<PAGE>
OCC ACCUMULATION TRUST
O MANAGED PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 1999
MANAGED BY
[LOGO]
<PAGE>
OCC ACCUMULATION TRUST
MANAGED BY
[LOGO]
REPORT FOR THE SIX MONTHS ENDED JUNE 30, 1999
The first half of 1999 was a period of generally higher stock prices, with
the market advancing 12.4% as measured by the Standard & Poor's 500 index ("S&P
500"). Within that general uptrend, however, there were several crosscurrents.
In the first quarter, the gains of the S&P 500 continued to be driven by a
limited number of technology and large cap growth issues, as had been true
throughout 1998 and 1997. In the second quarter, by contrast, market leadership
broadened to include undervalued stocks with strong business fundamentals of the
type owned in our portfolios. Value stocks include those judged to be trading at
market prices well below the inherent value of the business, while growth stocks
include those believed to have excellent long-term earnings growth prospects. In
addition, the stocks of small companies, which had trailed the performance of
large cap issues for an extended period, sprang back to life in the second
quarter, advancing sharply.
Periods of outperformance by growth or value, or by large cap or small cap,
are normal. Like a pendulum, when the market reaches one extreme or the other,
absent some unusual factor it typically swings back. We believe the market is
now coming back toward our value style, which should benefit the equity
portfolios in the OCC Accumulation Trust.
As the third quarter begins, a central issue facing investors is whether
the U.S. economy is likely to overheat, causing interest rates to rise further.
The debate surrounding this issue has resulted from warnings by Federal Reserve
Chairman Alan Greenspan in mid-June that the recent growth rate of the U.S.
economy is "unsustainable" and that the reservoir of available workers is drying
up. In late June, in a preemptive move to keep the economy in check, the Federal
Reserve (the "Fed") raised its target short-term interest rate by one-quarter
percentage point, the first increase in more than two years.
The Fed's action is consistent with our expectation that the three
one-quarter point rate easings of 1998 are likely to require reversal during
1999. The original easings were made in response to global problems that are now
on the mend; they were not required to stimulate the U.S. economy. Our current
expectation is that the Fed will continue to retract the 1998 easings in order
to maintain economic balance. That behavior should be positive for our
investment style and central to the performance of the U.S. equity market as a
whole.
Our investment philosophy is characterized by:
1. Long-term perspective: We focus on individual companies and try to
understand where their businesses are going over the next several years, not on
where the stock market is heading in the next quarter.
2. Emphasis on cash flow: We buy businesses which generate cash that they
can use to compound investors' capital throughout an economic cycle.
3. Disciplined approach to valuation: We want to buy successful companies
that are growing. However, unlike more aggressive investors, we are reluctant to
pay a large premium for that growth. We believe that overpaying adds to risk and
makes it more difficult to achieve an investment profit.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
The Managed Portfolio performed well in its peer group and continued its
excellent long-term results in the first half of 1999. For the half, the
Portfolio's total return of 7.2% compared with an average total return of 5.9%
for the funds in Lipper's Variable Insurance Products Performance Service Report
flexible portfolio category and a return of 12.4% for the Standard & Poor's 500
index ("S&P 500") inclusive of dividends. The S&P 500 is an unmanaged index of
500 of the largest corporations weighted by market capitalization. The
Portfolio's six-month performance ranked 25th among the 92 funds in the Lipper
flexible portfolio universe.
We achieved these results despite our conservative investment posture in a
rising stock market. At June 30, 1999, the Portfolio's net assets were allocated
82% to common and preferred stocks and 18% to cash and cash equivalents. This is
virtually unchanged from the allocation of net assets six months earlier. The
Portfolio's cash position offers some protection against a stock market price
decline and is a resource to buy stocks as they become available at attractive
prices.
The Portfolio invests in stocks, bonds and cash equivalents, with an
emphasis on stocks, which have outperformed other classes of investments for
nearly every five-year period since the Depression.
