<PAGE>
OCC ACCUMULATION TRUST
o U.S. GOVERNMENT INCOME PORTFOLIO
ANNUAL REPORT
1999
MANAGED BY
[LOGO]
OpCap ADVISORS
<PAGE>
OCC ACCUMULATION TRUST
MANAGED BY
[LOGO]
OpCap ADVISORS
1999 ANNUAL REPORT
The stock market in 1999 was characterized by two contradictory trends: the
rapid price escalation of many technology stocks, especially those associated
with e-commerce and the Internet, and a widespread malaise among stocks in most
other industry sectors. The Standard & Poor's 500 Index (the "S&P 500") rose
21.0% during the year, returning more than 20% for a record fifth consecutive
year. However, this performance distorted the overall direction of the market.
Without its technology stock component, the S&P 500 would have been down 1% in
1999. In fact, approximately 60% of the stocks on the New York Stock Exchange
declined in price during the year.
The year was especially challenging for value investors such as ourselves.
Quality companies with strong competitive positions, high cash flow and
favorable earnings prospects--the types of companies in which we invest
generally did very well. The stocks of these companies, however, were out of
favor, trailing the market indexes by a wide margin. As a result, our investment
returns generally fell short of our benchmarks in 1999.
We have always been thoughtful in our value style to give consideration to
companies across the breadth of the market, including technology companies. In
fact, we did well with several technology investments during the past year,
including Computer Associates and Motorola in the United States and Ericsson and
Alcatel in Europe. However, in the current ebullient market for technology
stocks, it has become increasingly difficult to find value in the sector.
Regardless of whether the current technology stock craze turns out to be a
bubble that bursts, the technology industry is growing rapidly and creating
enormous economic wealth. Our challenge as value investors, therefore, is to
identify solid companies that stand to benefit from this growth.
At OpCap Advisors, we continue to invest in our people and our operation to
ensure we have the necessary resources to meet this challenge. Our firm has
moved aggressively to hire additional investment personnel and has made
important reallocations of people and resources to best apply investment skills
not only to technology stocks, but to other industry sectors as well. We have
established "sector" groups, involving the integration of our domestic and
international analysts, to ensure timely and complete coverage of investment
opportunities wherever they may exist.
By remaining disciplined in our value style, and taking the necessary actions to
keep pace with an ever-evolving stock market, we are focused on delivering
excellent long-term investment results without taking large risks. We believe
many of the stocks we own are significantly undervalued, providing opportunities
for substantial profits as undervalued securities of financially solid, growing
companies return to favor.
As the new year begins, the U.S. economy remains strong, perhaps too strong, and
there are indications of excessive optimism in the stock market. Inflation has
been kept low for the past several years by an internationally competitive
environment, major improvements in technology, corporate mergers and
restructurings, and low inflation expectations. Recently, however, some of these
factors have reversed. Commodity prices have rebounded strongly, while energy
and import prices are on the rise. These factors suggest to us that inflationary
pressures could increase somewhat in the months ahead and that the Federal
Reserve is likely to raise interest rates further, on top of the four rate
increases implemented since June 1999. We believe these conditions will favor
our value style of investing, which emphasizes companies that can generate a
high level of cash flow throughout the economic cycle.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
Nineteen ninety-nine was a difficult year for fixed-income investing. Although
securities with maturities of approximately three years or shorter provided
positive total returns (coupon plus price change), most longer maturities were
negative in their returns for the year. The U.S. Government Income Portfolio was
down 1.6% for the year, compared with a 0.5% increase for the Lehman Brothers
Intermediate Government Bond Index (the "Index"). During the second half of the
year, the Portfolio's total return of 0.2% compared with a 1.0% rise in the
Index.
The Portfolio invests in debt obligations issued or guaranteed by the U.S.
Government and its agencies or intermediaries. It primarily owns
intermediate-term securities and places a priority on maintaining a relatively
stable net asset value per share. The Portfolio is intended for investors
seeking high current income from investments in Government securities.
