<PAGE>
OCC ACCUMULATION TRUST
o EQUITY 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
EQUITY PORTFOLIO
After a slow start in the first quarter of 1999, the Equity Portfolio
achieved strong results in the second quarter. For the first half of 1999, the
Portfolio's total return of 9.5% compared with a total return of 12.4% for the
Standard & Poor's 500 index ("S&P 500") inclusive of dividends, and an average
total return of 13.7% for the funds in Lipper's Variable Insurance Products
Performance Service Report capital appreciation category. The S&P 500 is an
unmanaged index of 500 of the largest corporations weighted by market
capitalization. The Portfolio's performance for the six months ranked 42nd among
the 54 funds in the Lipper capital appreciation universe.
As value stocks returned to favor in the second quarter, the Portfolio
delivered a total return of 9.8% for the quarter, exceeding both the 7.0% return
of the S&P 500 and an average total return of 9.5% for the funds in the Lipper
capital appreciation category.
The Portfolio invests in a diverse group of value stocks chosen for their
superior business characteristics and reasonable prices. (Value stocks are those
deemed to have share prices well below the inherent value of the business, while
growth stocks are those projected to have steady earnings increases.) In our
view, a company's stock price is determined in the long run by earnings and
other business fundamentals. For that reason, we are patient long-term value
investors, seeking to generate excellent results over time and control risk by
owning companies which we consider to be undervalued in relation to their
competitive positions, cash flow and earnings prospects. The objective of our
investment approach is to acquire the stocks of superior companies for
substantially less than they are worth.
In the 12 months ended June 30, 1999, the Portfolio provided a total return
of 8.6% versus 22.8% for the S&P 500 and an average total return of 20.9% for
the funds in the Lipper capital appreciation category. Results for the
12 months were hurt by the underperformance of value stocks during 1998 and in
the early part of 1999. The Portfolio's 12-month performance was 40th among the
50 funds in the Lipper capital appreciation universe.
The Portfolio continues to deliver favorable returns over longer periods,
with what we believe to be less risk than the market. For the three years ended
June 30, 1999, the Portfolio generated an average annual total return of 20.0%,
compared with 21.1% for the funds in the Lipper capital appreciation category
and 29.1% for the S&P 500. The Portfolio's three-year performance ranked 19th
among the 37 funds in the Lipper capital appreciation universe. For the five
years ended June 30, 1999, the Portfolio's average annual total return of 22.5%*
compared with 23.0% for the funds in the Lipper capital appreciation category
and 27.9% for the S&P 500. This five-year performance was 13th among the 28
capital appreciation funds monitored by Lipper. In the 10 years ended June 30,
1999, the Portfolio provided an average annual total return of 17.6%*, compared
with 16.3% for the funds in the Lipper capital appreciation category and 18.8%
for the S&P 500. The Portfolio's 10-year performance ranked sixth among the 15
funds in the Lipper category. From its inception on August 1, 1988 through June
30, 1999, the Portfolio's average annual total return of 17.1%* 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.
Despite their strong recovery in the second quarter, we believe the types
of value stocks in which the Portfolio invests continue to trade at a
significant discount to large growth stocks and the stock market in general. As
a result, we continue to find stocks that, in our opinion, meet our criteria of
being reasonably priced and having strong underlying business fundamentals,
including high cash flow and favorable earnings prospects.
Two of our new positions in the first half of 1999 were Raytheon (Class B)
and AMFM (formerly Chancellor Media). Raytheon is the world leader in defense
electronics, manufacturing missiles, electro-optic
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* Based on results of the OCC Accumulation Trust and its predecessor. On
September 16, 1994, an investment company which had commenced operations on
August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust"),
was effectively divided into two investment funds--the Old Trust and the
present OCC Accumulation Trust (the "Present Trust")--at which time the
Present Trust commenced operations. The total net assets of the Equity
Portfolio immediately after the transaction were $86,789,755 in the Old Trust
and $3,764,598 in the Present Trust. For the period prior to September 16,
1994, the performance figures for the Equity Portfolio of the Present Trust
reflect the performance of the Equity Portfolio of the Old Trust.
<PAGE>
devices, surveillance equipment, radar systems and other defense products. The
company is also an important manufacturer of general aviation aircraft and has
one of the country's largest engineering and construction businesses. Management
is focused on integrating and restructuring recently acquired companies, with a
goal of achieving annual cost savings of $2.4 billion. Even though the stock
rose sharply in the second quarter, we believe it remains a good value. The
company's shares trade at a valuation only slightly above the defense industry
average and at a significant discount to the market. Free cash flow is expected
to increase significantly in 2000 and will most likely be used for debt
reduction.
