31, 1995.
20
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) ---
------ ------ ------ ------
Total dividends and distributions to shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the year
ended December 31, 1995.
21
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102 Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST
Equity Portfolio
Mid Cap Portfolio
Small Cap Portfolio
Managed Portfolio
22
<PAGE>
OCC ACCUMULATION TRUST
Prospectus May 1, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolios (the "Portfolios"):
Equity Portfolio
Blended Equity Portfolio
Large Cap Growth Portfolio
Small Cap Growth Portfolio
Target Portfolio
Mid Cap Portfolio
Small Cap Portfolio
Global Equity Portfolio
Managed Portfolio
Balanced Portfolio
U.S. Government Income Portfolio
Shares of the Portfolios are sold only to variable accounts of certain life
insurance companies as an investment vehicle for their variable annuity and
variable life insurance contracts and to qualified pension and retirement plans.
The Securities and Exchange Commission has not approved any Portfolio's shares
as an investment or determined whether this Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
Risk/Return Summary......................................................3
Principal Investment Strategies.........................................12
Risks...................................................................18
Investment Policies.....................................................20
Fund Management.........................................................21
Share Price.............................................................26
Distributions and Taxes.................................................26
Financial Highlights....................................................26
2
<PAGE>
RISK/RETURN SUMMARY
<TABLE>
<S><C>
INVESTMENT GOALS Equity Portfolio.........................Long term capital appreciation
Blended Equity Portfolio.................Long term capital appreciation
Large Cap Growth Portfolio...............Long term capital appreciation
Small Cap Growth Portfolio...............Capital appreciation
Target Portfolio.........................Capital appreciation
Mid Cap Portfolio........................Long term capital appreciation
Small Cap Portfolio......................Capital appreciation
Global Equity Portfolio..................Long term capital appreciation
Managed Portfolio........................Growth of capital over time
Balanced Portfolio.......................Growth of capital and investment income
U.S. Gov't Income Portfolio..............High current income and protection of capital
</TABLE>
PRINCIPAL INVESTMENT
STRATEGIES - The Equity Portfolio invests primarily
in equity securities listed on the New
York Stock Exchange.
- The Blended Equity Portfolio invests
generally in equity securities of
companies with market capitalizations of
at least $5 billion that the sub-adviser
believes offer growth opportunities and
in equity securities of companies with
market capitalizations of more than $2
billion that the investment adviser
believes are undervalued relative to
their industry group.
- The Large Cap Growth Portfolio invests
primarily in equity securities of
companies with market capitalizations of
at least $5 billion.
- The Small Cap Growth Portfolio invests
primarily in equity securities of
companies with market capitalizations
under $2 billion.
3
<PAGE>
- The Target Portfolio invests primarily
in equity securities of companies with
market capitalizations between $1
billion and $10 billion.
- The Mid Cap Portfolio invests primarily
in equity securities of companies with
market capitalizations between $500
million and $5 billion.
- The Small Cap Portfolio invests
primarily in equity securities of
companies with market capitalizations
under $1 billion.
- The Global Equity Portfolio invests
primarily in equity securities on a
worldwide basis and may invest in U.S.
or foreign fixed income securities.
- The Managed Portfolio invests in common
stocks, bonds and cash equivalents,
allocated based on the investment
adviser's judgment.
- The Balanced Portfolio invests in common
stocks, preferred stocks, securities
convertible into common stock and debt
securities.
- The U.S. Government Income Portfolio
invests solely in debt obligations
including mortgage-backed securities
issued or guaranteed by the U.S.
government, its agencies or
instrumentalities.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to
all of the Portfolios. OpCap Advisors has
retained PIMCO Equity Advisors, a division
of PIMCO Advisors L.P. ("PIMCO Equity
Advisors"), as sub-adviser to the Large Cap
Growth, Small Cap Growth, and Target
Portfolios, and for a portion of the assets
of the Blended Equity Portfolio. OpCap
Advisors has retained Pacific Investment
Management Company ("PIMCO") as sub-adviser
for a portion of the assets of the Managed
Portfolio.
For the equity investments it manages
directly, i.e., the Equity, Mid Cap, Small
Cap, Global Equity and Balanced Portfolios
and the portion of the assets of the Blended
Equity and Managed Portfolios not
sub-advised by its affiliates, OpCap
Advisors applies principles of value
investing, although the individual portfolio
managers may implement those principles
differently.
4
<PAGE>
When selecting equity securities, OpCap
Advisors believes there are two major
components of value.
- A company's ability to generate earnings
that contribute to shareholder value.
OpCap Advisors considers discretionary
cash flow-cash that remains after a
company spends what is needed to sustain
its industrial position as a primary
determinant of a company's potential to
add economic value.
- Price - OpCap Advisors looks for market
undervaluation great enough to offer the
potential for upside reward with what it
believes is modest downward risk.
OpCap Advisors uses fundamental company
analysis to select securities. Fundamental
company analysis involves intensive
evaluation of historic financial data
including:
- Company financial statements
- Market share analysis
- Unit volume growth
- Barriers to entry
- Pricing policies
- Management record.
OpCap Advisors uses fundamental company
analysis to select companies they believe
have one or more of the following
characteristics:
- substantial and growing discretionary
cash flow
- strong shareholder value-oriented
management
- valuable consumer or commercial
franchises
- high returns on capital
- favorable price to intrinsic value
relationship.
In selecting debt securities, OpCap Advisors
analyzes yield relationships between
different sectors and among securities along
the yield curve. OpCap Advisors seeks to
take advantage of maturities and individual
issues that are inexpensive and have the
potential to provide superior returns. In
evaluating high yield debt securities, OpCap
Advisors supplements its traditional credit
analysis with an evaluation of an issuer's
asset values.
There can be no assurance that OpCap
Advisors will achieve its goals.
5
<PAGE>
PIMCO Equity Advisors acts as sub-adviser to
the Large Cap Growth, Small Cap Growth and
Target Portfolios and has been retained by
OpCap Advisors to act as sub-adviser for a
portion of the investments of the Blended
Equity Portfolio.
