<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2000
MANAGED BY
[LOGO]
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
MANAGED BY
[LOGO]
2000 SEMI-ANNUAL REPORT
The Managed Portfolio (the "Portfolio") declined 3.0% during the first half of
2000 in a generally declining stock market. This return exceeded the performance
of most value investing indices, including the 4.1% decrease in the S&P
500/BARRA Value Index and the 4.2% decline in the Russell 1000 Value Index.
However, we trailed our benchmark, the Standard & Poor's 500 Index (the "S&P
500"), which declined 0.4% for the six month period. The S&P 500 is an unmanaged
index of 500 of the largest corporations weighted by market capitalization.
The Portfolio's technology holdings were the largest detractor from performance
during the six months. Although we have significant investments in this sector,
the tech stocks we own--such as Computer Associates and Sabre Group--trailed by
wide margins the returns of the highly valued, more speculative tech stocks that
led the market, particularly in the first quarter. The Portfolio's holdings of
consumer non-durables and financial stocks were the primary contributors to
performance during the six months.
During the second quarter, in a continued volatile market environment, the
Portfolio did well relative to its benchmark, declining 2.0% versus a decrease
of 2.7% for the S&P 500 and larger declines for many value indices such as the
Russell 1000 Value Index, which was off by 4.7%. In this case, our careful
approach to investing in technology stocks paid off. In fact, tech stocks were
the biggest contributor to our results in the second quarter. Just as we did not
participate in the sharp rise of the highly valued, more speculative technology
stocks in the first quarter, we avoided the pitfalls of owning these stocks when
many of them plunged during the second quarter.
The Portfolio invests in stocks, bonds and cash equivalents. We seek to generate
excellent long-term performance by owning stocks with more upside potential than
downside risk and by preserving capital in periods of market turmoil.
We positioned the Portfolio defensively early in the year due to concerns
regarding the high valuations of many stocks. This decision helped protect
capital when the market fell in the second quarter. At the end of June, 67.7% of
net assets were allocated to common stocks, 16.2% to fixed income securities and
19.1% to short-term investments. Fixed income securities and short-term
investments provide a buffer against stock market volatility, generate income,
and represent a resource to buy quality stocks as they become available at
attractive prices.
The Portfolio decreased 5.0% during the twelve months ended June 30, 2000,
compared to an increase of 7.3% for the S&P 500. Our performance in the twelve
month period was dampened by our limited holdings of highly valued technology
stocks, which led the market's advance. For the three years ended June 30, 2000,
the Portfolio provided an average annual total return of 5.4%, compared with
19.7% for the S&P 500. For the five years ended June 30, 2000, the Portfolio's
average annual total return of 12.9% compared with 23.8% for the S&P 500. For
the 10 years ended June 30, 2000, the Portfolio delivered an average annual
total return of 15.9%*, versus 17.8% for the S&P 500. The Portfolio's average
annual total return from its inception on August 1, 1988 through June 30, 2000
was 16.6%*, compared with 18.1% for the S&P 500. We believe these longer-term
results are favorable in light of our risk-averse investment style and the fact
that the Portfolio invests in bonds and short-term securities, not just in
stocks. Returns for the Portfolio take into account expenses incurred by the
Portfolio, but not other charges imposed by the Variable Accounts.
* 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
<PAGE>
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.
Our investment philosophy is based on the premise that companies create wealth
by generating cash flow at high rates. That wealth is delivered to shareholders
by managements who use this cash wisely, such as for share repurchase or astute
acquisitions. Our criteria in buying the stocks of these companies include:
- Good businesses with growing free cash flow
- Management motivated to create wealth for shareholders
- Securities that can be purchased inexpensively
The objective of our approach is to acquire 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.
New positions established in the second quarter included Alcoa (manufacturing),
Bristol-Myers Squibb (drugs & medical products), Eli Lilly (drugs & medical
products) and Motorola (telecommunications). Each reflects our philosophy of
owning businesses that are well managed, have strong competitive positions,
enjoy favorable earnings prospects and use their cash flow to create shareholder
value. We also purchased oil and gas companies Chevron, Tosco and USX-Marathon
Group. Energy stocks are currently valued by the market to reflect a drop in the
price of oil that we believe is overestimated, and we find attractive investment
opportunities in well-managed companies in this sector.