For the three years ended December 31, 1999, the Portfolio provided an average
annual total return of 4.3%, compared with an average annual total return of
5.5% for the Index. From its inception on January 3, 1995 through December 31,
1999 the Portfolio provided an average annual total return of 5.8%, compared
with 6.9% for the Index. Returns take into account expenses incurred by the
Portfolio, but not separate account charges imposed by the insurance company.
A year-and-a-half ago, investor concerns centered on the risks of a global
economic downturn, the Russian debt default, and the possibility of deflation,
causing interest rates to decline. Since that time, conditions have changed
dramatically. Many emerging market economies have rebounded and Japan seems to
be pulling out of its long recession. Moreover, with the continued strength of
the U.S. economy, low unemployment and a surging stock market, interest rates
have turned upward during the past year on renewed concerns over inflation.
As we observe changes in the bond market, we search for the most advantageous
combination of yield and risk. In other words, we seek to increase the
Portfolio's yield with little or no change in risk or, vice-versa, we seek
investment situations that reduce risk with no change in yield. During 1999, we
reduced the Portfolio's investments in U.S. Treasury securities. Federal budget
surpluses have led to net reductions in the amount of Treasury securities
outstanding, resulting in a scarcity value that has held down Treasury yields in
comparison to other types of fixed income securities. We increased the
Portfolio's holdings of U.S. government agency and mortgage-related securities,
where we have found attractive yields, and added a small position in corporate
bonds.
At December 31, the Portfolio's net assets were allocated 55.9% to U.S.
Government Agency and Mortgage-Related securities, 38.2% to U.S. Treasury
securities, and 5.0% to corporate bonds. The Portfolio's average maturity was
10.7 years at December 31, 1999.
Down markets do not continue forever, and bonds may in fact be poised to perform
well in 2000. We believe some increase in inflation is already priced into the
market, yet the actual inflation rate remains modest. In addition, history tells
us that two down years in a row would be a very unusual occurrence; there have
not been two consecutive losing years in the bond market in more than a quarter
century. We see value in the bond market today and continue to go about our
process of investing in those maturities, sectors and credit categories where we
find the highest yields at the lowest relative cost with the least amount of
risk.
<PAGE>
OCC ACCUMULATION TRUST--U.S. GOVERNMENT INCOME PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE PORTFOLIO AND THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX+
PERIODS ENDED DECEMBER 31, 1999
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
1 YEAR SINCE JANUARY 3, 1995*
(1.6%) 5.8%
<S> <C> <C> <C> <C> <C> <C>
1/3/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
------ -------- -------- -------- ------- --------
U.S. Government Income
Portfolio 10,143.00 11,314.16 11,656.51 12,476.90 13,273.54 13,237.31
Lehman Intermediate Gov't
Bond Index+ 10,163.00 11,443.18 11,907.01 12,826.78 13,913.01 13,981.42
</TABLE>
The performance graph does not reflect charges imposed by the Variable Accounts.
Past performance is not predictive of future performance
Assumes reinvestment of all dividends and distributions
+ The Lehman Brothers Intermediate Government Bond Index is an unmanaged
index that is not available for direct investment. All interest is reinvested.