PIMCO Equity Advisors' investment philosophy
focuses on the wealth-creating
characteristics of a growing business. By
combining the characteristics of growth,
quality, and time, its investment process
seeks to capture the powerful compounding
effect of a growing enterprise. PIMCO Equity
Advisors seeks to invest in superior
companies and then monitor accounts to
ensure that it maintains a portfolio of the
highest-quality companies available. The
investment process includes both
quantitative and qualitative screens at
identifying candidate securities. PIMCO
Equity Advisors aims to significantly
outperform the relevant market index over
the long term and to control risk relative
to the market. There can be no assurance
that it will achieve these goals.
PIMCO acts as the sub-adviser to the Managed
Portfolio. In selecting securities for the
Managed Portfolio, PIMCO develops an outlook
for interest rates, currency exchange rates
and the economy; analyzes credit and call
risks, and uses other security selection
techniques. The proportion of the
Portfolio's assets committed to investment
in securities with particular
characteristics (such as quality, section
interest rate or maturity) varies based on
PIMCO's outlook for the U.S. economy and the
economies of other countries in the world,
the financial markets and other factors.
PIMCO attempts to identify areas of the bond
market that are undervalued relative to the
rest of the market. PIMCO identifies these
areas by grouping bonds into the following
sectors: money markets, governments,
corporates, mortgages, asset-backed and
international. Sophisticated proprietary
software then assists in evaluating sectors
and pricing specific securities. Once
investment opportunities are identified,
PIMCO will shift assets among sectors
depending upon changes in relative
valuations and credit spreads. There is no
guarantee that PIMCO's security selection
techniques will produce the desired results.
PRINCIPAL RISKS If you invest in the Portfolios that invest
in equity securities, you could lose money
or those Portfolios could underperform other
investments if any of the following happens:
- The stock market goes down
- The Portfolio's investment style (i.e.,
value or growth) falls out
6
<PAGE>
of favor with the stock market
- The Portfolio's investment sector (e.g.,
small cap, mid cap or foreign
securities, which generally are more
volatile than U.S. large cap securities)
declines or becomes less liquid
- For the Equity, Mid Cap, Small Cap,
Global Equity, Managed and Balanced
Portfolios, the market undervalues the
stocks held for longer than expected, or
the stocks purchased turn out not to be
undervalued
- The stocks selected for growth potential
do not achieve such growth.
If you invest in the Portfolios that invest
in debt securities, you could lose money or
your investment may underperform other
investments if any of the following happens:
- Interest rates rise and the bond market
goes down
- Issuers of debt instruments cannot meet
their obligations
- Bond issuers' call bonds selling at a
premium to their call price before the
maturity date
- Loans securing mortgage-backed
obligations prepay principal more
rapidly than expected. The Portfolios
may have to reinvest these prepayments
at lower rates.
The U.S. Government Income Portfolio
principally buys fixed income securities
that are issued or guaranteed by the U.S.
Government or its agencies or
instrumentalities, so credit risk should be
low.
BAR CHART &
PERFORMANCE
TABLE
The bar charts provide some indication of the risks of
investing in the Portfolios by showing changes in the
performance of each Portfolio's shares from year to year
for the life of each Portfolio and the highest and lowest
quarterly return during the life of each Portfolio.
Performance is not shown in a table for the Blended Equity,
Balanced, Large Cap Growth, Small Cap Growth and Target
Portfolios because they do not have a full calendar year of
performance.
The Portfolios' past performance does not necessarily
indicate how each Portfolio will perform in the future. The
Portfolios' performance does not reflect charges and
deductions which are imposed under the variable contracts.
7
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.22)% 31.22% 17.90% 7.85% 3.81% 38.85% 23.36% 26.63% 11.86% 2.54%
</TABLE>
During the period from the inception of the Equity Portfolio through December
31, 1999, the highest quarterly return was 14.17% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.32)% (for the quarter ended
September 30, 1990).
[BAR CHART]
MID CAP PORTFOLIO
--------
1999
21.63%
During the period from the inception of the Mid Cap Portfolio through December
31, 1999, the highest quarterly return was 23.78% (for the quarter ended
December 31, 1999) and the lowest quarterly return was (17.87)% (for the quarter
ended September 30, 1998).
8
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
- ------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(9.76)% 48.12% 21.49% 19.51% (1.01)% 15.23% 18.72% 22.24% (9.03)% (1.80)%
</TABLE>
During the period from the inception of the Small Cap Portfolio through December
31, 1999, the highest quarterly return was 19.20% (for the quarter ended March
31, 1991) and the lowest quarterly return was (17.26)% (for the quarter ended
September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
GLOBAL EQUITY
-------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
15.02% 14.02% 13.29% 26.53%
</TABLE>
During the period from the inception of the Global Equity Portfolio through
December 31, 1999, the highest quarterly return was 14.89% (for the quarter
ended December 31, 1998) and the lowest quarterly return was (15.04)% (for the
quarter ended September 30, 1998).
9
<PAGE>
[BAR CHART]
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3.63)% 45.98% 18.65% 10.39% 2.61% 45.55% 22.77% 22.29% 7.12% 5.00%
</TABLE>
During the period from the inception of the Managed Portfolio through December
31, 1999, the highest quarterly return was 20.80% (for the quarter ended March
31, 1991) and the lowest quarterly return was (13.37)% (for the quarter ended
September 30, 1998).
[BAR CHART]
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME PORTFOLIO
----------------------------------------
1996 1997 1998 1999
<S> <C> <C> <C>
3.02% 7.04% 8.15% (1.61)%
</TABLE>
During the period from the inception of the U.S. Government Income Portfolio
through December 31, 1999, the highest quarterly return was 4.68% (for the
quarter ended September 30, 1998) and the lowest quarterly return was (1.05)%
(for the quarter ended June 30, 1999).
The table below shows how the average annual returns for one year, five years
and for the life of the Equity and Managed Portfolios compare to that of the
Standard & Poor's Composite Index of 500 Stocks, how the average annual returns
for one year and for the life of the Mid Cap Portfolio compare to those of the
Wilshire 750 Mid Cap Index, how the average annual returns for the Small Cap
Portfolio compare to the Russell 2000, how the average annual returns for the
Global Equity Portfolio compare to the MSCI World Index, and how the returns for
the U.S. Government Income Portfolio compare to the Lehman Intermediate
Government Bond Index. The table gives some indication of the risks of the
Portfolios by comparing the performance of each Portfolio with a broad measure
of market performance. The Blended Equity, Balanced, Large Cap Growth, Small Cap
Growth and Target Portfolios do not have one year track records yet.