Sales in the quarter just ended included Compaq (technology), IBM (technology),
Diageo (food services) and Champion International (paper products).
The Portfolio's five largest equity positions at June 30, 2000 were McDonald's,
a premier fast-food company with growing global markets, representing 5.2% of
the Portfolio's net assets; Freddie Mac, which originates and securitizes home
mortgages, 4.6% 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, 4.1% of net assets; duPont (E.I.) de Nemours, a
diversified technology and industrial company, 3.9% of net assets; and Boeing, a
global leader in aircraft and aerospace, 3.9% of net assets.
Major common stock industry positions were: financial services, representing
9.9% of the Portfolio's net assets at June 30, 2000; banking, 7.8% of net
assets; drugs & medical products, 7.3% of net assets; food services, 5.2% of net
assets; and telecommunications, 4.5% of net assets.
Looking ahead, the volatility that has characterized the stock market in recent
months does not appear likely to abate in the near future. At times like these,
investing in quality companies that enjoy strong, sustainable track records in
growing the value of their businesses remains a proven strategy. Moreover,
because we invest from the bottom up based on individual company fundamentals,
instead of following market trends, our investment approach tends to withstand
market turbulence. We remain confident that our research-driven approach will
continue to add value against our benchmarks and the broader market.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCK -- 67.7%
AEROSPACE/DEFENSE -- 3.9%
620,100 Boeing Co. ................................................. $25,927,931
-----------
AIRLINES -- 0.3%
80,000 AMR Corp.*.................................................. 2,115,000
-----------
BANKING -- 7.8%
209,000 FleetBoston Financial Corp.................................. 7,106,000
40,000 M&T Bank Corp. ............................................. 18,000,000
700,000 Wells Fargo & Co............................................ 27,125,000
-----------
52,231,000
-----------
CHEMICALS -- 3.9%
598,000 du Pont (E.I.) de Nemours & Co.............................. 26,162,500
-----------
COMPUTERS -- 0.2%
28,600 Dell Computer Corp.*........................................ 1,410,337
-----------
COMPUTER SERVICES -- 1.6%
237,100 Compuware Corp.*............................................ 2,459,912
70,000 Electronic Data System Corp................................. 2,887,500
202,812 Sabre Holdings Corp......................................... 5,780,142
-----------
11,127,554
-----------
CONGLOMERATES -- 3.9%
145,000 Minnesota Mining & Manufacturing Co......................... 11,962,500
255,000 Textron, Inc. .............................................. 13,849,687
-----------
25,812,187
-----------
DRUGS & MEDICAL PRODUCTS -- 7.3%
381,000 American Home Products Corp................................. 22,383,750
82,000 Bristol-Myers Squibb Co..................................... 4,776,500
18,000 Lilly (Eli) & Co. .......................................... 1,797,750
385,000 Pharmacia Corp. ............................................ 19,899,687
-----------
48,857,687
-----------
ELECTRONICS -- 1.0%
90,000 Emerson Electric Co......................................... 5,433,750
24,600 Solectron Corp.*............................................ 1,030,125
-----------
6,463,875
-----------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCK (CONTINUED)
ENERGY -- 1.4%
73,200 Anadarko Petroleum Corp..................................... $ 3,609,675
175,000 Unocal Corp................................................. 5,796,875
-----------
9,406,550
-----------
FINANCIAL SERVICES -- 9.9%
260,000 Citigroup, Inc.............................................. 15,665,000
755,000 Freddie Mac................................................. 30,577,500
415,000 Household International, Inc................................ 17,248,438
111,500 John Hancock Financial Services*............................ 2,641,156
-----------
66,132,094
-----------
FOOD SERVICES -- 5.2%
1,050,600 McDonald's Corp............................................. 34,604,138
-----------
INSURANCE -- 1.3%
157,960 XL Capital Ltd.............................................. 8,549,585
-----------
LEISURE -- 0.2%
52,100 Carnival Corp............................................... 1,015,950
-----------
MANUFACTURING -- 3.9%
190,000 Alcoa Inc.*................................................. 5,510,000
680,000 ITT Industries, Inc.*....................................... 20,655,000
-----------
