<PAGE>
OCC ACCUMULATION TRUST
o MID CAP PORTFOLIO
ANNUAL REPORT
1998
MANAGED BY
[LOGO]
<PAGE>
OCC ACCUMULATION TRUST
MANAGED BY
[LOGO]
We are pleased to report on the investment activities and results of the
portfolios in the OCC Accumulation Trust in 1998, a year of generally favorable
returns in both the stock and bond markets.
As measured by the Standard & Poor's 500 Index, the U.S. stock market
continued its remarkable advance, benefiting from a sustained U.S. economic
environment of moderate growth, declining interest rates and extremely low
inflation. The total return of that index was 28.6% in 1998, the fourth
consecutive year in which the S&P 500 has increased more than 20%.
Although economic conditions in Asia, Russia and Latin America were less
than robust, non-U.S. stock markets delivered positive returns on balance, but
in many cases with a high degree of price volatility. The total return of Morgan
Stanley Capital International's World Index was 24.3% in U.S. dollars.
Fixed income securities also provided generally strong results in 1998,
benefiting from declining interest rates and low inflation. Long-term U.S.
Treasury bonds led the way, with their prices being bid up by investors wanting
to own the safest fixed income securities at a time of global economic
uncertainty.
Beneath the surface, however, there were many crosscurrents in the U.S.
stock market. The year's sharp increase for the S&P 500 Index was driven
primarily by a limited group of super-large company stocks. Many other stocks
were left behind. For instance, the Wilshire Midcap 750 Index was up only 3.7%
in 1998, while the Russell 2000 Index, a benchmark of small company stocks in
the U.S., declined 2.6%. The strong relative performance of large versus small
stocks reflected the preference of many investors for owning highly liquid large
issues--especially those with predictable earnings--at a time when the
international economic outlook is uncertain and widespread concern exists that
the rate of economic growth in the U.S. may be slowing.
There was also a wide disparity between the performance of growth stocks
(those projected to have high future earnings growth rates) and value stocks
(those considered to be undervalued in relation to their inherent worth). The
S&P 500/BARRA Growth Index rose 42.2% in 1998 while the S&P 500/BARRA Value
Index increased 14.7%. Performance gaps of this type, favoring either growth or
value, are common. Nonetheless, the 1998 differential was one of the largest in
history. Many quality stocks that are inexpensive languished or even fell in
price, while some growth stocks with high valuations became even more expensive.
Even though we employ a value philosophy of investing, we are not against
growth. Indeed, we always want to buy good businesses that are growing. It is
just that we are against paying too much for that growth. Overpaying adds to
risk and makes it harder to achieve long-term profit.
The ebbs and flows of growth and value are part of the fabric of markets.
We do not know when the stock market will swing back to value, but we believe it
will swing back. Meanwhile, we will stick with our disciplined value philosophy
because it has proven itself over time and because it offers a way to
participate in the stock market without taking excessive risk. In other words,
we will continue to invest carefully for the long term, rather than chase after
those growth stocks that we believe to be overvalued or buy companies that are
in vogue.
We believe our style works over time precisely because it is based on
investing in quality companies at prices below their inherent worth. While our
style sometimes requires patience, we believe the inherent value of a
company--which is based on earnings, cash flow, strength of balance sheet,
competitive strengths, business outlook and other factors--almost always ends up
being reflected in the share price.
The objective of our strategy is to generate excellent returns over time.
We believe our approach is well suited for the long-term investor seeking to
achieve favorable returns in the stock market without taking large risks.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
The Mid Cap Portfolio invests in companies with stock market
capitalizations--that is, the total market value of a company's common shares
outstanding--between $500 million and $5 billion at time of purchase. We formed
this portfolio on February 9, 1998 to broaden the range of investment choices
available to investors in the Trust.
Many mid cap companies have strong growth records and are run by management
teams that own a large percentage of the stock, providing an incentive to
increase shareholder value. However, these companies are often overlooked
because they fall between the typical large cap and small cap investment
portfolio. We believe the relative lack of analyst coverage for mid cap stocks
offers opportunities to find undervalued issues not yet recognized by other
investors.
However, the mid cap sector did not perform well in 1998 because of the
stock market's strong orientation during the year toward large growth stocks.