10
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
---------------------------------------------------------------------
PAST YEAR PAST 5 YEARS SINCE INCEPTION
--------- ------------ ---------------
<S> <C> <C> <C>
EQUITY PORTFOLIO 2.54% 19.98% 15.66%*
- ---------------- ----- ------ -------
MANAGED PORTFOLIO 5.00% 19.69% 17.70%*
- ----------------- ----- ------ -------
S&P 500 INDEX 21.04% 28.54% 18.98%
- ------------- ------ ------ ------
SMALL CAP PORTFOLIO (1.82)% 8.35% 11.48%*
- ------------------- ------- ----- -------
RUSSELL 2000 21.26% 16.69% 13.06%
- ------------ ------ ------ ------
MID CAP PORTFOLIO 21.63% N/A 9.96%
- ----------------- ------ --- -----
WILSHIRE 750 MID CAP INDEX 26.63% N/A 16.29%
- -------------------------- ------ --- ------
GLOBAL EQUITY PORTFOLIO 26.53% N/A 18.06%
- ----------------------- ------ --- ------
MSCI WORLD INDEX 24.93% N/A 20.50%
- ---------------- ------ --- ------
U.S. GOVERNMENT INCOME PORTFOLIO (1.61)% N/A 5.78%
- -------------------------------- ------- --- -----
LEHMAN INTERMEDIATE GOVERNMENT
BOND INDEX 0.49% N/A 6.93%
- ---------- ----- --- -----
U.S. GOVERNMENT INCOME PORTFOLIO
YIELD FOR THE 30-DAY PERIOD ENDED
DECEMBER 31, 1999 5.38%
- ----------------- -----
</TABLE>
*On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Equity, Small Cap and Managed Portfolios
immediately after the transaction were $86,789,755, $139,812,573 and
$682,601,380, respectively, with respect to the Old Trust and for each of the
Equity, Small Cap and Managed Portfolios, $3,764,598, $8,129,274 and
$51,345,102, respectively, with respect to the Fund. For the period prior to
September 16, 1994, the performance figures above for each of the Equity, Small
Cap and Managed Portfolios reflect the performance of the corresponding
Portfolios of the Old Trust. The Old Trust commenced operations on August 1,
1988.
The benchmark for the portion of the Managed Portfolio managed by PIMCO is the
Lehman Brothers Aggregate Bond Index.
For current yield information please call 1-800-700-8258.
11
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES
EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through investment in a diversified
portfolio of equity securities selected on the basis of a value approach to
investing.
Q What is the Portfolio's investment program?
A The Equity Portfolio invests primarily in equity securities of companies
that OpCap Advisors believes are undervalued in the marketplace. Under
normal conditions, the Portfolio will invest at least 65% of its total
assets in equity securities listed on the New York Stock Exchange. The
Portfolio also may purchase securities listed on other U.S. or foreign
securities exchanges or traded in the U.S. or foreign over the counter
markets.
The Equity Portfolio is managed to follow a composite portfolio constructed
by a group of senior portfolio managers at OpCap Advisors.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. Equity investors should have a long term investment
horizon and should be prepared for the ups and downs of the stock markets.
BLENDED EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation.
Q What is the Portfolio's investment program?
A The Portfolio invests generally in equity securities of companies with
market capitalization of a least $5 billion at the time of purchase that
PIMCO Equity Advisors believes will experience relatively rapid earnings
growth and in equity securities of companies with market capitalizations of
at least $2 billion that OpCap Advisors believes are undervalued relative
to their industry group. The majority of the stocks purchased by the
Portfolio will be listed on a domestic stock exchange or traded in the U.S.
over the counter market. The Portfolio may purchase foreign securities that
are listed on a U.S. or foreign exchange or traded in the U.S. or foreign
over the counter market, purchase and sell foreign currencies and use
derivatives for risk management purposes or as part of its investment
strategy. In response to unfavorable market and other conditions, the
Portfolio may invest temporarily in
12
<PAGE>
high-quality fixed income securities.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. Opportunities for long term growth of capital arise
from companies that are undervalued relative to their industry group or
show strong potential for growth or experience better than anticipated
earnings growth.
LARGE CAP GROWTH PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations of at least $5 billion at the time of purchase which
PIMCO Equity Advisors believes will experience relatively rapid earnings
growth. The majority of the stocks purchased by the Portfolio will be
listed on a domestic stock exchange or traded in the U.S. over the counter
market. The Portfolio may purchase foreign securities that are listed on a
U.S. or foreign exchange or traded in the U.S. or foreign over the counter
market, purchase and sell foreign currencies and use derivatives for risk
management purposes or as part of its investment strategy. In response to
unfavorable market and other conditions, the Portfolio may invest
temporarily in high-quality fixed income securities.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. The prices of securities of large cap companies may
be less volatile than those of less highly-capitalized companies.
SMALL CAP GROWTH PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations of under $2 billion at the time of purchase which
PIMCO Equity Advisors believes will experience relatively rapid earnings
growth. The majority of the stocks purchased by the
13
<PAGE>
Portfolio will be listed on a domestic stock exchange or traded in the U.S.
over the counter market. The Portfolio may purchase foreign securities that
are listed on a U.S. or foreign exchange or traded in the U.S. or foreign
over the counter market, purchase and sell foreign currencies and use
derivatives for risk management purposes or as part of its investment
strategy. In response to unfavorable market and other conditions, the
Portfolio may invest temporarily in high-quality fixed income securities.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks and other equity securities offer a way to invest for long
term growth of capital. Opportunities for appreciation for small cap
companies could result from product expansion or product improvement,
industry transition, new management or the sale of the company. Small cap
companies are followed by fewer analysts than are large and mid cap
companies. So as additional analysts follow a small cap stock, investor
demand for the stock may increase.