26,165,000
-----------
MEDIA/BROADCASTING -- 0.2%
30,000 News Corp. Ltd. ADR **...................................... 1,425,000
-----------
OIL/GAS -- 3.3%
219,000 Chevron Corp................................................ 18,573,938
76,500 Tosco Corp. ................................................ 2,165,906
40,000 USX-Marathon Group.......................................... 1,002,500
-----------
21,742,344
-----------
REAL ESTATE -- 0.0%
1,399 Security Capital Group, Inc., (Class A) *................... 483
-----------
RETAIL -- 3.3%
21,500 CVS Corp.................................................... 860,000
950,000 Kroger Co.*................................................. 20,959,375
-----------
21,819,375
-----------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<C> <S> <C>
COMMON STOCK (CONCLUDED)
TECHNOLOGY -- 4.0%
483,000 Computer Associates International, Inc...................... $ 24,723,562
17,300 Intel Corp.................................................. 2,312,794
------------
27,036,356
------------
TELECOMMUNICATIONS -- 4.5%
9,000 AT&T Corp................................................... 2,846,250
355,000 Bell Atlantic Corp.*+....................................... 18,038,438
31,000 Motorola, Inc............................................... 900,938
108,400 Sprint Corp. (FON Group).................................... 5,528,400
60,000 WorldCom, Inc.*............................................. 2,752,500
------------
30,066,526
------------
WASTE DISPOSAL -- 0.6%
215,900 Waste Management, Inc....................................... 4,102,100
------------
Total Common Stock (cost-$438,240,553)...................... 452,173,572
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000)
---------------------
<C> <S> <C>
CORPORATE BONDS & NOTES -- 4.0%
BANKING -- 0.5%
$3,000 Nacional Financiera SNC, 8.575%, 5/8/03..................... 3,009,231
-----------
CONGLOMERATES -- 0.4%
3,000 LG&E Capital Corp., 5.75%, 11/1/01++........................ 2,942,790
-----------
ELECTRONICS -- 0.7%
3,000 Arrow Electronics, Inc., 7.57%, 11/24/00.................... 2,999,694
2,000 Sierra Pacific Resources, Inc., 6.892%, 4/20/03++........... 1,996,830
-----------
4,996,524
-----------
FINANCING -- 1.0%
2,000 Finova Capital Corp., 7.03%, 6/18/03........................ 1,682,520
2,000 General Motors Acceptance Corp., 7.15%, 12/17/01............ 2,021,700
2,000 Heller Financial Inc., 7.03%, 6/25/01....................... 2,010,920
695 Residential Funding Mortgages Corp., 7.00%, 10/25/27........ 691,061
-----------
6,406,201
-----------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
--------------------- -----------
<C> <S> <C>
CORPORATE BONDS & NOTES (CONCLUDED)
FINANCIAL SERVICES -- 1.2%
$2,000 Chrysler Financial Corp., 6.82%, 2/10/13.................... $ 2,020,220
1,000 HSBC Cap Funding Corp., 9.55%, 12/31/49..................... 1,040,000
3,000 Salomon Smith Barney Holdings, Inc., 6.63%, 4/28/03......... 2,995,254
2,000 Textron Financial Corp., 6.58%, 9/17/02..................... 1,999,566
-----------
8,055,040
-----------
TELECOMMUNICATIONS -- 0.2%
1,500 WorldCom Inc., 7.05%, 11/20/01.............................. 1,505,925
-----------
Total Corporates Bonds & Notes (cost-$27,139,731)........... 26,915,711
-----------
U.S. GOVERNMENT AGENCY SECURITIES -- 12.2%
4,300 Federal National Mortgage Association, 6.00%, 8/16/30....... 4,020,715
1,285 Freddie Mac, 5.10%-6.00%, 8/16/30........................... 1,236,085
Government National Mortgage Association, 6.13%-9.75%,
79,282 7/24/30-8/15/23............................................. 76,040,952
-----------
Total U.S. Government Agency Securities
(cost-$81,144,471).......................................... 81,297,752
-----------
SHORT-TERM INVESTMENTS -- 19.1%
COMMERCIAL PAPER -- 10.9%
AUTOMOTIVE -- 3.6%
12,000 Ford Motor Credit Corp., 6.51%, 8/3/00...................... 11,928,390
12,000 General Motors Acceptance Corp., 6.53%, 7/10/00............. 11,980,410
-----------
23,908,800
-----------
FINANCIAL SERVICES -- 5.0%
12,000 American Express Credit Corp., 6.52%, 7/19/00............... 11,960,880
10,000 General Electric Capital Corp., 6.54%, 7/25/00.............. 9,956,400
10,000 Prudential Funding Corp., 6.50%, 7/20/00.................... 9,965,694
1,700 Washington Mutual, Inc., 6.85%, 8/30/00..................... 1,680,592
-----------
33,563,566
-----------
INDUSTRIAL -- 0.1%
300 Tyco International Group, 6.86%, 7/26/00.................... 298,571
-----------
TECHNOLOGY -- 2.2%
15,000 International Business Machines Corp., 6.52%, 7/24/00....... 14,937,517
-----------