* Portfolio's inception.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
- ------------- ------------
<S> <C> <C>
CORPORATE BOND -- 5.0%
Ford Motor Credit Corp.,
$ 500 6.70%, 7/16/04 (cost - $499,245).................................................... $ 489,375
-------------
MORTGAGE-RELATED -- 43.8%
Federal Home Loan Mortgage Corp.,
175 6.22%, 3/24/03..................................................................... 171,966
125 7.75%, 11/7/01...................................................................... 127,285
150 8.115%, 1/31/05.................................................................... 157,359
Federal National Mortgage Association,
624 6.00%, 3/1/13-9/1/13............................................................... 592,741
980 6.50%, 4/29/09..................................................................... 917,065
459 7.50%, 11/1/27...................................................................... 453,682
2 9.00%, 8/1/02...................................................................... 1,926
150 9.20%, 9/11/00..................................................................... 152,837
52 9.50%, 12/1/06-12/1/19.............................................................. 55,301
Government National Mortgage Association,
977 4.00%, 10/20/25..................................................................... 873,995
826 7.00%, 3/15/28-6/15/28............................................................. 797,981
-------------
Total Mortgage-Related (cost - $4,497,631).......................................... 4,302,138
-------------
U.S. GOVERNMENT AGENCY -- 12.1%
Federal Home Loan Bank Discount Notes,
200 4.15%, 1/18/00..................................................................... 199,608
Student Loan Marketing Association,
100 7.20%, 11/9/00...................................................................... 100,609
Tennessee Valley Authority,
1,000 5.375%, 11/13/08.................................................................... 888,750
-------------
Total U.S. Government Agency (cost - $1,299,622).................................... 1,188,967
-------------
U.S. TREASURY NOTES AND BONDS -- 38.2%
1,100 5.125%, 8/31/00.................................................................... 1,097,147
1,000 5.75%, 11/15/00..................................................................... 996,870
875 5.875%, 11/30/01.................................................................... 869,391
95 6.25%, 4/30/01..................................................................... 95,074
200 6.50%, 5/31/02..................................................................... 200,968
475 7.25%, 8/15/22..................................................................... 500,755
-------------
Total U.S. Treasury Notes and Bonds (cost - $3,842,754)............................. 3,760,205
-------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments (cost - $10,139,252)..................................... 99.1% 9,740,685
Other assets less liabilities.............................................. 0.9 89,131
--------- ----------
Net Assets................................................................. 100.0% $9,829,816
--------- ----------
--------- ----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost - $10,139,252).......................................................... $ 9,740,685
Cash................................................................................................ 4,141
Interest receivable................................................................................. 108,963
Prepaid expenses.................................................................................... 194
------------
Total Assets...................................................................................... 9,853,983
------------
LIABILITIES:
Payable for shares of beneficial interest redeemed.................................................. 8,541
Investment advisory fee payable..................................................................... 1,054
Accrued expenses.................................................................................... 14,572
------------
Total Liabilities................................................................................. 24,167
------------
Net Assets..................................................................................... $ 9,829,816
------------
------------
COMPOSITION OF NET ASSETS:
Beneficial interest shares of $0.01 par value (unlimited number authorized)......................... $ 9,826
Paid-in-capital in excess of par.................................................................... 10,250,579
Accumulated net realized loss on investments........................................................ (32,022)
Net unrealized depreciation on investments.......................................................... (398,567)
------------
Net Assets..................................................................................... $ 9,829,816
------------
------------
Shares outstanding.................................................................................. 982,573
------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................................... $10.00
------------
------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest......................................................................................... $602,366
-------------
EXPENSES:
Investment advisory fees......................................................................... 63,217
Custodian fees................................................................................... 15,924
Audit and tax service fees....................................................................... 11,318
Transfer agent fees.............................................................................. 3,977
Trustees' fees and expenses...................................................................... 2,394
Reports to shareholders.......................................................................... 968
Legal fees....................................................................................... 171
Miscellaneous.................................................................................... 1,804
-------------
Total expenses................................................................................ 99,773
Less: expense offset.......................................................................... (770)
-------------
Net expenses.................................................................................. 99,003
-------------
Net investment income....................................................................... 503,363
-------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments................................................................. (31,440)
Net change in unrealized appreciation/depreciation on investments................................ (628,105)
-------------
Net realized and unrealized loss on investments............................................. (659,545)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $(156,182)
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income.............................................................. $ 503,363 $ 411,556
Net realized gain (loss) on investments............................................ (31,440) 151,330
Net change in unrealized appreciation/depreciation on investments.................. (628,105) 89,811
----------- -----------
Net increase (decrease) in net assets resulting from operations.................. (156,182) 652,697
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................. (503,363) (411,556)
Net realized gains................................................................. -- (149,402)
----------- -----------
Total dividends and distributions to shareholders................................ (503,363) (560,958)
----------- -----------
SHARE TRANSACTIONS:
Net proceeds from the sale of shares............................................... 3,365,637 5,717,541
Reinvestment of dividends and distributions........................................ 503,363 560,300
Cost of shares redeemed............................................................ (3,921,601) (2,810,893)
----------- -----------
Net increase (decrease) in net assets from share transactions.................... (52,601) 3,466,948
----------- -----------
Total increase (decrease) in net assets....................................... (712,146) 3,558,687
NET ASSETS:
Beginning of year.................................................................. 10,541,962 6,983,275
----------- -----------
End of year........................................................................ $9,829,816 $10,541,962
----------- -----------
----------- -----------
SHARES ISSUED AND REDEEMED:
Issued............................................................................. 326,391 535,354
Issued in reinvestment of dividends and distributions.............................. 49,145 52,582
Redeemed........................................................................... (382,260) (263,013)
----------- -----------
Net increase (decrease).......................................................... (6,724) 324,923
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
<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 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) Commencements 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 (See 1G
in Notes to Financial Statements).