TARGET PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations between $1 billion and $10 billion at the time of
purchase which PIMCO Equity Advisors believes will experience relatively
rapid earnings growth. The majority of the stocks purchased by the
Portfolio will be listed on a domestic stock exchange or traded in the U.S.
over the counter market. The Portfolio may purchase foreign securities that
are listed on a U.S. or foreign exchange or traded in the U.S. or foreign
over the counter market, purchase and sell foreign currencies and use
derivatives for risk management purposes or as part of its investment
strategy. In response to unfavorable market and other conditions, the
Portfolio may invest temporarily in high-quality fixed income securities.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital. To the
extent the Portfolio invests in mid cap companies it may take advantage of
opportunities for value creation resulting from regional or product line
expansion or the sale of such companies. Investments in larger-size
companies help mitigate the volatility of the Portfolio.
MID CAP PORTFOLIO
Q What is the Portfolio's investment objective?
14
<PAGE>
A Long term capital appreciation.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations between $500 million and $5 billion at the time of
purchase which OpCap Advisors believes are undervalued. The majority of the
stocks purchased by the Portfolio will be listed on a domestic stock
exchange or traded in the U.S. over the counter market. The Portfolio may
purchase foreign securities that are listed on a U.S. or foreign exchange
or traded in the U.S. or foreign over the counter markets. The Portfolio
also may purchase securities in initial public offerings or shortly after
those offerings have been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital. Mid
cap companies generally are studied by fewer analysts than are large cap
companies. Institutional investors may not want to hold large positions in
mid cap companies. Opportunities for capital appreciation for mid cap
companies could result from regional or product line expansion or sale of
the company.
SMALL CAP PORTFOLIO
Q What is the Portfolio's investment objective?
A Capital appreciation through a diversified portfolio consisting primarily
of securities of companies with market capitalizations of under $1 billion
at time of purchase.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies with
market capitalizations under $1 billion at the time of purchase that OpCap
Advisors believes are undervalued in the marketplace. The Portfolio may
purchase securities listed on U.S. or foreign securities exchanges or
traded in the U.S. or foreign over the counter markets. The Portfolio also
may purchase securities in initial public offerings or shortly after those
offerings have been completed.
Q What are the potential rewards of investing in the Portfolio?
A Common stocks offer a way to invest for long term growth of capital.
Opportunities for value creation for small cap companies could result from
product expansion or product improvement, industry transition, new
management or sale of the company. Small cap companies are followed by
fewer analysts than are large and mid cap companies. So as additional
analysts follow a small cap stock, investor demand for the stock may
increase.
15
<PAGE>
GLOBAL EQUITY PORTFOLIO
Q What is the Portfolio's investment objective?
A Long term capital appreciation through pursuit of a global investment
strategy primarily involving equity securities.
Q What is the Portfolio's investment program?
A The Portfolio invests primarily in equity securities of companies located
throughout the world which OpCap Advisors believes are undervalued in the
marketplace. The Portfolio may invest up to 35% of its total assets in
fixed income securities which may be lower than investment grade.
Q What are the potential rewards of investing in the Portfolio?
A Foreign securities provide additional opportunities and diversification.
U.S. stocks represent less than half of the world's stock market
capitalization.
MANAGED PORTFOLIO
Q What is the Portfolio's investment objective?
A Growth of capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which will
vary based on OpCap Advisors' and PIMCO's assessments of the relative
outlook for such investments.
Q What is the Portfolio's investment program?
A The Portfolio seeks to meet its objective by investing in common stocks,
bonds and cash equivalents in varying percentages based on OpCap Advisors'
and PIMCO's view of relative values. The Portfolio may purchase securities
listed on U.S. or foreign securities exchanges or traded in the U.S. or
foreign over the counter markets. The Portfolio also may purchase
investment grade U.S. government and corporate bonds and high quality money
market securities. The Portfolio can invest up to 100% of its assets in
debt securities but will only do so if equity securities are not an
attractive investment.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio normally invests mainly in equity securities. Common stocks
offer a way to invest for long term growth of capital.
BALANCED PORTFOLIO
16
<PAGE>
Q What is the Portfolio's investment objective?
A Growth of capital and investment income.
Q What is the Portfolio's investment program?
A The Portfolio invests in equity securities (with an emphasis on
dividend-paying stocks) and debt securities that OpCap Advisors believes
are undervalued. Generally, the Portfolio will invest at least 25% of its
total assets in equity securities and at least 25% of its total assets in
debt securities. The Portfolio seeks debt securities that offer investment
income and the potential for capital appreciation if interest rates decline
or the issuer's credit improves. OpCap Advisors seek to find convertible
securities that have the potential for investment income prior to
conversion and capital growth. Convertible debt securities may be
classified as equity securities or as debt securities depending on the
value of the conversion feature as compared to the debt feature. The
Portfolio may purchase securities listed on U.S. or foreign securities
exchanges or traded in U.S. or foreign over the counter markets. The
Portfolio may invest up to 25% of its total assets in debt securities rated
below investment grade.
Q What are the potential rewards of investing in the Portfolio?
A The Portfolio's mix of equity securities, convertible securities and debt
securities may result in the Portfolio's being less volatile than the
market.
U.S. GOVERNMENT INCOME PORTFOLIO
Q What is the Portfolio's investment objective?
A High level of current income together with protection of capital by
investing exclusively in debt obligations, including mortgage-backed
securities issued or guaranteed by the United States government, its
agencies or instrumentalities.
Q What is the Portfolio's investment program?
A The Portfolio invests in debt obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities. These securities are
referred to as "U.S. Government Securities." The Portfolio also may purchase
mortgage-backed securities to effectuate this program.
OpCap Advisors observes current and historical yield relationships between
maturities and sectors to seek the best relative values. The Portfolio
generally maintains an average maturity between five and ten years. OpCap
Advisors does not attempt to forecast interest rates in managing the
Portfolio.
Q What are the potential rewards of investing in the Portfolio?
17
<PAGE>
A The Portfolio consists of the highest quality debt instruments. Since the
average maturity of the Portfolio's investments are between five and ten
years, the Portfolio should be less volatile than a longer term bond fund.
RISKS
Q What are the risks of investing in the Portfolios?