TELECOMMUNICATIONS -- 0.0%
100 AT&T Corp., 6.56%, 9/19/00.................................. 98,542
-----------
Total Commercial Paper (amortized cost-$72,806,996)......... 72,806,996
-----------
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED) (CONCLUDED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
--------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY DISCOUNT NOTES -- 8.1%
$28,517 Federal Home Loan Bank, 6.36%-6.57%, 7/3/00-7/10/00......... $ 28,484,541
Federal National Mortgage Association, 6.36%-6.40%,
25,632 7/12/00-7/17/00............................................. 25,575,311
------------
Total U.S. Government Agency Discount Notes (amortized
cost-$54,059,852)........................................... 54,059,852
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
REPURCHASE AGREEMENT -- 0.1%
Repurchase Agreement with State Street Bank & Trust Co.,
dated 6/30/00, 5.85% due 7/3/00, proceeds: $297,145;
collateralized by Federal National Mortgage Association,
297 valued at $303,856; (amortized cost-$297,000)....................... 297,000
------------
Total Short-Term Investments (amortized cost-$127,163,848).......... 127,163,848
------------
Total Investments (cost-$673,688,603)..................... 103.0% 687,550,883
Liabilities in excess of other assets..................... (3.0) (19,928,732)
----- ------------
Net Assets................................................ 100.0% $667,622,151
===== ============
</TABLE>
------------------------------
* Non-income producing security.
** Preferred stock
+ Effective July 3, 2000, the name of this company changed to Verizon
Communications.
++ Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from registration
typically to qualified institutional investors. At June 30, 2000, these
securities aggregated $4,939,620 or 0.74% of net assets.
ADR - American Depositary Receipt
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost-$673,688,603)................... $687,550,883
Cash........................................................ 48,462
Receivable for investments sold............................. 29,168,930
Dividends and interest receivable........................... 1,032,702
Receivable for shares of beneficial interest sold........... 75,221
Prepaid expenses............................................ 6,770
------------
Total Assets.............................................. 717,882,968
------------
LIABILITIES:
Payable for investments purchased........................... 49,256,836
Payable for shares of beneficial interest redeemed.......... 308,926
Investment advisory fee payable............................. 438,129
Trustees' retirement plan payable........................... 103,406
Accrued expenses............................................ 153,520
------------
Total Liabilities......................................... 50,260,817
------------
Net Assets............................................ $667,622,151
============
COMPOSITION OF NET ASSETS:
Beneficial interest shares of $0.01 par value (unlimited
number authorized)........................................ $ 174,821
Paid-in-capital in excess of par............................ 649,157,810
Accumulated undistributed net investment income............. 7,840,521
Accumulated net realized loss on investments................ (3,413,281)
Net unrealized appreciation of investments.................. 13,862,280
------------
Net Assets............................................ $667,622,151
============
Shares outstanding.......................................... 17,482,123
------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE..................................................... $38.19
============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $27,159)... $ 3,930,392
Interest.................................................. 7,004,365
------------
Total investment income................................. 10,934,757
------------
EXPENSES:
Investment advisory fees.................................. 2,778,554
Trustees' fees and expenses............................... 84,370
Custodian fees............................................ 51,890
Transfer agent fees....................................... 29,040
Legal fees................................................ 28,326
Reports to shareholders................................... 25,320
Audit and tax service fees................................ 21,212
Insurance expense......................................... 2,512
Miscellaneous............................................. 1,996
------------
Total expenses.......................................... 3,023,220