AMFM is one of the largest radio station owners in the U.S. and its planned
purchase of Capstar Broadcasting will make it number one, with more than 485
stations in 105 markets. We believe AMFM is an undervalued company with strong
prospects to generate high cash flow.
We constantly evaluate each stock we own in light of whether there might be
better investment opportunities. In that regard, in a number of cases during the
first half of 1999, we reduced or eliminated our holdings in one stock and
redeployed the capital into another stock trading at what we believe to be a
greater discount to its intrinsic value. For instance, we eliminated our
investment in AlliedSignal while purchasing Emerson Electric. The price of
AlliedSignal soared during the first half of 1999 as investors applauded the
company's purchase of Honeywell. Moreover, the company's strong earnings reflect
the full bloom of aerospace spending. We took advantage of this price advance to
sell our AlliedSignal shares at a profit. Even as the price of AlliedSignal
stock soared, Emerson's share price lagged the market, creating what we consider
to be a buying opportunity. Because Emerson is heavily dependent on foreign
economies and spending by the petrochemical industry, both of which have been
weak, the company's rate of sales growth has slowed somewhat. However, Emerson
has an excellent long-term growth record and, in comparison to AlliedSignal, is
equally well managed and more cohesively structured. We believe Emerson's
financial results will resume their favorable rate of growth as its markets
strengthen.
At June 30, 1999, the Portfolio's net assets were allocated 90.9% to common
stocks and 9.1% to cash and cash equivalents, compared with 84.7% to stocks and
15.3% to cash and cash equivalents six months earlier. The Portfolio's five
largest equity positions at June 30, 1999 were Computer Associates
International, which designs and markets computer software, representing 4.6% of
the Portfolio's net assets; XL Capital (Class A shares), a strongly capitalized
specialty insurance company headquartered in Bermuda, 4.0% of net assets; Dover,
a diversified manufacturer of industrial products, 3.0% 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, 3.0% of net assets; and Textron, a diversified global company
participating in the aircraft, automotive, industrial and finance industries,
3.0% of net assets.
Major industry positions at the end of June were: insurance, representing
12.9% of the Portfolio's net assets; financial services, 8.7% of net assets;
food services, 6.1% of net assets; technology, 6.0% of net assets and banking,
5.9% of net assets.
We believe our long-term perspective and emphasis on buying superior
undervalued businesses provide a competitive advantage as the market moves away
from highly priced growth stocks toward a renewed recognition of the enduring
value of a company's earnings, cash flow and competitiveness. We remain
confident that our disciplined value style will generate excellent long-term
results with below-market risk.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY 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 -- 3.9%
$2,392,000 Federal Home Loan Bank, 4.60%, 7/1/99............................................... $ 2,392,000
210,000 Federal National Mortgage Association, 4.77%, 7/8/99................................ 209,805
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Total U.S. Government Agency Notes (cost -- $2,601,805)............................. 2,601,805
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SHORT-TERM CORPORATE NOTES -- 6.1%
AUTOMOTIVE -- 1.6%
1,123,000 Ford Motor Credit Corp., 5.10%, 7/28/99............................................. 1,118,705
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MACHINERY/ENGINEERING -- 4.5%
3,000,000 Deere (John) Capital Corp., 4.83%, 7/6/99........................................... 2,997,987
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Total Short-Term Corporate Notes (cost -- $4,116,692)............................... 4,116,692
<CAPTION>
SHARES
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<S> <C> <C>
COMMON STOCKS -- 90.9%
ADVERTISING -- 3.7%
14,600 Omnicom Group....................................................................... 1,168,000
15,000 WPP Group plc ADR................................................................... 1,286,250
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2,454,250
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AEROSPACE/DEFENSE -- 4.7%
23,000 General Dynamics Corp. ............................................................. 1,575,500
22,000 Raytheon Co. (Class B) ............................................................. 1,548,250
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3,123,750
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BANKING -- 5.9%
38,000 BankBoston Corp. ................................................................... 1,942,750
46,330 Wells Fargo & Co. .................................................................. 1,980,608
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3,923,358
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CHEMICALS -- 2.5%
24,000 du Pont (E.I.) de Nemours & Co. .................................................... 1,639,500
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COMPUTER SERVICES -- 1.2%
12,000 Sabre Group Holdings, Inc. *........................................................ 825,000
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CONGLOMERATES -- 5.8%
22,000 Minnesota Mining & Manufacturing Co. ............................................... 1,912,625
24,000 Textron, Inc. ...................................................................... 1,975,500
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3,888,125
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CONSUMER PRODUCTS -- 3.1%
21,000 Avery Dennison Corp. ............................................................... 1,267,875
30,000 Mattel, Inc. ....................................................................... 793,125
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2,061,000
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DRUGS & MEDICAL PRODUCTS -- 1.8%
