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OCC ACCUMULATION TRUST
Supplement dated October 20, 2000
to the Prospectus dated July 17, 2000
OCC ACCUMULATION TRUST (the "Fund") is an open-end investment company with the
following investment portfolio (the "Portfolio"):
Science and Technology 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.
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TABLE OF CONTENTS
Page
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Risk/Return Summary..........................................................3
Fees & Expenses of the Portfolio.............................................4
Sub-Advisor's Past Performance...............................................5
Principal Investment Strategies..............................................6
Risks........................................................................6
Investment Policies..........................................................8
Fund Management..............................................................9
Share Price.................................................................11
Distributions and Taxes.....................................................11
Financial Highlights........................................................12
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RISK/RETURN SUMMARY
INVESTMENT GOALS Science and Technology Portfolio........Capital
appreciation
PRINCIPAL INVESTMENT
STRATEGIES The Science and Technology Portfolio invests
primarily in equity securities of companies which
use innovative technologies to gain a strategic
competitive advantage in their industry, as well as
companies that provide and service those
technologies.
INVESTMENT
PHILOSOPHY OpCap Advisors is the investment adviser to the
Portfolio. OpCap Advisors has retained PIMCO Equity
Advisors, a division of PIMCO Advisors L.P. ("PIMCO
Equity Advisors"), as sub-adviser to the 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.
PRINCIPAL RISKS If you invest in the Portfolio you could lose
money 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.,
growth) falls out of favor with the stock
market
- The Portfolio's investment sector (e.g.,
technology, which generally is more volatile
than U.S. large cap securities) declines or
becomes less liquid
- The stocks selected for growth potential do
not achieve such growth.
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BAR CHART &
PERFORMANCE
TABLE
Performance charts provide some indication of the
risks of investing. Performance is not shown for the
Science and Technology Portfolio because it does not
have a full calendar year of performance.
Supplemental performance of the sub-adviser with
regard to the Science & Technology Portfolio can be
found in the section captioned "Sub-Advisor's Past
Performance" after the section "Fees & Expenses of
the Portfolio."
FEES & EXPENSES OF THE PORTFOLIO
This table describes the fees and expenses that you may pay if you buy and hold
shares in the Portfolio.
SHAREHOLDER FEES--FEES YOU PAY DIRECTLY None
Annual Fund Operating Expenses - Expenses that are deducted from Fund assets
<TABLE>
<CAPTION>
Total Annual Fund
Management Fees Other Expenses Operating Expenses
<S> <C> <C> <C>
Science & Technology Portfolio 0.80% 0.20% 1.00%
</TABLE>
EXAMPLE:
This example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other funds. Although your actual costs
may be higher or lower, you would pay the following expenses on a $10,000
investment assuming: (1) 5% annual return; (2) the Portfolio's operating
expenses remain the same, and (3) you redeem all your shares at the end of each
period in the table.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Science & Technology Portfolio $102 $318 $552 $1,225
</TABLE>
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SUB-ADVISOR'S PAST PERFORMANCE
The performance results shown below represent composite returns (the
"Composite") derived from performance data furnished by PIMCO Equity Advisors
which is sub-advisor to the Science and Technology Portfolio. The Composite is
comprised of all accounts managed by PIMCO Equity Advisors with substantially
similar investment objectives, policies and strategies as the Portfolio.
The Composite has not been subject to the same types of expenses and
restrictions to which the Portfolio is subject under the Investment Company Act
and the Internal Revenue Code. The information regarding the performance of the
Composite does not represent the Portfolio's performance. Such information
should not be considered a prediction of the future performance of the Science
and Technology Portfolio. The Portfolio is newly organized and has no
performance record of its own.
The table below shows the average annual total return of the Composite
managed by PIMCO Equity Advisors for the period ending September 30, 2000.
The Composite's return is also compared against its relevant benchmark (which
is the same benchmark for the Science and Technology Portfolio). The
performance data for the Composite has been adjusted to reflect the
management fees and other expenses actually paid by the Portfolio and assumes
the reinvestment of all dividends and distributions. The fees and expenses
paid by the Portfolio will be higher than the fees and expenses paid by the
Composite. The performance of the Composite would have been lower than that
shown below if the Composite had been subject to the fees and expenses of the
Portfolio and to other restrictions applicable to investment companies under
relevant laws.
AVERAGE ANNUAL TOTAL RETURN
(FOR THE PERIOD ENDED SEPTEMBER 30, 2000)
<TABLE>
<CAPTION>
1998(1) 1999 YEAR TO DATE LAST 12 MONTHS SINCE INCEPTION(2)
---- ---- ------------ -------------- ----------------
<S> <C> <C> <C> <C> <C>
Science and Technology Composite 37.22 139.75 21.41 118.82 99.87
Lipper Science & Technology Index 39.06 113.90 6.64 67.56 78.10
</TABLE>
(1) Performance is for the period October 1, 1998 through December 31, 1998.