The Portfolio declined 1.6% from its inception on February 9 through the end of
the year. This compared with a total return of 1.3% during the same period for
the Wilshire Midcap 750 Index with dividends included (Wilshire 750). The
Wilshire 750 is an unmanaged index of 750 mid-sized corporations weighted by
market capitalization.
The Portfolio is focused on long-term investment in undervalued quality
companies with high cash flow and favorable business prospects. We believe two
of the most important long-term drivers of a company's stock price are five-year
average return on equity and five-year earnings per share growth. In that
regard, the companies we own have significantly higher return on equity than,
and comparable earnings per share growth to, the average of the stocks in the
S&P 500 Index. Yet, the shares of the companies we own carry price/earnings
ratios well below the average of the stocks in the 500 Index. We remain
optimistic that investments in quality undervalued businesses will generate
superior returns over time.
We find many attractive values in the mid cap sector at this time. In the
second half of the year, we established new positions in the common stocks of
Air Express International Corp., Conseco, Inc., Eagle USA Airfreight, Inc.,
EG&G, Inc., EXEL Ltd., Oak Industries, Inc., PartnerRe Ltd. and Prologis Trust.
Air Express International illustrates our philosophy of investing in quality
companies that we believe to be significantly undervalued. Serving international
shippers, the company provides freight forwarding and logistics services that
combine air, ocean and ground transportation with warehousing and distribution.
The company has only modest capital requirements and generates significant free
cash flow. Even though the company continues to benefit from the growth of
international trade, the stock price declined recently because of investor
misperceptions about the impact of the Asian financial crisis on its operations.
We believe this decline has created an opportunity to invest in this quality
company at a low price.
Eliminations in the second half of the year were General Instrument Corp.,
International Flavors & Fragrances, Inc., Nuevo Energy Co., Solectron Corp.,
Unifi, Inc. and W.R. Berkley Corp.
At the end of December, 97.3% of the Portfolio's net assets were invested
in common stocks and 2.7% were in cash and cash equivalents. The Portfolio's
five largest holdings at December 31, 1998 were Sabre Group Holdings, Inc.,
which operates an electronic travel reservations system and provides information
technology services, representing 5.3% of the Portfolio's net assets; WPP Group
plc (ADR), one of the world's leading advertising and specialty communications
services firms, 5.2% of net assets; Shaw Industries, Inc., which manufactures
and sells carpets and rugs and also sells other flooring products, 5.1% of net
assets; Countrywide Credit Industries, Inc., which originates and services home
mortgages, 5.1% of net assets; and ACE Ltd., a Bermuda-based provider of excess
directors and officers liability insurance, 4.4% of net assets.
The Portfolio's top five industry positions at the end of December were in
the insurance sector, 23.5% of net assets; electronics, 9.3% of net assets; real
estate, 7.2% of net assets; advertising, 6.2% of net assets; and computer
services, 5.3% of net assets.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
OCC ACCUMULATION TRUST MID CAP PORTFOLIO FROM INCEPTION (2/9/98)
THROUGH 12/31/98 AND TOTAL RETURN ON WILSHIRE MID CAP 750 UNIVERSE INDEX*
[LINE GRAPH]
Date Mid Cap Portfolio Wilshire Midcap 750 Universe Index*
-------- ----------------- -----------------------------------
2/9/98 $10,000 $10,000
12/31/98 9,838 10,128
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
* With dividends
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY NOTES -- 2.4%
$ 45,000 Federal Home Loan Mortgage Corp., 5.08%, 1/8/99
(cost -- $44,955).................................................................... $ 44,955
----------
SHARES
----------
COMMON STOCKS -- 97.3%
ADVERTISING -- 6.2%
300 Omnicom Group........................................................................ 17,400
1,600 WPP Group plc ADR.................................................................... 98,800
----------
116,200
----------
AUTOMOTIVE -- 3.9%
2,200 LucasVarity Corp. plc ADR............................................................ 73,700
----------
BUILDING & CONSTRUCTION -- 4.7%
800 Armstrong World Industries, Inc. .................................................... 48,250
2,600 Oakwood Homes Corp. ................................................................. 39,488
----------
87,738
----------
CHEMICALS -- 1.1%
4,100 Methanex Corp.*...................................................................... 20,756
----------
COMPUTER SERVICES -- 5.3%
2,250 Sabre Group Holdings, Inc.*.......................................................... 100,125
----------
CONSUMER PRODUCTS -- 1.4%
1,400 Polaroid Corp. ...................................................................... 26,162
----------
DRUGS & MEDICAL PRODUCTS -- 2.7%
1,250 Teva Pharmaceutical Industries Ltd. ADR.............................................. 50,859
----------
ELECTRONICS -- 9.3%
2,200 Allegheny Teledyne, Inc. ............................................................ 44,963
1,600 Arrow Electronics, Inc. ............................................................. 42,700
1,100 Avnet, Inc. ......................................................................... 66,550
600 Oak Industries, Inc. ................................................................ 21,000
----------
175,213
----------
ENERGY -- 2.6%
1,600 Anadarko Petroleum Corp. ............................................................ 49,400