A The Equity, Blended Equity, Large Cap Growth, Small Cap Growth, Target, Mid
Cap, Small Cap, Global Equity, Managed and Balanced Portfolios invest
principally in equity securities which may be affected by the following:
STOCK MARKET VOLATILITY - The stock market in general may fluctuate in
response to political, market and economic developments and you can lose
money on your investments.
Equity investors should have a long-term investment horizon and should be
prepared for the ups and downs of the stock market.
STOCK PICKING - The portfolio manager may select stocks that have prices
that turn out not to be undervalued or do not achieve expectations for
growth in income or revenues.
ISSUER CHANGES - Changes in the financial condition of an issuer or changes
in economic conditions that affect a particular type of issuer can affect
the value or credit quality of an issuer's securities.
SMALL CAP AND MID CAP VOLATILITY - Mid cap stocks are more volatile and
have less trading volume than large cap stocks. Small cap stocks are more
volatile and have less trading volume than both large cap and mid cap
stocks.
SECTOR RISK - OpCap Advisors are bottom up investment managers. That means
that they select securities for a Portfolio based on the investment merits
of a particular issue rather than the business sector.
INVESTMENT STYLES - Value or growth stocks may be out of favor for a period
of time. Both investment styles can produce poor returns for a period of
time.
ASSET ALLOCATION RISK - The Managed and Balanced Portfolios invest in a mix
of equity and fixed income securities. The portfolio managers of those
Portfolios can make the wrong allocation decisions.
FOREIGN EXPOSURE - When selecting foreign securities for the Portfolios,
OpCap Advisors use approximately the same standards that they set for U.S.
issuers. Foreign securities, foreign currencies and securities issued by
U.S. entities with substantial foreign operations may have additional risks
than U.S. securities. This risk is greater for the Global Equity Portfolio
which invests on a worldwide basis.
18
<PAGE>
- Political Risk - Foreign governments can take over the assets or
operations of a company or may impose taxes or limits on the removal
of the Portfolio's assets from that country.
- Currency risk - The value of securities held in foreign currencies
will be affected by changes in the value of that currency.
- Liquidity - Some foreign markets are less liquid and more volatile
than the U.S. stock market.
- Limited information - There may be less public information about
foreign issuers than there is about U.S. issuers.
- Settlement and clearance - Some foreign markets experience delays in
settlement. These delays could cause the Portfolio to miss investment
opportunities or to be unable to sell a security.
- Euro - The effect of the Euro on international markets has not yet
been determined.
- Emerging Markets - There are greater risks of unstable governments and
economies and restriction on foreign ownership in these countries. The
Portfolios presently intend to limit investment in emerging markets to
no more than 5% of their total assets.
To the extent that the Portfolios invest in debt securities, the Portfolios are
exposed to these risks:
- Interest rate risk - The risk that changes in interest rates will
affect the value of fixed income securities in the Portfolio.
- Prepayment risk - The risk that the holder of a mortgage underlying a
mortgage backed security will prepay principal.
- Credit risk - The risk that an issuer of a fixed income security will
be unable to pay principal and interest payments when they are due.
To the extent that the Global Equity Portfolio or the Balanced Portfolio invests
in lower grade debt securities, you should know that lower grade debt may have
the following additional risks:
- more volatility
- less liquidity
- greater risk of issuer default or insolvency.
19
<PAGE>
INVESTMENT POLICIES
Q Can a Portfolio change its investment objective and investment policies?
A Fundamental policies of a Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. A
Portfolio's investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. Investment policies are not fundamental and can be
changed by the Fund's Board of Trustees.
Q Can the Portfolios use derivative instruments?
A Yes. The Equity, Blended Equity, Large Cap Growth, Small Cap Growth,
Target, Mid Cap, Small Cap, Global Equity, Managed and Balanced Portfolios
may use the following derivative instruments:
- futures contracts
- options on futures contracts
- forward foreign currency contracts
- covered calls written on individual securities
- uncovered calls and puts
- options on stock indices.
The Equity, Mid Cap, Small Cap, Global Equity and Balanced Portfolios do
not expect to use derivative instruments significantly, if at all. The
Blended Equity, Managed, Large Cap Growth, Small Cap Growth and Target
Portfolios will sometimes use derivative instruments as part of a strategy
designed to reduce exposure to other risks, such as interest risk or
currency risk, and may use derivative instruments to meet their investment
objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of a Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of a Portfolio's futures or options positions are not
correlated with its other investments
- A Portfolio cannot close out a position because of an illiquid market.
Q Do the Portfolios expect to engage in short-term trading?
A The Portfolios do not expect to engage in frequent short-term trading. The
Financial Highlights table in this prospectus shows the turnover rates
during prior fiscal years for the Portfolios that were active during this
period.
20
<PAGE>
Q Can the Portfolios vary from their investment goals?
A When a Portfolio's investment adviser or subadviser thinks market or
economic conditions are adverse, it may invest up to 100% of its assets in
defensive investments such as U.S. Government securities and money market
instruments. To the extent that a Portfolio takes a defensive position, it
will not be pursuing its investment objective.
FUND MANAGEMENT
OPCAP ADVISORS
The Board of Trustees of the Fund has hired OpCap Advisors to serve as manager
of the Fund.
OpCap Advisors is a subsidiary of Oppenheimer Capital, an investment advisory
firm with approximately $53 billion of assets under management as of December
31, 1999. They are indirect wholly-owned subsidiaries of PIMCO Advisors L.P. The
mailing address is 1345 Avenue of the Americas, New York, New York 10105.
The general partners of PIMCO Advisors L.P. are PIMCO Partners G.P. and PIMCO
Advisors Holding L.P.("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holdings LLC, a Delaware limited liability company and an indirect
wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO Partners
LLC, a California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors L.P. PIMCO Partners, G.P. is the sole
general partner of PAH.
On October 31, 1999, PIMCO Advisors L.P., PAH and Allianz AG ("Allianz")
announced that they had reached a definitive agreement pursuant to which Allianz
will acquire majority ownership of PIMCO Advisors L.P. and its subsidiaries,
including OpCap Advisors (the "Allianz Transaction"). Under the terms of the
transaction, Allianz will acquire all of PAH, the publicly traded general
partner of PIMCO Advisors L.P. Pacific Life Insurance Company will retain an
approximately 30% interest in PIMCO Advisors L.P. The Allianz Transaction is
currently expected to be completed by on or about May 5, 2000.