(4) During the fiscal periods indicated above, the Adviser waived a portion or
all of its fees and assumed a portion of the Portfolio's expenses. If such
waivers and assumptions had not been in effect, the ratios of expenses to
average net assets and the ratios of net investment income to average net
assets would have been 1.19% 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
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
OCC Accumulation Trust (the "Trust") was organized May 12, 1994 as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment company.
The Trust is authorized to issue an unlimited number of shares of beneficial
interest at $.01 par value. The Trust is comprised of: the Equity Portfolio, the
Small Cap Portfolio, the Global Equity Portfolio, the Managed Portfolio, the
U.S. Government Income Portfolio (the "Portfolio") and the Mid Cap Portfolio.
OpCap Advisors (the "Adviser"), a subsidiary of Oppenheimer Capital, serves as
the Trust's investment adviser. The accompanying financial statements and notes
thereto are those of the Portfolio. The Trust is an investment vehicle for
variable annuity and variable life insurance contracts of various life insurance
companies, and qualified pension and retirement plans.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment debt securities (other than short-term obligations) are valued each
business day by an independent pricing service (approved by the Board of
Trustees) using methods which include current market quotations from a major
market maker in the securities and trader-reviewed "matrix" prices. Short-term
debt securities having a remaining maturity of sixty days or less are valued at
amortized cost or amortized value, which approximates market value. Any
securities or other assets for which market quotations are not readily available
are valued at their fair value as determined in good faith by the Board of
Trustees. The ability of issuers of debt instruments to meet their obligations
may be affected by economic developments in a specific industry or region.
(B) FEDERAL INCOME TAXES
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders; accordingly, no federal
income tax provision is required.
(C) INVESTMENT TRANSACTIONS AND OTHER INCOME
Investment transactions are accounted for on the trade date. In determining the
gain or loss from the sale of investments, the cost of investments sold has been
determined on the basis of identified cost. Interest income is accrued as
earned. Discounts or premiums on debt securities purchased are accreted or
amortized to interest income over the lives of the respective securities using
the effective interest method.
(D) DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income are declared daily and paid monthly.
Distributions from net realized capital gains, if any, are declared and paid at
least annually.
The Portfolio records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions is determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles. These "book-tax" differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal income tax treatment; temporary differences do not
require reclassification. To the extent dividends and/or distributions exceed
current and accumulated earnings and profits for federal income tax purposes,
they are reported as dividends and/or distributions of paid-in-capital or as a
tax return of capital.
(E) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular portfolio are borne by that
portfolio. Other expenses are allocated to each portfolio based on its net
assets in relation to the total net assets of all applicable portfolios of the
Trust or another reasonable basis.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(CONTINUED)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES--(CONCLUDED)
(F) USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
(G) EXPENSE OFFSET
The Portfolio benefits from an expense offset arrangement with its custodian
bank whereby uninvested cash balances earn credits which reduce monthly
custodian fees. Had these cash balances been invested in income producing
securities, they would have generated income for the Portfolio.
(H) TRUSTEES' RETIREMENT PLAN
The Trustees have adopted a Retirement Plan (the "Plan") effective January 1,
1999. The Plan provides for payments upon retirement to independent Trustees
based on the average annual compensation paid to them during their five highest
paid years of service. An independent Trustee must serve for a minimum of seven
years (or such lessor period as may be approved by the Board of Trustees) to
become eligible to receive benefits. For the year ended December 31, 1999, the
Portfolio accrued $982 in connection with the Plan.