Less: expense offset.................................... (720)
------------
Net expenses.......................................... 3,022,500
------------
Net investment income................................. 7,912,257
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments.......................... (2,656,551)
Net change in unrealized appreciation/depreciation of
investments............................................. (28,915,723)
------------
Net realized and unrealized loss on investments....... (31,572,274)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $(23,660,017)
============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income....................................... $ 7,912,257 $ 10,021,902
Net realized gain (loss) on investments..................... (2,656,551) 58,154,646
Net change in unrealized appreciation/depreciation of
investments............................................... (28,915,723) (29,206,986)
------------ ------------
Net increase (decrease) in net assets resulting from
operations............................................ (23,660,017) 38,969,562
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income....................................... (10,093,638) (11,467,176)
Net realized gains.......................................... (56,361,979) (25,731,928)
------------ ------------
Total dividends and distributions to shareholders....... (66,455,617) (37,199,104)
------------ ------------
SHARE TRANSACTIONS:
Net proceeds from the sale of shares........................ 42,328,331 142,108,078
Reinvestment of dividends and distributions................. 66,455,617 37,199,104
Cost of shares redeemed..................................... (155,513,419) (153,697,507)
------------ ------------
Net increase (decrease) in net assets from share
transactions.......................................... (46,729,471) 25,609,675
------------ ------------
Total increase (decrease) in net assets............... (136,845,105) 27,380,133
NET ASSETS:
Beginning of year........................................... 804,467,256 777,087,123
------------ ------------
End of period (including undistributed net investment income
of $7,840,521 and $10,021,902, respectively).............. $667,622,151 $804,467,256
============ ============
SHARES ISSUED AND REDEEMED:
Issued...................................................... 1,059,374 3,293,544
Issued in reinvestment of dividends and distributions....... 1,877,277 916,460
Redeemed.................................................... (3,883,863) (3,547,618)
------------ ------------
Net increase (decrease)................................. (947,212) 662,386
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGH OUT EACH PERIOD:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ----------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.............. $43.65 $43.74 $42.38 $36.21 $30.14 $20.83
-------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income......................... 0.49 0.56 0.60 0.34 0.43 0.42
Net realized and unrealized gain (loss)
on investments.............................. (2.10) 1.47 2.40 7.45 6.31 9.02
-------- -------- -------- -------- -------- -------
Total income (loss) from investment
operations.............................. (1.61) 2.03 3.00 7.79 6.74 9.44
-------- -------- -------- -------- -------- -------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income......................... (0.58) (0.65) (0.33) (0.40) (0.41) (0.13)
Net realized gains............................ (3.27) (1.47) (1.31) (1.22) (0.26) --
-------- -------- -------- -------- -------- -------
Total dividends and distributions to
shareholders............................ (3.85) (2.12) (1.64) (1.62) (0.67) (0.13)
-------- -------- -------- -------- -------- -------
Net asset value, end of period.................. $38.19 $43.65 $43.74 $42.38 $36.21 $30.14
======== ======== ======== ======== ======== =======
TOTAL RETURN (1)................................ (3.0)% 5.0% 7.1% 22.3% 22.8% 45.6%
======== ======== ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)............... $667,622 $804,467 $777,087 $466,791 $180,728 $99,188
Ratio of expenses to average net assets (2)..... 0.84%(4) 0.83% 0.82% 0.87% 0.84%(3) 0.66%(3)
Ratio of net investment income to average net
assets........................................ 2.22%(4) 1.27% 1.74% 1.42% 1.66%(3) 1.85%(3)
Portfolio Turnover.............................. 84% 50% 37% 32% 27% 22%
</TABLE>
------------------------------
(1) Assumes reinvestment of all dividends and distributions. Total return for a
period of less than one year is not annualized.