Allianz is the world's second largest insurance company and a leading provider
of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. Allianz currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After consummation of the transaction, the
combined firms will have over $650 billion in assets under management.
Affiliates of Allianz currently include Dresdner Bank AG, Deutsche Bank AG,
Munich Re, and Hypo Vereinsbank. These entities, as well as certain broker-
dealers controlled by or affiliated with these entities, such as Bankers Trust
Company and BT Alex Brown, Inc. are considered the "Affiliated Brokers". Once
the Allianz transaction is consummated, absent an SEC exemption or
21
<PAGE>
other relief, the Fund's Portfolios would generally be precluded from effecting
principal transactions with the Affiliated Brokers, and each Portfolio's ability
to purchase securities being underwritten by an Affiliated Broker or to utilize
the Affiliated Brokers for agency transactions would be subject to restrictions.
OpCap Advisors does not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect its ability,
post-closing, to provide services to the Fund, the ability of the Portfolios to
take advantage of market opportunities, or the overall performance of the
Portfolios.
The consummation of the Allianz Transaction is subject to the approval of the
public unitholders of PAH, as well as to certain regulatory and client
approvals, and other conditions customary to transactions of this kind.
This Prospectus will be supplemented or revised if the Allianz Transaction does
not occur substantially as set forth above.
OpCap Advisors has been in business as an investment adviser since 1987 and
Oppenheimer Capital has been in business as an investment adviser since 1969.
OpCap Advisors manages the investments of certain Portfolios (and places
brokerage orders) and conducts the business affairs of the Fund. Employees of
Oppenheimer Capital, PIMCO Advisors and OpCap Advisors perform these services.
Each Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. In the case of the Blended
Equity, Large Cap Growth, Small Cap Growth and Target Portfolios for which OpCap
Advisors has retained PIMCO Equity Advisors as subadvisor, OpCap Advisors (and
not the Fund) pays a portion of the advisory fees its receives to PIMCO Equity
Advisors in return for its services. OpCap also pays a portion of its advisory
fees to PIMCO in return for the advisory services PIMCO performs for the Managed
Portfolio. The Portfolios of the Fund listed below paid OpCap Advisors the
following fees as a percentage of average daily net assets during the fiscal
year ended December 31, 1999:
<TABLE>
<S> <C>
Equity Portfolio...............................................0.80%
Mid Cap Portfolio..............................................0.10%
Small Cap Portfolio............................................0.80%
Global Equity Portfolio........................................0.80%
Managed Portfolio..............................................0.77%
U.S. Government Income Portfolio...............................0.60%
</TABLE>
OpCap will pay PIMCO a fee at the annual rate of 0.25% of the average daily net
assets of the Managed Portfolio for the advisory services PIMCO performed for
the Managed Portfolio.
OpCap Advisors waived a portion of its fees from the MidCap Portfolio for the
fiscal year ended December 31, 1999. Absent such waiver the advisory fee for the
MidCap Portfolio would have been 0.80% of the average daily net assets of the
Portfolio.
22
<PAGE>
The Fund pays OpCap Advisors at the annual rate of .80% of the first $400
million of average net assets, .75% on the next $400 million of average net
assets and .70% of assets in excess of $800 million with respect to the Equity,
Global Equity, Managed, Small Cap, Mid Cap, Balanced, Blended Equity, Large Cap
Growth, Small Cap Growth and Target Portfolios. The rate applicable to the U.S.
Government Income Portfolio is .60% of average net assets.
OpCap Advisors will pay PIMCO Equity Advisors fees at the annual rate of .40% of
the first $400 million of average net assets, .375% on the next $400 million of
average net assets and .35% of assets in excess of $800 million with respect to
the Blended Equity, Large Cap Growth, Small Cap Growth and Target Portfolios for
investment advisory services PIMCO Equity Advisors renders to those Portfolios.
PIMCO EQUITY ADVISORS
PIMCO Equity Advisors acts as subadviser to the Large Cap Growth, Small Cap
Growth and Target Portfolios. OpCap Advisors has also retained the PIMCO Equity
Advisors to manage a portion of the investments of the Blended Equity Portfolio.
PIMCO Equity Advisors is a division of PIMCO Advisors L.P., which has its
principal offices at 800 Newport Center Drive, Newport Beach, California 92660.
Organized in 1987, PIMCO Advisors provides investment management and advisory
services to private accounts of institutional and individual clients and to
mutual funds. As of December 31, 1999 PIMCO Advisors and its subsidiary
partnerships had approximately $261 billion in assets under management.
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
Founded in 1971, Pacific Investment currently manages $186 billion on behalf of
mutual fund and institutional clients located around the world. PIMCO, a wholly
owned subsidiary of PIMCO Advisors L.P., has its principal offices at 800
Newport Center Drive, Newport Beach, California 92660, is located at 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660. Renowned for its fixed income
management expertise, PIMCO manages assets for may of the largest corporations,
foundations, endowments, and governmental bodies in the United States and the
world.
PORTFOLIO MANAGERS
[PHOTO] Louis Goldstein has been the portfolio manager of the
Mid Cap Portfolio since its inception. Mr. Goldstein, a
Senior Vice President of Oppenheimer Capital, joined
Oppenheimer Capital in 1991. He earned a BS Summa Cum
Laude and a MBA in Finance with honors from the Wharton
School of Business.
23
<PAGE>
[PHOTO] Mark Degenhart, who has been a portfolio manager of the
Small Cap Portfolio since February 1999, joined
Oppenheimer Capital in January 1999 as a Vice President
with responsibilities including research, analysis and
investment management. He acts as a portfolio manager
for several small capitalization funds. Prior to joining
Oppenheimer Capital, he was Director of Research and
Associate Portfolio Manager at Palisade Capital
Management. From 1990 to 1993, he was a Generalist for
Cazenove & Co. Previously Mr. Degenhart was a Special
Situations Analyst at Argus Research Corp. for over
three years. He has a BS degree in marketing from the
University of Scranton.