40,084 Becton, Dickinson & Co. ............................................................ 1,202,520
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</TABLE>
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OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
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<S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONICS -- 4.4%
10,000 Avnet, Inc. ........................................................................ $ 465,000
18,000 Emerson Electric Co. ............................................................... 1,131,750
22,000 Rockwell International Corp. ....................................................... 1,336,500
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2,933,250
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ENTERTAINMENT -- 1.3%
28,000 Walt Disney Co. .................................................................... 862,750
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FINANCIAL SERVICES -- 8.7%
38,085 Citigroup, Inc. .................................................................... 1,809,037
19,912 Countrywide Credit Industries, Inc. ................................................ 851,238
25,620 Federal Home Loan Mortgage Corp. ................................................... 1,485,960
36,000 Household International, Inc........................................................ 1,705,500
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5,851,735
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FOOD SERVICES -- 6.1%
33,715 Diageo plc ADR...................................................................... 1,449,745
30,000 Heinz (H.J.) Co. ................................................................... 1,503,750
27,000 McDonald's Corp. ................................................................... 1,115,438
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4,068,933
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INSURANCE -- 12.9%
40,100 ACE Ltd. ........................................................................... 1,132,825
29,744 AFLAC, Inc. ........................................................................ 1,423,994
2,839 American International Group, Inc. ................................................. 332,340
41,161 Conseco, Inc. ...................................................................... 1,252,838
42,000 Everest Reinsurance Holdings, Inc. ................................................. 1,370,250
13,000 RenaissanceRe Holdings Ltd. ........................................................ 481,000
47,007 XL Capital Ltd. .................................................................... 2,655,896
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8,649,143
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LEISURE -- 1.2%
17,000 Carnival Corp. ..................................................................... 824,500
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MACHINERY/ENGINEERING -- 4.5%
16,000 Caterpillar, Inc. .................................................................. 960,000
58,000 Dover Corp. ........................................................................ 2,030,000
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2,990,000
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MANUFACTURING -- 0.9%
10,000 Alcoa, Inc. ........................................................................ 618,750
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MEDIA/BROADCASTING -- 2.3%
28,000 Chancellor Media Corp.*+............................................................ 1,543,500
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PRINTING/PUBLISHING -- 2.7%
36,000 Donnelley (R.R.) & Sons Co. ........................................................ 1,334,250
40,000 Hollinger, Inc. .................................................................... 475,000
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1,809,250
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</TABLE>
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OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED) (CONCLUDED)
<TABLE>
<CAPTION>
SHARES VALUE
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<S> <C> <C>
COMMON STOCKS (CONCLUDED)
RETAIL -- 2.3%
38,332 May Department Stores Co. .......................................................... $ 1,566,821
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TECHNOLOGY -- 6.0%
39,000 Compaq Computer Corp. .............................................................. 923,812
56,000 Computer Associates International, Inc. ............................................ 3,080,000
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4,003,812
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TELECOMMUNICATIONS -- 2.9%
14,000 Motorola, Inc. ..................................................................... 1,326,500
12,000 Sprint Corp. (FON Group)............................................................ 633,750
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1,960,250
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TRANSPORTATION -- 3.4%
25,600 AMR Corp.*.......................................................................... 1,747,200
21,000 Canadian Pacific Ltd. .............................................................. 500,062
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2,247,262
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WASTE DISPOSAL -- 2.6%
32,000 Waste Management, Inc. ............................................................. 1,720,000
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Total Common Stocks (cost -- $49,139,488)........................................... 60,767,459
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</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments (cost -- $55,857,985)................................... 100.9% $ 67,485,956
Liabilities in Excess of Other Assets..................................... (0.9) (621,085)
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Total Net Assets.......................................................... 100.0% $ 66,864,871
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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.