During the second quarter, following an extended period in which the
performance of the S&P 500 was driven by a limited number of large
capitalization growth issues, stock market leadership broadened to include
undervalued stocks with strong business fundamentals of the type owned by the
Portfolio. Benefiting from this change, the Portfolio delivered a total return
of 7.5% in the second quarter, exceeding both the 4.7% average total return of
the funds in the Lipper flexible portfolio category and the 7.0% return of the
S&P 500. Several of our largest holdings advanced sharply in price during the
quarter, contributing significantly to the Portfolio's returns. These holdings
included Computer Associates International (computer software), Wells Fargo
(banking), Boeing (aerospace) and Citigroup (financial services).
The 12 months ended June 30, 1999 were a more difficult period for the
Portfolio, with results well below our expectations. In the 12 months, the
Portfolio's total return of 3.4% compared with a return of 22.8% for the S&P 500
and an average total return of 9.3% for the funds in the Lipper flexible
portfolio category. The Portfolio's 12-month performance ranked 80th among the
92 funds in the Lipper category. We trailed the S&P 500 for several reasons,
including our concerns about investing in the large cap growth stocks with very
high market valuations that had led the stock market's advance during 1998 and
into the first quarter of 1999. Some of these stocks reached price-earnings
ratios of 60 or more, making them vulnerable, in our view, to sizable price
declines. Although the Portfolio's performance suffered in the short-run by
avoiding these stocks, we believe the Portfolio is well positioned to generate
favorable returns over time, without taking large risks, because its owns good
businesses run by capable managements at large discounts to inherent value.
Our philosophy of investing in superior businesses available at reasonable
prices has produced one of the best long-term performance records in the Lipper
flexible portfolio category. For the three years ended June 30, 1999, the
Portfolio delivered an average annual total return of 16.6%, compared with the
average of 15.8% for the funds in the Lipper flexible portfolio category and
29.1% for the S&P 500. The Portfolio's three-year performance was 36th among the
76 funds in this Lipper universe. In the five years ended June 30, 1999, the
Portfolio's average annual total return of 20.4%* compared with the average
annual total return of 16.1% for the funds in the Lipper flexible portfolio
category and 27.9% for the S&P 500. This five-year performance was sixth among
the 60 funds in the Lipper flexible portfolio universe.
- ------------------
* Based on results of the OCC Accumulation Trust and its predecessor. On
September 16, 1994, an investment company which had commenced operations on
August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust"),
was effectively divided into two investment funds--the Old Trust and the
present OCC Accumulation Trust (the "Present Trust")--at which time the
Present Trust commenced operations. The total net assets of the Managed
Portfolio immediately after the transaction were $682,601,380 in the Old Trust
and $51,345,102 in the Present Trust. For the period prior to September 16,
1994, the performance figures for the Managed Portfolio of the Present Trust
reflect the performance of the Managed Portfolio of the Old Trust.
<PAGE>
For the 10 years ended June 30, 1999, the Portfolio's average annual total
return was 18.4%*, compared with an average of 13.4% for the funds in its Lipper
category and 18.8% for the S&P 500. The Portfolio's 10-year results were second
among the 38 funds in its Lipper category. Since its inception on August 1,
1988, the Portfolio has provided an average annual total return of 18.8%*
compared with 19.1% for the S&P 500. Returns for the Portfolio take into account
expenses incurred by the Portfolio, but not other charges imposed by the
Variable Accounts.
We believe companies create wealth by generating high rates of cash flow.
That wealth is delivered to shareholders by managements who use cash wisely,
such as for astute acquisitions or stock repurchase. Our criteria in buying the
stocks of these companies include: good businesses with growing free cash flow;
management motivated to create wealth for shareholders; and securities that can
be purchased inexpensively.