(2) The inception period for the Science and Technology Composite is 10/1/98.
Average Annual Total Return: Composite results are measured internally based
upon trade date accounting and include the reinvestment of dividends and
interest. Results for the full historical period are time weighted. The
Composite is valued monthly and portfolio returns are asset weighted using
beginning-of-month market values. Quarterly, annual and annualized periods are
calculated based upon geometrically linked monthly returns.
The benchmark (or index) for the Composite is a measure of the broad market for
the technology
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sector. The index is included to provide a detailed basis of comparison. The
index is unmanaged and reflects past performance, which is not indicative of
future results. For comparison purposes, the unmanaged index is fully invested
and returns are gross of investment management fees.
PRINCIPAL INVESTMENT STRATEGIES
SCIENCE AND TECHNOLOGY 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 which PIMCO
Equity Advisors believes uses innovative technologies to gain a strategic
competitive advantage in their industry, as well as companies that provide
and service those technologies. Although the Portfolio emphasizes technology
companies, it is not required to invest exclusively in companies in a
particular business sector. The Portfolio is concentrated, investing in
approximately 25 mid and large cap stocks. 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.
Opportunities for technology companies may result from the competitive
strategic advantages associated with the use and service of innovative
technologies as well as from the successful development and sale of those
technologies.
RISKS
Q What are the risks of investing in the Portfolio?
A The Science and Technology 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.
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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 - The Science and Technology Portfolio will invest primarily in
technology related companies. Companies dependent on new technology and
innovative products are more volatile than well established, older companies.
INVESTMENT STYLES - Growth and technology 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, PIMCO
Equity Advisors uses 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
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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 Portfolio invests 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 the Portfolio change its investment objective and investment policies?
A Fundamental policies of the Portfolio cannot be changed without the approval
of a majority of the outstanding voting shares of the Portfolio. The
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 Science and Technology 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 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 its investment objectives.
Q What are the risks of derivative instruments?
A Derivative instruments can reduce the return of the Portfolio if :
- Its investment adviser uses a derivative instrument at the wrong time
- The prices of the Portfolio's futures or options positions are not
correlated with its other
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investments
- The 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 does not expect to engage in frequent short-term trading.
Q Can the Portfolio vary from its investment goals?
A When the 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 the 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 was
completed on 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
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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 Portfolio would generally be precluded from effecting principal
transactions with the Affiliated Brokers, and the 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 Portfolio to
take advantage of market opportunities, or the overall performance of the
Portfolio.
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.
The Portfolio pays OpCap Advisors fees in return for providing or arranging for
the provision of investment advisory services. OpCap Advisors has retained PIMCO
Equity Advisors as subadvisor and OpCap Advisors (and not the Fund) pays a
portion of the advisory fees its receives to PIMCO Equity Advisors in return for
its services.
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.
OpCap Advisors pays 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 Science and Technology Portfolio for investment advisory services PIMCO
Equity Advisors renders to the Portfolio.
PIMCO EQUITY ADVISORS
PIMCO Equity Advisors acts as subadviser to the Science and Technology
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.
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PORTFOLIO MANAGER
[PHOTO]
Dennis McKechnie, a Certified Financial Analyst, is a
Managing Director of PIMCO Equity Advisors. Mr. McKechnie is
the manager of the Science and Technology Portfolio and
joined PIMCO Equity Advisors in January 1999. He has eight
years of investment management experience as the Vice
President for Columbus Circle Investors from April 1991 to
January 1999. Mr. McKechnie has a BS in Electrical
Engineering from Purdue University and a MBA from Columbus
Business School.
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.
Net Asset Value = TOTAL PORTFOLIO ASSETS - LIABILITIES
--------------------------------------------------
NUMBER OF PORTFOLIO SHARES OUTSTANDING
The Fund uses the market prices of securities to value the 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 Portfolio does not price its
shares so the net asset value of the 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.
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FINANCIAL HIGHLIGHTS
Financial highlights tables are intended to help you understand the Portfolio's
financial performance. Certain information will reflect financial results for a
single Portfolio share. Total returns will represent the rate that an investor
would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). Currently, there is no
financial highlight information because the Science and Technology Portfolio is
newly formed and was not operational during the last fiscal year.
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For investors who want more information about the Portfolio, the following
documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolio's
investments is available in the Portfolio's annual and semi-annual reports to
shareholders. In the 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 Portfolio 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 Fund at
1-800-700-8258.
You can review and copy the Portfolio's 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
Science and Technology Portfolio
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