ADR -- American Depositary Receipt
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $55,857,985).............................................................. $ 67,485,956
Cash..................................................................................................... 1,228
Receivable from shares of beneficial interest sold....................................................... 105,869
Dividends receivable..................................................................................... 60,601
Other assets............................................................................................. 1,461
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Total Assets........................................................................................... 67,655,115
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LIABILITIES
Payable for investments purchased........................................................................ 741,720
Payable for shares of beneficial interest redeemed....................................................... 25,650
Investment advisory fee payable.......................................................................... 8,048
Other payables and accrued expenses...................................................................... 14,826
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Total Liabilities...................................................................................... 790,244
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Total Net Assets....................................................................................... $ 66,864,871
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COMPOSITION OF NET ASSETS
Par value ($.01 per share)............................................................................... $ 16,666
Paid-in-capital in excess of par......................................................................... 52,271,799
Accumulated net investment income........................................................................ 310,586
Accumulated net realized gain on investments............................................................. 2,637,849
Net unrealized appreciation on investments............................................................... 11,627,971
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Total Net Assets....................................................................................... $ 66,864,871
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Shares outstanding....................................................................................... 1,666,592
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Net asset value per share................................................................................ $ 40.12
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</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY 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 $2,210).................................................. $ 365,774
Interest................................................................................................ 196,667
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Total investment income.............................................................................. 562,441
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OPERATING EXPENSES
Investment advisory fees................................................................................ 224,881
Custodian fees.......................................................................................... 10,405
Audit fees.............................................................................................. 4,306
Transfer and dividend disbursing agent fees............................................................. 3,461
Trustees' fees and expenses............................................................................. 3,165
Reports to shareholders................................................................................. 1,132
Legal fees.............................................................................................. 364
Miscellaneous........................................................................................... 5,456
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Total operating expenses............................................................................. 253,170
Less: expense offset................................................................................. (1,317)
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Net operating expenses............................................................................. 251,853
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Net investment income.............................................................................. 310,588
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments........................................................................ 2,637,848
Net change in unrealized appreciation/depreciation on investments....................................... 2,432,480
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Net realized and unrealized gain on investments.................................................... 5,070,328
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Net increase in net assets resulting from operations...................................................... $ 5,380,916
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</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999(1) DECEMBER 31, 1998
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<S> <C> <C>
OPERATIONS
Net investment income.................................................... $ 310,588 $ 496,362
Net realized gain on investments......................................... 2,637,848 2,269,575
Net change in unrealized appreciation/depreciation on investments........ 2,432,480 1,277,757
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Net increase in net assets resulting from operations................... 5,380,916 4,043,694
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............................................... (496,364) (311,417)
From net realized gains.................................................. (2,260,409) (1,344,997)
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Total dividends and distributions to shareholders...................... (2,756,773) (1,656,414)
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SHARE TRANSACTIONS
Net proceeds from the sale of shares..................................... 19,923,668 25,006,798
Reinvestment of dividends and distributions.............................. 2,756,773 1,656,414
Cost of shares redeemed.................................................. (7,150,424) (9,159,759)
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Net increase in net assets from share transactions..................... 15,530,017 17,503,453
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Total increase in net assets........................................ 18,154,160 19,890,733
NET ASSETS
Beginning of period...................................................... 48,710,711 28,819,978
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End of period (including undistributed net investment income of $310,586
and $496,362, respectively)............................................ $ 66,864,871 $48,710,711
------------ -----------
------------ -----------
SHARES ISSUED AND REDEEMED
Issued................................................................... 514,962 673,182
Issued in reinvestment of dividends and distributions.................... 77,459 44,976
Redeemed................................................................. (184,592) (248,628)
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Net increase........................................................... 407,829 469,530
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</TABLE>
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(1) Unaudited
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY 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 "Portfolio"), the Small Cap Portfolio, the Global
Equity Portfolio, the Managed Portfolio, the U.S. Government Income Portfolio
and the Mid Cap Portfolio. OpCap Advisors (the "Adviser"), a subsidiary of
Oppenheimer Capital, serves as the Trust's investment adviser. The accompanying
financial statements and notes thereto are those of the Portfolio. The Trust is
an investment vehicle for variable annuity and variable life insurance contracts
of various life insurance companies, and qualified pension and retirement plans.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment securities, other than debt securities, listed on a national
securities exchange or traded in the over-the-counter National Market System are
valued each business day at the last reported sale price; if there are no such
reported sales, securities are valued at their last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Debt securities (other than short-term
obligations) are valued each business day by an independent pricing service
(approved by the Board of Trustees) using methods which include current market
quotations from a major market maker and trader-reviewed "matrix" prices.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any securities or other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by the Board of
Trustees. The ability of issuers of debt instruments to meet their obligations
may be affected by economic developments in a specific industry or region.