The objective of our value-based approach is to produce excellent long-term
investment performance, without taking large risks, by acquiring stocks for
substantially less than they are worth. While our investment style sometimes
requires patience, we believe the intrinsic value of a company--which is based
on cash flow, earnings, strength of balance sheet, competitive strengths and
other factors--almost always ends up being reflected over time in its share
price. We do not trade in and out of the market nor do we buy highly speculative
stocks, since doing so, in our view, adds to risk and runs up costs.
New positions established in the first half of 1999 included American Home
Products, Cadence Design Systems (computer software) and AMFM, formerly called
Chancellor Media (radio broadcasting). Each of these companies exemplify our
philosophy of investing in undervalued companies with excellent business
prospects.
American Home Products is in three businesses: pharmaceuticals, consumer
health care and agricultural products. We believe the company is on the verge of
benefiting from several new drug introductions, each of which over time is
expected to generate revenues in excess of a billion dollars. AMFM is one of the
largest radio station owners in the U.S. and its planned purchase of Capstar
Broadcasting will make it the market leader, with more than 485 stations in 105
markets. Our analysis shows AMFM to be an undervalued company with strong
prospects to generate high cash flow. We purchased a small position in Cadence
Design after the stock fell nearly 50% in one day due to an earnings shortfall.
In our view, the market's reaction was excessive, creating an opportunity to
invest in this quality company at a bargain price.
The Portfolio's five largest equity positions at June 30, 1999 were
Citigroup, a leading global banking, insurance and other financial services
company, representing 6.6% of the Portfolio's net assets; McDonald's, a premier
fast-food company with growing global markets, 5.5% of net assets; Freddie Mac,
the second largest insurer of home mortgages in the United States, 5.3% of net
assets; Wells Fargo, a financial conglomerate comprising one of the larger banks
in the Midwest and West, together with national mortgage and consumer finance
companies, 5.2% of net assets; and Computer Associates International, which
designs and markets computer software, 4.6% of net assets.
Major industry positions at the end of the half were: financial services,
13.8% of net assets; banking, representing 9.3% of the Portfolio's net assets;
food services, 8.8% of net assets; media/broadcasting, 7.2% of net assets; and
chemicals, 6.3% of net assets.
We believe the best investments to own for the long-term are excellent
businesses with good prospects that are undervalued. By investing in these
companies, we remain focused on delivering superior long-term investment results
for the Portfolio's shareholders, without taking large risks.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
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<S> <C> <C>
U.S. GOVERNMENT AGENCY NOTES -- 2.6%
$ 308,000 Federal Home Loan Bank, 4.60%, 7/1/99.............................................. $ 308,000
Federal National Mortgage Association,
20,845,000 4.77%, 7/7/99...................................................................... 20,828,428
575,000 4.77%, 7/8/99...................................................................... 574,467
--------------
Total U.S. Government Agency Notes (cost -- $21,710,895)........................... 21,710,895
--------------
SHORT-TERM CORPORATE NOTES -- 15.2%
AUTOMOTIVE -- 3.1%
25,883,000 Ford Motor Credit Corp., 5.13%, 8/3/99............................................. 25,761,285
--------------
BROKERAGE -- 3.0%
25,000,000 Goldman Sachs Group L.P. (The), 5.10%, 7/19/99..................................... 24,936,250
--------------
FINANCIAL SERVICES -- 1.7%
6,760,000 American Express Credit Corp., 5.05%, 7/28/99...................................... 6,734,396
7,365,000 Norwest Financial, Inc., 5.04%, 7/23/99............................................ 7,342,316
--------------
14,076,712
--------------
INSURANCE -- 3.6%
30,000,000 Prudential Funding Corp., 5.06%, 7/26/99........................................... 29,894,583
--------------
TECHNOLOGY -- 3.8%
IBM Credit Corp.,
1,020,000 4.96%, 7/21/99..................................................................... 1,017,189
29,730,000 5.10%, 7/21/99..................................................................... 29,645,766
--------------
30,662,955
--------------
Total Short-Term Corporate Notes (cost -- $125,331,785)............................ 125,331,785
--------------
U.S. TREASURY NOTES AND BONDS -- 0.1%
700,000 6.25%, 8/15/23.................................................................... 703,283
297,500 7.875%, 8/15/01.................................................................... 311,072
--------------
Total U.S. Treasury Notes and Bonds (cost -- $878,219)............................. 1,014,355
<CAPTION> --------------
SHARES