[PHOTO] Elisa A. Mazen, Senior Vice President, has been a member
of the international equity investment team at
Oppenheimer Capital since 1994 and is primarily
responsible for European research within the firm's
global effort. Prior to joining Oppenheimer Capital, she
was a Portfolio Manager/ Analyst at Clemente Capital,
Inc. Ms. Mazen graduated with a BA in economics/ finance
from Douglass College, Rutgers University in 1983.
[PHOTO] Richard Glasebrook, Managing Director of Oppenheimer
Capital, has managed the domestic portion of the Global
Equity Portfolio since its inception. Mr. Glasebrook
joined Oppenheimer Capital in 1991. He has a BA from
Kenyan College and a MBA from the Harvard School of
Business Administration. Mr. Glasebrook has been a
portfolio manager of the Managed Portfolio since its
inception.
[PHOTO] Colin Glinsman, Chief Investment Officer and Managing
Director of Oppenheimer Capital, has been named the
portfolio manager of the Balanced Portfolio. He joined
Oppenheimer Capital in 1989 as a securities analyst. Mr.
Glinsman has a BA from Yale University and a MS from New
York University.
[PHOTO] Vikki Hanges, Senior Vice President of Oppenheimer
Capital, has been the portfolio manager of the U.S.
Government Portfolio since its inception. She joined
Oppenheimer Capital in 1982. Ms. Hanges has a BS from
Cornell University.
24
<PAGE>
[PHOTO] Kenneth W. Corba is the portfolio manager of the Large
Cap Growth Portfolio. Mr. Corba, Chief Investment
Officer, Managing Director of PIMCO Equity Advisors,
joined PIMCO Equity Advisors in January 1999. Prior to
this time, he was the Chief Investment Officer for Eagle
Asset Management from March 1995 to March 1999 and
Director of the Capital Management Group at Stein Roe &
Farnham from June 1984 to February 1995. He has a BA and
MBA from the University of Michigan.
[PHOTO] Michael F. Gaffney, a Managing Director of PIMCO Equity
Advisors, is the portfolio manager of the Small Cap
Growth Portfolio. Mr. Gaffney joined PIMCO Equity
Advisors in January 1999. Prior to this time, he was the
Senior Vice President and Portfolio Manager for Alliance
Capital Management from September 1987 to January 1999.
He has a BS Magna Cum Laude from St. John's University
and a MBA from New York University.
[PHOTO] Jeffrey D. Parker, a senior portfolio manager of PIMCO
Equity Advisors, is the portfolio manager of the Target
Portfolio. Mr. Parker joined PIMCO Equity Advisors in
January 1999. Prior to this time, he was an Assistant
Portfolio Manager for Eagle Asset Management from July
1996 to December 1998 and a Senior Consultant
specializing in health care and technology for Andersen
Consulting from February 1991 to May 1994. Mr. Parker
has a BBA from the University of Miami and a MBA from
Vanderbilt University.
[PHOTO] William H. Gross, Managing Director and Chief Investment
Officer of PIMCO, has been a co-portfolio manager of the
Managed Portfolio since March 2000. Mr. Gross joined
PIMCO in June 1971 and is a founding partner of PIMCO.
25
<PAGE>
SHARE PRICE
The Fund calculates each Portfolio's share price, called its net asset value, on
each business day that the New York Stock Exchange is open after the close of
regular trading (generally 4:00 p.m. Eastern Standard Time). Net asset value per
share is computed by adding up the total value of a Portfolio's investments and
other assets, subtracting its liabilities and then dividing by the number of
shares outstanding.
TOTAL PORTFOLIO ASSETS - LIABILITIES
Net Asset Value = ---------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value a Portfolio's investments
unless securities do not have market quotations or are short-term debt
securities. When the Fund uses fair value to price a security, the Fund reviews
the pricing method with the Fund's Board. The Fund prices short-term investments
that mature in less than 60 days using amortized cost or amortized value.
Foreign securities trade on days when the Portfolios do not price their shares
so the net asset value of a Portfolio's shares may change on days when
shareholders will not be able to buy or sell shares of the Portfolio. If an
event occurs after the close of the New York Stock Exchange that the Fund
believes changes the value of a security, then the Fund will value the security
at what it believes to be fair value.
DISTRIBUTIONS AND TAXES
This discussion is about distributions to the Portfolio's shareholders, which
are variable accounts of insurance companies and qualified pension and
retirement plans. You should read the prospectus for the variable account for
information about distributions and federal tax treatment for contract owners of
variable products.
Each Portfolio pays dividends from its net investment income and distributes any
net capital gains that it has realized at least once a year. The U.S. Government
Income Portfolio pays dividends from its net investment income once a month.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolios' financial performance. Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). The
information in the financial highlights table below has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the corresponding Portfolios' financial statements, is incorporated by reference
in the Fund's SAI, which is available upon request.
26
<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.
(3) During the fiscal years indicated above, the Investment 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, 1.26% and 1.20%, respectively, for
the year ended December 31, 1995.
27
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
For the Year For the Period
Ended February 9, 1998 (1) to
December 31, 1999 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 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.
(5) During the fiscal periods indicated above, the Investment 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.
28
<PAGE>
OCC ACCUMULATION TRUST
SMALL CAP 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 $23.10 $26.37 $22.61 $19.91 $17.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.14 0.14 0.08 0.14 0.26
Net investment income
Net realized and unrealized gain (loss)
on investments (0.57) (2.38) 4.73 3.45 2.37
------ ------ ---- ---- ----
Total income (loss) from investment (0.43) (2.24) 4.81 3.59 2.63
operations ------ ------ ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.15) (0.09) (0.13) (0.25) (0.05)
Net realized gains -- (0.94) (0.92) (0.64) (0.05)
----- ------ ------ ------ ------
Total dividends and distributions to
Shareholders (0.15) (1.03) (1.05) (0.89) (0.10)
------ ------ ---- ---- ----
Net asset value, end of year $22.52 $23.10 $26.37 $22.61 $19.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) (1.8)% (9.0)% 22.2% 18.7% 15.2%
------ ------ ----- ----- -----
------ ------ ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $151,290 $155,506 $110,565 $34,257 $16,004
Ratio of expenses
to average net assets (2) 0.89% 0.88% 0.97% 0.93%(3) 0.74%(3)
Ratio of net investment income
to average net assets 0.61% 0.72% 0.64% 1.03%(3) 1.75%(3)
Portfolio Turnover 99% 51% 68% 50% 69%
</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.