(2) INVESTMENT ADVISORY FEE
The investment advisory fee is accrued daily and payable monthly to the Adviser,
and is computed as a percentage of the Portfolio's net assets as of the close of
business each day at the annual rate of 0.60%. The Adviser is contractually
obligated to waive that portion of the advisory fee and to assume any necessary
expense to limit total operating expenses of the Portfolio to 1.00% of average
net assets (net of any expense offset) on an annual basis.
(3) INVESTMENTS IN SECURITIES
For federal income tax purposes the cost of securities owned at December 31,
1999 was $10,139,252. Accordingly, net unrealized depreciation of investments of
$398,567 was comprised of gross appreciation of $1,617 for those investments
having an excess of value over cost and gross depreciation of $400,184 for those
investments having an excess of cost over value.
For the year ended December 31, 1999, purchases and sales of investment
securities, other than short-term securities, aggregated $6,614,567 and
$7,232,838, respectively.
At December 31, 1999, the Portfolio had a capital loss carryforward of $31,930
available as a reduction, to the extent provided in the regulations, of any
future net capital gains realized before the end of fiscal year 2007. To the
extent that these losses are used to offset future realized capital gains, such
gains will not be distibuted.
<PAGE>
OCC ACCUMULATION TRUST
U.S. GOVERNMENT INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(CONCLUDED)
(4) ACQUISITION OF INVESTMENT ADVISER
On October 31, 1999, PIMCO Advisors Holdings L.P. ("PAH"), its operating
subsidiary, PIMCO Advisors L.P. ("PIMCO Advisors"), and Allianz AG ("Allianz")
announced that they have reached a definitive agreement for Allianz, a German
insurance company, to acquire majority ownership of PIMCO Advisors, including
all of the interests held by PAH (the "Allianz Transaction"). For the Portfolio,
the change of control as a result of the consummation of the Allianz Transaction
(expected to close by the end of the first quarter of 2000) will result in the
automatic termination of the current investment advisory agreement with OpCap
Advisors, an indirect wholly-owned subsidiary of PIMCO Advisors. The Board of
Trustees has approved a new agreement with OpCap Advisors to become effective
upon consummation of the Allianz Transaction. The new agreement will be
submitted for approval by the stockholders of the Portfolio.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
OCC Accumulation Trust -- U.S. Government Income Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the U.S. Government Income
Portfolio (one of the portfolios of OCC Accumulation Trust, hereafter referred
to as the "Portfolio") at December 31, 1999, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the four years in
the period then ended and for the period January 3, 1995 (commencement of
operations) through December 31, 1995, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Portfolio's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audit of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 11, 2000
<PAGE>
[This page intentionally left blank]
<PAGE>
OCC ACCUMULATION TRUST
1345 AVENUE OF THE AMERICAS
NEW YORK, NY 10105
<TABLE>
<S> <C>
TRUSTEES AND PRINCIPAL OFFICERS
Joseph M. LaMotta Trustee, President
V. Lee Barnes Trustee
Paul Y. Clinton Trustee
Thomas W. Courtney Trustee
Lacy B. Herrmann Trustee
Theodore T. Mason Trustee
Steven Calabria Vice President
Bernard H. Garil Vice President
Mark F. Degenhart Vice President and Portfolio Manager
John C. Giusio, Jr. Vice President
Richard J. Glasebrook, II Vice President and Portfolio Manager
Colin Glinsman Vice President and Portfolio Manager
Louis Goldstein Vice President and Portfolio Manager
Benjamin D. Gutstein Vice President and Portfolio Manager
Vikki Hanges Vice President and Portfolio Manager
Jeffrey J. Hughes Vice President
Timothy J. McCormack Vice President and Portfolio Manager
Eric V. Retzlaff Vice President
James Sheldon Vice President and Portfolio Manager
Brian S. Shlissel Treasurer
Elliot M. Weiss Secretary
Maria Camacho Assistant Secretary
</TABLE>
INVESTMENT ADVISER
OpCap Advisors
1345 Avenue of the Americas
New York, NY 10105
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 1978
Boston, MA 02105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
This report is authorized for distribution only
to shareholders and to others who have received
a copy of this Trust's prospectus.