----------
HOTELS -- 1.2%
4,800 Homestead Village, Inc.*............................................................. 21,600
----------
INSURANCE -- 23.5%
2,400 ACE Ltd. ............................................................................ 82,650
2,328 Conseco, Inc. ....................................................................... 71,150
668 Delphi Financial Group, Inc. (Class A)............................................... 35,028
1,100 EXEL Ltd. ........................................................................... 82,500
1,950 Everest Reinsurance Holdings, Inc. .................................................. 75,928
400 PartnerRe Ltd. ...................................................................... 18,300
950 Protective Life Corp. ............................................................... 37,822
1,100 RenaissanceRe Holdings Ltd. ......................................................... 40,287
----------
443,665
----------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
SCHEDULE OF INVESTMENTS (CONCLUDED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
COMMON STOCKS (CONCLUDED)
MACHINERY/ENGINEERING -- 3.2%
<S> <C> <C>
1,650 Dover Corp. ......................................................................... $ 60,431
----------
MANUFACTURING -- 3.7%
300 Carlisle Companies, Inc. ............................................................ 15,488
1,825 Crane Co. ........................................................................... 55,092
----------
70,580
----------
MISCELLANEOUS FINANCIAL SERVICES -- 5.1%
1,900 Countrywide Credit Industries, Inc. ................................................. 95,356
----------
PRINTING/PUBLISHING -- 3.5%
4,800 Hollinger International, Inc. ....................................................... 66,900
----------
REAL ESTATE -- 7.2%
3,300 Prologis Trust....................................................................... 68,475
5,000 Security Capital Group, Inc. (Class B)*.............................................. 67,813
----------
136,288
----------
TECHNOLOGY -- 3.3%
2,300 Adaptec, Inc.*....................................................................... 40,394
800 EG&G, Inc. .......................................................................... 22,250
----------
62,644
----------
TEXTILES/APPAREL -- 5.1%
4,000 Shaw Industries, Inc. ............................................................... 97,000
----------
TRANSPORTATION -- 4.3%
2,000 Air Express International Corp. ..................................................... 43,500
1,500 Eagle USA Airfreight, Inc. .......................................................... 36,750
----------
80,250
----------
Total Common Stocks (cost -- $1,824,346)............................................. 1,834,867
----------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments (cost -- $1,869,301)..................................... 99.7% $1,879,822
Other Assets in Excess of Liabilities...................................... 0.3 5,202
--------- ----------
Total Net Assets........................................................... 100.0% $1,885,024
--------- ----------
--------- ----------
</TABLE>
- ------------------
* Non-income producing security
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $1,869,301).......................................................... $ 1,879,822
Cash................................................................................................ 13,503
Receivable from investment adviser.................................................................. 2,078
Dividends receivable................................................................................ 1,475
Other assets........................................................................................ 93
------------
Total Assets...................................................................................... 1,896,971
------------
LIABILITIES
Payable for fund shares purchased................................................................... 1,247
Other payables and accrued expenses................................................................. 10,700
------------
Total Liabilities................................................................................. 11,947
------------
Total Net Assets.................................................................................. $ 1,885,024
------------
------------
COMPOSITION OF NET ASSETS
Par value ($.01 per share).......................................................................... $ 1,925
Paid-in-capital in excess of par.................................................................... 1,880,997
Accumulated net realized loss on investments........................................................ (8,419)
Net unrealized appreciation on investments.......................................................... 10,521
------------
Total Net Assets.................................................................................. $ 1,885,024
------------
------------
Fund shares outstanding............................................................................. 192,501
------------
Net asset value per share........................................................................... $ 9.79
------------
------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 9, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $274)................................................. $ 13,300
Interest............................................................................................. 7,738
---------
Total investment income........................................................................... 21,038
---------
OPERATING EXPENSES