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<S> <C> <C>
COMMON STOCKS -- 82.0%
AEROSPACE/DEFENSE -- 3.1%
579,650 Boeing Co.......................................................................... 25,613,284
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BANKING -- 9.3%
298,800 BankBoston Corp.................................................................... 15,276,150
35,000 M & T Bank Corp.................................................................... 19,250,000
995,000 Wells Fargo & Co................................................................... 42,536,250
--------------
77,062,400
--------------
CHEMICALS -- 6.3%
510,000 du Pont (E.I.) de Nemours & Co..................................................... 34,839,375
423,500 Monsanto Co........................................................................ 16,701,781
--------------
51,541,156
--------------
COMPUTER SERVICES -- 0.5%
325,800 Cadence Design Systems, Inc.*...................................................... 4,153,950
--------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
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<S> <C> <C>
COMMON STOCKS (CONTINUED)
CONGLOMERATES -- 4.9%
330,000 Minnesota Mining & Manufacturing Co................................................ $ 28,689,375
145,000 Textron, Inc....................................................................... 11,935,312
--------------
40,624,687
--------------
DRUGS & MEDICAL PRODUCTS -- 2.1%
295,700 American Home Products Corp........................................................ 17,002,750
--------------
FINANCIAL SERVICES -- 13.8%
1,139,250 Citigroup, Inc..................................................................... 54,114,375
749,400 Federal Home Loan Mortgage Corp.................................................... 43,465,200
331,800 Household International, Inc....................................................... 15,719,025
--------------
113,298,600
--------------
FOOD SERVICES -- 8.8%
628,900 Diageo plc ADR..................................................................... 27,042,700
1,094,400 McDonald's Corp.................................................................... 45,212,400
--------------
72,255,100
--------------
INSURANCE -- 3.8%
350,100 ACE Ltd............................................................................ 9,890,325
377,960 XL Capital Ltd..................................................................... 21,354,740
--------------
31,245,065
--------------
MACHINERY/ENGINEERING -- 2.6%
359,500 Caterpillar, Inc................................................................... 21,570,000
--------------
MANUFACTURING -- 2.8%
600,000 ITT Industries, Inc................................................................ 22,875,000
--------------
MEDIA/BROADCASTING -- 7.2%
167,100 Chancellor Media Corp.*+........................................................... 9,211,388
853,500 News Corp. Ltd. ADR++.............................................................. 26,938,594
315,600 Time Warner, Inc................................................................... 23,196,600
--------------
59,346,582
--------------
PAPER PRODUCTS -- 1.7%
286,500 Champion International Corp........................................................ 13,716,188
--------------
PRINTING/PUBLISHING -- 1.7%
381,360 Donnelley (R.R.) & Sons Co......................................................... 14,134,155
--------------
REAL ESTATE -- 0.1%
1,399 Security Capital Group Inc., (Class A)*............................................ 909,080
--------------
TECHNOLOGY -- 6.0%
488,000 Compaq Computer Corp............................................................... 11,559,500
690,000 Computer Associates International, Inc............................................. 37,950,000
--------------
49,509,500
--------------
TELECOMMUNICATIONS -- 5.3%
200,000 Motorola, Inc...................................................................... 18,950,000
468,400 Sprint Corp. (FON Group)........................................................... 24,737,375
--------------
43,687,375
--------------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED) (CONCLUDED)
<TABLE>
<CAPTION>
SHARES VALUE
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<S> <C> <C>
COMMON STOCKS (CONCLUDED)
TRANSPORTATION -- 2.0%
260,000 UAL Corp.*......................................................................... $ 16,900,000
--------------
Total Common Stocks (cost -- $568,370,274)......................................... 675,444,872
--------------
<S> <C> <C> <C>
Total Investments (cost -- $716,291,173)................................. 99.9% $ 823,501,907
Other Assets Less Liabilities............................................ 0.1 61,679
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Total Net Assets......................................................... 100.0% $ 823,563,586
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</TABLE>
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* Non-income producing security
+ Effective July 14, 1999, this company changed its name to AMFM, Inc.