(3) During the fiscal years indicated above, the Investment 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 1.01% and 0.95%, respectively,
for the year ended December 31, 1996, and 0.99% and 1.50%, respectively,
for the year ended December 31, 1995.
29
<PAGE>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31, For the Period
---------------------------------------------------- March 1, 1995(1)
1999 1998 1997 1996 to December 31, 1995
------ ------ ------ ------ --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.43 $14.32 $13.23 $11.61 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.31 0.12 0.06 0.04 0.05
Net realized and unrealized gain
on investments and foreign currency transactions 3.78 1.78 1.79 1.70 1.83
---- ---- ---- ---- ----
Total income from investment operations 4.09 1.90 1.85 1.74 1.88
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From Net investment income in excess of (0.26) (0.18) (0.04) (0.05) (0.03)
net investment income -- -- (0.03) -- --
From net realized gains (2.70) (0.61) (0.69) (0.07) (0.24)
------ ------ ------ ------ ------
Total dividends and distributions to shareholders (2.96) (0.79) (0.76) (0.12) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period $16.56 $15.43 $14.32 $13.23 $11.61
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (2) 26.5% 13.3% 14.0% 15.0% 18.9%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $43,412 $34,777 $25,874 $16,972 $2,891
Ratio of net operating expenses
to average net assets (3) 1.10% 1.13% 1.19%(4) 1.42%(4) 1.25%(4)(5)
Ratio of net investment income
to average net assets 0.48% 0.79% 0.45%(4) 0.81%(4) 1.02%(4)(5)
Portfolio Turnover 83% 55% 53% 40% 67%
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 (loss) to average net assets would have been 1.20% and 0.44%,
respectively, for the year ended December 31, 1997, 1.83% and 0.40%,
respectively, for the year ended December 31, 1996 and 3.94% (annualized)
and (1.67)% (annualized), respectively, for the period March 1, 1995
(commencement of operations) to December 31, 1995.
(5) Annualized
30
<PAGE>
OCC ACCUMULATION TRUST
MANAGED 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 $43.74 $42.38 $36.21 $30.14 $20.83
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain
on investments 1.47 2.40 7.45 6.31 9.02
---- ---- ---- ---- ----
Total income from investment
operations 2.03 3.00 7.79 6.74 9.44
---- ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains (1.47) (1.31) (1.22) (0.26) ---
------ ------ ------ ------
Total dividends and distributions to
shareholders
(2.12) (1.64) (1.62) (0.67) (0.13)
------ ------ ------ ------ ------
Net asset value, end of year $43.65 $43.74 $42.38 $36.21 $30.14
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (1) 5.0% 7.1% 22.3% 22.8% 45.6%
---- ---- ----- ----- -----
---- ---- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of Year (000's) $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses
to average net assets (2) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income
to average net assets 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover 50% 37% 32% 27% 22%
</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.
(3) During the fiscal years indicated above, the Investment Adviser waived a
portion of its fees. If such waivers 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 0.85% and 1.65%, respectively, for the
year ended December 31, 1996 and 0.74% and 1.77%, respectively, for the
year ended December 31, 1995.
31
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout each period:
<TABLE>
<CAPTION>
Year Ended December 31, For the Period
---------------------------------------------------- January 3, 1995(1)
1999 1998 1997 1996 to December 31, 1995
------ ------ ------ ------ --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.66 $10.51 $10.38 $10.62 $10.00
------ ------ ------ ------ -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.49 0.53 0.57 0.55 0.60
Net realized and unrealized gain (loss) on
investments (0.66) 0.31 0.14 (0.24) 0.68
------ ---- ---- ------ ----
Total income (loss) from investment operations (0.17) 0.84 0.71 0.31 1.28
------ ---- ---- ---- ----
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.49) (0.53) (0.57) (0.55) (0.60)
Net realized gains --- (0.16) (0.01) --- (0.06)
------ ------ ------
Total dividends and distributions to shareholders (0.49) (0.69) (0.58) (0.55) (0.66)
------ ------ ------ ------ ------
Net asset value, end of period $10.00 $10.66 $10.51 $10.38 $10.62
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (2) (1.6)% 8.1% 7.0% 3.0% 13.1%
------ ---- ---- ---- -----
------ ---- ---- ---- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $9,830 $10,542 $6,983 $3,422 $1,442
Ratio of expenses
to average net assets (3) 0.95% 1.00%(4) 0.93%(4) 0.96%(4) 0.75%(4)(5)
Ratio of net investment income
to average net assets 4.78% 4.96%(4) 5.51%(4) 5.27%(4) 5.75%(4)(5)
Portfolio Turnover 69% 80% 80% 31% 65%
</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) Inclusive of expenses offset by earnings credits from custodian bank.
(4) During the fiscal periods indicated above, the Investment 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 1.19% and 4.77%, respectively,
for the year ended December 31, 1998, 1.06% and 5.38%, respectively, for
the year ended December 31, 1997, 2.34% and 3.89%, respectively, for the
year ended December 31, 1996, and 4.73% (annualized) and 1.77%,
(annualized), respectively, for the period January 3, 1995 (commencement of
operations) to December 31, 1995.
(5) Annualized
32
<PAGE>
For investors who want more information about the Portfolios, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolios'
investments is available in the Portfolios' annual and semi-annual reports to
shareholders. In each Portfolio's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolios and is incorporated into this prospectus by
reference.
The SAI and the Portfolio's annual and semi-annual reports are available without
charge upon request to your insurance agent or by calling the Portfolios at
1-800-700-8258.
You can review and copy the Portfolios' reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
After paying a duplicating fee, by electronic request at the following
email address: [email protected], or by writing to or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-0102 Telephone: 1-202-942-8090
Free from the EDGAR Database on the Commission's Internet website at
http://www.sec.gov.