Custodian fees....................................................................................... 13,332
Reports and notices to shareholders.................................................................. 12,024
Investment advisory fees............................................................................. 9,473
Audit fees........................................................................................... 8,423
Transfer and dividend disbursing agent fees.......................................................... 6,294
Miscellaneous........................................................................................ 1,186
---------
Total operating expenses.......................................................................... 50,732
Less: Investment advisory fees waived and expenses assumed........................................ (38,307)
Less: Expenses offset............................................................................. (583)
---------
Net operating expenses.......................................................................... 11,842
---------
Net investment income........................................................................... 9,196
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -- NET
Net realized loss on investments..................................................................... (8,419)
Net unrealized appreciation on investments........................................................... 10,521
---------
Net realized loss and unrealized appreciation on investments.................................... 2,102
---------
Net increase in net assets resulting from operations................................................... $ 11,298
---------
---------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 9,
1998 (1)
TO DECEMBER 31, 1998
--------------------
<S> <C>
OPERATIONS
Net investment income........................................................................ $ 9,196
Net realized loss on investments............................................................. (8,419)
Net unrealized appreciation on investments................................................... 10,521
----------
Net increase in net assets resulting from operations....................................... 11,298
----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income........................................................................ (9,196)
Net realized gains........................................................................... --
----------
Total dividends and distributions to shareholders.......................................... (9,196)
----------
FUND SHARE TRANSACTIONS
Net proceeds from sales...................................................................... 2,061,371
Reinvestment of dividends and distributions.................................................. 4,411
Cost of shares redeemed...................................................................... (182,860)
----------
Net increase in net assets from fund share transactions.................................... 1,882,922
----------
Total increase in net assets............................................................ 1,885,024
NET ASSETS
Beginning of period.......................................................................... --
----------
End of period (including undistributed net investment income of $0).......................... $1,885,024
----------
----------
SHARES ISSUED AND REDEEMED
Issued....................................................................................... 211,535
Issued in reinvestment of dividends and distributions........................................ 451
Redeemed..................................................................................... (19,485)
----------
Net increase............................................................................... 192,501
----------
----------
</TABLE>
- ------------------
(1) Commencement of operations
See accompanying notes to financial statements.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(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 U.S. Government Income Portfolio and the Mid Cap
Portfolio (the "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. 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. 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 tax
return of capital. At December 31, 1998, the Portfolio did not have any
permanent book-tax differences.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1998
(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) EXPENSES OFFSET
The Portfolio benefits from an expense offset arrangement with its
custodian bank where uninvested cash balanaces earn credits that reduce monthly
fees. Had these cash balances been invested in income producing securities, they
would have generated income for the Portfolio.
(H) TRUSTEES' FEES AND EXPENSES
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 lessor
period as may be approved by the board) to become eligible to receive benefits.
The effective date of the retirement plan is January 1, 1999, therefore, no
expenses have been accrued for the year ended December 31, 1998.
(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
expense to limit total operating expenses of the Portfolio to 1.00% of average
net assets (net of expenses offset) on an annual basis. For the period
February 9, 1998 (commencement of operations) to December 31, 1998, the Adviser
waived $9,473 in investment advisory fees and assumed $28,834 in operating
expenses for the Portfolio.
(3) PURCHASES AND SALES OF SECURITIES
For the period February 9, 1998 (commencement of operations) to December
31, 1998, purchases and sales of investment securities, other than short-term
securities, were $2,297,854 and $465,086, respectively.