++ Preferred stock
ADR -- American Depositary Receipt
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $716,291,173)...................................................... $ 823,501,907
Cash.............................................................................................. 1,023
Receivable from shares of beneficial interest sold................................................ 290,983
Dividends and interest receivable................................................................. 332,965
Other assets...................................................................................... 6,878
--------------
Total Assets.................................................................................... 824,133,756
--------------
LIABILITIES
Payable for shares of beneficial interest redeemed................................................ 315,613
Investment advisory fee payable................................................................... 101,105
Other payables and accrued expenses............................................................... 153,452
--------------
Total Liabilities............................................................................... 570,170
--------------
Total Net Assets................................................................................ $ 823,563,586
--------------
--------------
COMPOSITION OF NET ASSETS
Par value ($.01 per share)........................................................................ $ 184,761
Paid-in-capital in excess of par.................................................................. 698,525,722
Accumulated net investment income................................................................. 4,963,012
Accumulated net realized gain on investments...................................................... 12,679,357
Net unrealized appreciation on investments........................................................ 107,210,734
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Total Net Assets................................................................................ $ 823,563,586
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--------------
Shares outstanding................................................................................ 18,476,086
--------------
Net asset value per share......................................................................... $ 44.57
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--------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $44,150).......................................... $ 4,882,603
Interest......................................................................................... 3,324,764
-----------
Total investment income....................................................................... 8,207,367
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OPERATING EXPENSES
Investment advisory fees......................................................................... 3,025,934
Trustees' fees and expenses...................................................................... 85,162
Custodian fees................................................................................... 42,567
Reports to shareholders.......................................................................... 36,288
Transfer and dividend disbursing agent fees...................................................... 29,005
Audit fees....................................................................................... 10,959
Legal fees....................................................................................... 6,458
Miscellaneous.................................................................................... 10,796
-----------
Total operating expenses...................................................................... 3,247,169
Less: expense offset.......................................................................... (2,820)
-----------
Net operating expenses...................................................................... 3,244,349
-----------
Net investment income....................................................................... 4,963,018
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments................................................................. 15,228,748
Net change in unrealized appreciation/depreciation on investments................................ 35,225,745
-----------
Net realized and unrealized gain on investments............................................. 50,454,493
-----------
Net increase in net assets resulting from operations............................................... $55,417,511
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999(1) DECEMBER 31, 1998
---------------- -----------------
<S> <C> <C>
OPERATIONS
Net investment income....................................................... $ 4,963,018 $ 11,467,184
Net realized gain on investments............................................ 15,228,748 23,587,489
Net change in unrealized appreciation/depreciation on investments........... 35,225,745 (185,933)
------------ -------------
Net increase in net assets resulting from operations...................... 55,417,511 34,868,740
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income.................................................. (11,467,182) (4,115,649)
From net realized gains..................................................... (25,731,922) (16,508,556)
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Total dividends and distributions to shareholders......................... (37,199,104) (20,624,205)
------------ -------------
SHARE TRANSACTIONS
Net proceeds from the sale of shares........................................ 68,609,866 339,789,141
Reinvestment of dividends and distributions................................. 37,199,104 20,624,205
Cost of shares redeemed..................................................... (77,550,914) (64,361,982)
------------ -------------