(B) FEDERAL INCOME TAXES
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders; accordingly, no Federal
income tax provision is required.
(C) INVESTMENT TRANSACTIONS AND OTHER INCOME
Investment transactions are accounted for on the trade date. In determining the
gain or loss from the sale of investments, the cost of investments sold has been
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend date and interest income is accrued as earned. Discounts or premiums
on debt securities purchased are accreted or amortized to interest income over
the lives of the respective securities.
(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 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.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED) (CONCLUDED)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)
(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 in connection with 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 $2,286.
(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 that 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 INVESTMENTS
For the six months ended June 30, 1999, purchases and sales of investments,
other than short-term securities, were $29,354,224 and $14,917,239,
respectively.
(4) UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
Aggregate gross unrealized appreciation for securities in which there was an
excess of value over cost was $12,663,484, aggregate gross unrealized
depreciation for securities in which there was an excess of cost over value was
$1,035,513, resulting in net unrealized appreciation was $11,627,971.
<PAGE>
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------------- SEPTEMBER 16, 1994 (1)
JUNE 30, 1999 (7) 1998 1997 1996 1995 TO DECEMBER 31, 1994
----------------- ------- ------- ------- ------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 38.70 $ 36.52 $ 30.07 $ 25.05 $ 18.12 $18.57
-------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income............... 0.15 0.39 0.39 0.21 0.31 0.09
Net realized and unrealized gain
(loss) on investments............. 3.28 3.84 7.34 5.52 6.71 (0.54)
-------- ------- ------- ------- ------- ------
Total income (loss) from
investment operations........... 3.43 4.23 7.73 5.73 7.02 (0.45)
-------- ------- ------- ------- ------- ------
Dividends and distributions to
shareholders:
From net investment income.......... (0.36) (0.39) (0.28) (0.24) (0.09) --
From net realized gains............. (1.65) (1.66) (1.00) (0.47) -- --
-------- ------- ------- ------- ------- ------
Total dividends and distributions
to shareholders................. (2.01) (2.05) (1.28) (0.71) (0.09) --
-------- ------- ------- ------- ------- ------
Net asset value, end of period........ $ 40.12 $ 38.70 $ 36.52 $ 30.07 $ 25.05 $18.12
-------- ------- ------- ------- ------- ------
-------- ------- ------- ------- ------- ------
Total return (2)...................... 9.5% 11.9% 26.6% 23.4% 38.9% (2.4%)
-------- ------- ------- ------- ------- ------
-------- ------- ------- ------- ------- ------
Net assets, end of period (000's)..... $ 66,865 $48,711 $28,820 $19,843 $ 9,036 $4,281
-------- ------- ------- ------- ------- ------
Ratio of net operating expenses to
average net assets (5).............. 0.90%(3,4) 0.94% 0.99% 0.93%(6) 0.72%(6) 0.72%(3,6)
-------- ------- ------- ------- ------- ------
Ratio of net investment income to
average net assets (5).............. 1.10%(3,4) 1.36% 1.25% 1.29%(6) 1.74%(6) 1.80%(3,6)
-------- ------- ------- ------- ------- ------
Portfolio turnover.................... 30% 29% 32% 36% 31% 6%
-------- ------- ------- ------- ------- ------
</TABLE>
- ------------------
(1) Commencement of operations.
(2) Assumes reinvestment of all dividends and distributions. Total return for
period of less than one year is not annualized.
(3) Annualized
(4) Average net assets for six months ended June 30, 1999, were $56,686,260.
(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 or all of its
fees and assumed a portion of the Portfolio's operating expenses. If such
waivers and assumptions 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 1.05% and 1.15%, respectively, for the
year ended December 31, 1996, 1.26% and 1.20%, respectively, for the year
ended December 31, 1995 and 2.09% and 0.43% (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
</TABLE>
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
This report is authorized for distribution only
to shareholders and to others who have received
a copy of this Trust's prospectus.