(4) UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
Aggregate gross unrealized appreciation for securities in which there is an
excess of value over tax cost is $157,038, aggregate gross unrealized
depreciation for securities in which there is an excess of tax cost over value
is $148,379, and net unrealized appreciation for Federal income tax purposes is
$8,659. Federal income tax cost basis of portfolio securities is $1,871,163 at
December 31, 1998.
(5) CAPITAL LOSS CARRYFORWARD
At December 31, 1998, the Mid Cap Portfolio's accumulated net realized
capital losses available as a reduction against future net realized capital
gains for Federal income tax purposes were $737, which will expire in 2006. To
the extent that these capital loss carryforwards are used to offset future net
realized gains, the gains offset will not be distributed to shareholders. Net
capital losses of $5,820 which were incurred after October 31, 1998 are deemed
to arise on the first business day of the following year.
<PAGE>
OCC ACCUMULATION TRUST
MID CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
FEBRUARY 9, 1998 (1)
TO DECEMBER 31, 1998
-----------------------
<S> <C>
Net asset value, beginning of period........................................................ $ 10.00
-----------
Income from investment operations:
Net investment income..................................................................... 0.05
Net realized and unrealized loss on investments........................................... (0.21)
-----------
Total loss from investment operations.................................................. (0.16)
-----------
Dividends and distributions to shareholders:
Dividends to shareholders from net investment income...................................... (0.05)
Distributions to shareholders from net realized gains..................................... --
-----------
Total dividends and distributions to shareholders...................................... (0.05)
-----------
Net asset value, end of period.............................................................. $ 9.79
-----------
-----------
Total return (2)............................................................................ (1.6%)
-----------
-----------
Net assets, end of period................................................................... $ 1,885,024
-----------
Ratio of net operating expenses to average net assets (3,4,5,6)............................. 1.05%
-----------
Ratio of net investment income to average net assets (3,4,6)................................ 0.78%
-----------
Portfolio turnover rate..................................................................... 38%
-----------
</TABLE>
- ------------------
(1) Commencement of operations
(2) Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown.
(3) Annualized
(4) Average net assets for the period February 9, 1998 (commencement of
operations) to December 31, 1998 were $1,325,812.
(5) Ratios are calculated to include expenses offset by earnings credits from a
custodian bank (See note 1G in Notes to Financial Statements).
(6) During the period noted above, the Adviser waived its fee and assumed a
portion of the Portfolio's operating expenses. If such waivers and
assumptions had not been in effect, the ratio of net operating expenses to
average net assets and the ratio of net investment income (loss) to average
net assets would have been 4.28% and (2.46%), annualized, respectively, for
the period February 9, 1998 (commencement of operations) to December 31,
1998.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
OCC Accumulation Trust -- Mid Cap 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 Mid Cap Portfolio (one of the
six portfolios constituting OCC Accumulation Trust, hereafter referred to as the
"Portfolio") at December 31, 1998, the results of its operations, the changes in
its net assets and the financial highlights for the period February 9, 1998
(commencement of operations) through December 31, 1998, in conformity with
generally accepted accounting principles. 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 audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards 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
audit, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 12, 1999
<PAGE>
OCC ACCUMULATION TRUST
TWO WORLD FINANCIAL CENTER
NEW YORK, NY 10281
TRUSTEES AND PRINCIPAL OFFICERS
<TABLE>
<S> <C>
Joseph M. LaMotta........................................ Trustee, President
Paul Y. Clinton.......................................... Trustee
Thomas W. Courtney....................................... Trustee
Lacy B. Herrmann......................................... Trustee
George Loft.............................................. Trustee
Bernard H. Garil......................................... Vice President
Gavin Albert............................................. Vice President and Portfolio Manager
John C. Giusio, Jr....................................... Vice President
Richard J. Glasebrook, II................................ Vice President and Portfolio Manager
Louis Goldstein.......................................... Vice President and Portfolio Manager
Alan Gutmann............................................. 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
James Sheldon............................................ Vice President and Portfolio Manager
Richard L. Peteka........................................ Treasurer
Deborah Kaback........................................... Secretary
Robert J. Brault......................................... Assistant Treasurer
</TABLE>
INVESTMENT ADVISER
OpCap Advisors
Two 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.