Net increase in net assets from share transactions........................ 28,258,056 296,051,364
------------ -------------
Total increase in net assets........................................... 46,476,463 310,295,899
NET ASSETS
Beginning of period......................................................... 777,087,123 466,791,224
------------ -------------
End of period (including undistributed net investment income of $4,963,012
and $11,467,176, respectively)............................................ $823,563,586 $ 777,087,123
------------ -------------
------------ -------------
SHARES ISSUED AND REDEEMED
Issued...................................................................... 1,594,182 7,796,148
Issued in reinvestment of dividends and distributions....................... 916,460 476,642
Redeemed.................................................................... (1,801,505) (1,520,543)
------------ -------------
Net increase.............................................................. 709,137 6,752,247
------------ -------------
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</TABLE>
- ------------------------
(1) Unaudited
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
(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 six classes of shares of
beneficial interest at $.01 par value. The Trust is comprised of six portfolios:
the Equity Portfolio, the Small Cap Portfolio, the Global Equity Portfolio, the
Managed Portfolio (the "Portfolio"), the U.S. Government Income Portfolio and
the Mid Cap Portfolio. OpCap Advisors (the "Adviser"), a subsidiary of
Oppenheimer Capital, serves as the Trust's investment adviser. The accompanying
financial statements and notes thereto are those of the Portfolio. The Trust is
an investment vehicle for variable annuity and variable life insurance contracts
of various life insurance companies, and qualified pension and retirement plans.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment securities, other than debt securities, listed on a national
securities exchange or traded in the over-the-counter National Market System are
valued each business day at the last reported sale price; if there are no such
reported sales, the securities are valued at their last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Debt securities (other than short-term
obligations) are valued each business day by an independent pricing service
(approved by the Board of Trustees) using methods which include current market
quotations from a major market maker in the securities and trader-reviewed
"matrix" prices. Short-term debt securities having a remaining maturity of sixty
days or less are valued at amortized cost or amortized value, which approximates
market value. Any securities or other assets for which market quotations are not
readily available are valued at their fair value as determined in good faith by
the Board of Trustees. The ability of issuers of debt instruments to meet their
obligations may be affected by economic developments in a specific industry or
region.
(B) FEDERAL INCOME TAXES
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders; accordingly, no Federal
income tax provision is required.
(C) INVESTMENT TRANSACTIONS AND OTHER INCOME
Investment transactions are accounted for on the trade date. In determining the
gain or loss from the sale of investments, the cost of investments sold has been
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend date and interest income is accrued as earned. Discounts or premiums
on debt securities purchased are accreted or amortized to interest income over
the lives of the respective securities.
(D) DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders from net investment income and net
realized capital gains, if any, are declared and paid at least annually.
The Portfolio records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions is determined in
accordance with Federal income tax regulations, which may differ from generally
accepted accounting principles. These "book-tax" differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their Federal income tax treatment; temporary differences do not
require
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED) (CONCLUDED)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)
reclassification. To the extent dividends and/or distributions exceed current
and accumulated earnings and profits for Federal income tax purposes, they are
reported as dividends and/or distributions of paid-in-capital or as a tax return
of capital.
(E) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular portfolio are borne by that
portfolio. Other expenses are allocated to each portfolio based on its net
assets in relation to the total net assets of all applicable portfolios of the
Trust or another reasonable basis.
(F) USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
(G) EXPENSE OFFSET
The Portfolio benefits from an expense offset arrangement with its custodian
bank whereby uninvested cash balances earn credits that reduce custodian fees.
Had these cash balances been invested in income producing securities, they would
have generated income for the Portfolio.
(H) TRUSTEES' RETIREMENT PLAN
On October 19, 1998, the Trust adopted a retirement plan that 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 lesser
period as may be approved by the board) to become eligible to receive benefits.
For the six months ended June 30, 1999, expenses accrued in connection with the
retirement plan were $36,828.
(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 .80% on the first $400 million, .75% on
the next $400 million and .70% thereafter. The Adviser is contractually
obligated to waive a portion of the advisory fee and to assume any necessary
expenses in order 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) PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of investments,
other than short-term securities, were $171,298,623 and $180,759,549,
respectively.
(4) UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
Aggregate gross unrealized appreciation for securities in which there was an
excess of value over cost was $124,505,494, aggregate gross unrealized
depreciation for securities in which there was an excess of cost over value was
$17,294,760, resulting in net unrealized appreciation of $107,210,734.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 16,
JUNE 30, 1999 ------------------------------------------ 1994 (1)
(7) 1998 1997 1996 1995 TO DECEMBER 31, 1994
---------------- -------- -------- -------- ------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 43.74 $ 42.38 $ 36.21 $ 30.14 $ 20.83 $ 21.80
-------- -------- -------- -------- ------- --------
Income from investment operations:
Net investment income............ 0.28 0.60 0.34 0.43 0.42 0.14
Net realized and unrealized gain
(loss) on investments.......... 2.67 2.40 7.45 6.31 9.02 (1.11)
-------- -------- -------- -------- ------- --------
Total income (loss) from
investment operations........ 2.95 3.00 7.79 6.74 9.44 (0.97)
-------- -------- -------- -------- ------- --------
Dividends and distributions to
shareholders:
From net investment income....... (0.65) (0.33) (0.40) (0.41) (0.13) --
From 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 period..... $ 44.57 $ 43.74 $ 42.38 $ 36.21 $ 30.14 $ 20.83
-------- -------- -------- -------- ------- --------
-------- -------- -------- -------- ------- --------
Total return (2)................... 7.2% 7.1% 22.3% 22.8% 45.6% (4.4)%
-------- -------- -------- -------- ------- --------
-------- -------- -------- -------- ------- --------
Net assets, end of period
(000's).......................... $823,564 $777,087 $466,791 $180,728 $99,188 $ 54,943
-------- -------- -------- -------- ------- --------
Ratio of net operating expenses to
average net assets (5)........... 0.83%(3,4) 0.82% 0.87% 0.84%(6) 0.66%(6) 0.66%(3,6)
-------- -------- -------- -------- ------- --------
Ratio of net investment income to
average net assets (5)........... 1.27%(3,4) 1.74% 1.42% 1.66%(6) 1.85%(6) 2.34%(3,6)
-------- -------- -------- -------- ------- --------
Portfolio turnover................. 26% 37% 32% 27% 22% 8%
-------- -------- -------- -------- ------- --------
</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) Average net assets for the six months ended June 30, 1999 were $787,492,572.
(5) For fiscal periods ended after September 1, 1995, ratios are inclusive of
expenses offset by earnings credits from custodian bank (See 1G in Notes to
Financial Statements).
(6) During the periods noted above, the Adviser waived a portion of its fees. If
such waivers had not been in effect, the ratios of net operating 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, 0.74% and 1.77%, respectively, for the year ended
December 31, 1995 and 0.96% and 2.04% (annualized), respectively, for the
period September 16, 1994 (commencement of operations) to December 31, 1994.
(7) Unaudited
<PAGE>
OCC ACCUMULATION TRUST
ONE WORLD FINANCIAL CENTER
NEW YORK, NY 10281
TRUSTEES AND PRINCIPAL OFFICERS
<TABLE>
<S> <C>
Joseph M. LaMotta........................................ Trustee, President & Chairman
Paul Y. Clinton.......................................... Trustee
Thomas W. Courtney....................................... Trustee
Lacy B. Herrmann......................................... Trustee
George Loft.............................................. Trustee
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
Timothy J. McCormack..................................... Vice President and Portfolio Manager
Eileen P. Rominger....................................... Vice President and Portfolio Manager
Lawrence K. Becker....................................... Treasurer
Deborah Kaback........................................... Secretary
Brian S. Shlissel........................................ Assistant Treasurer
Maria Camacho............................................ Assistant Secretary
INVESTMENT ADVISER
OpCap Advisors
One World Financial Center
New York, NY 10281
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
</TABLE>
This report is authorized for distribution only
to shareholders and to others who have received
a copy of this Trust's prospectus.