(2) Inclusive of expenses offset by earnings credits from custodian bank (See 1G
in Notes to Financial Statements).
(3) During the fiscal years indicated above, the Adviser waived a portion of its
fees. If such waivers had not been in effect, the ratios of expenses to
average net assets and the ratios of net investment income to average net
assets would have been 0.85% and 1.65%, respectively, for the year ended
December 31, 1996, and 0.74% and 1.77%, respectively, for the year ended
December 31, 1995.
(4) Annualized
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(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 shares of beneficial
interest at $0.01 par value. The Trust is comprised of: the Equity Portfolio,
the Small Cap Portfolio, the Global Equity Portfolio, the Managed Portfolio (the
"Portfolio"), the U.S. Government Income Portfolio, the Mid Cap Portfolio, and
the Science & Technology Portfolio. OpCap Advisors (the "Adviser"), a
wholly-owned subsidiary of Oppenheimer Capital, serves as the Trust's investment
adviser. The accompanying financial statement 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. 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.
The Portfolio's custodian takes possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued daily
on a mark-to-market basis to ensure that the value, including accrued interest,
is at least equal to the repurchase price. In the event of default of the
obligation to repurchase, the Portfolio has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligations. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
(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
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED) (CONTINUED)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES --CONTINUED
premiums on debt securities purchased are accreted or amortized to interest
income over the lives of the respective securities using the effective interest
method.
(D) DIVIDENDS AND DISTRIBUTIONS
Dividends 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.
(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
The Trustees have adopted a Retirement Plan (the "Plan") effective January 1,
1999. The Plan provides for payments upon retirement to independent Trustees
based on the average annual compensation paid to them during their five highest
paid years of service. An independent Trustee must serve for a minimum of seven
years (or such lessor period as may be approved by the Board of Trustees) to
become eligible to receive benefits. For the six months ended June 30, 2000, the
Portfolio accrued $36,016 in connection with the Plan.
(2) INVESTMENT ADVISORY AND SUB-ADVISORY FEES
The investment advisory fee is accrued daily and payable monthly to the Adviser,
and is computed as a percentage of the Portfolio's net assets as of the close of
business each day at the annual rate of 0.80% on the first $400 million of net
assets, 0.75% on the next $400 million of net assets and 0.70% 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 any expense offset) on an
annual basis.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED) (CONTINUED)
(2) INVESTMENT ADVISORY AND SUB-ADVISORY FEES --CONTINUED
Pursuant to a sub-advisory agreement between the Adviser and Pacific Investment
Management Co., (the "Sub-Adviser"), the Adviser, out of its investment advisory
fee, pays the Sub-Adviser a monthly fee at the annual rate of 0.25% for
providing investment advisory services for a portion of the Portfolio's
investments. The Sub-Adviser commenced providing these services on March 9,
2000. For the period ended June 30, 2000, the Adviser paid the Sub-Adviser
$58,960, of which $15,660 was payable at June 30, 2000.
(3) INVESTMENTS IN SECURITIES
For federal income tax purposes the cost of securities owned at June 30, 2000
was $673,688,603. Accordingly, net unrealized appreciation of investments of
$13,862,280 was composed of gross appreciation of $47,829,332 for those
investments having an excess of value over cost and gross depreciation of
$33,967,052 for those investments having an excess of cost over value.
For the six months ended June 30, 2000, purchases and sales of investment
securities, other than short-term securities, aggregated $489,616,530 and
$535,377,722, respectively.
(4) ACQUISITION OF INVESTMENT ADVISER AND SUB-ADVISER
On May 5, 2000 the general partners of PIMCO Advisors closed the transactions
contemplated by the Implementation and Merger Agreement dated as of October 31,
1999 ("Implementation Agreement"), as amended March 3, 2000, with Allianz of
America, Inc., Pacific Asset Management LLC, PIMCO Partners LLC, PIMCO Holding
LLC, PIMCO Partners, G.P., and other parties to the Implementation Agreement. As
a result of completing these transactions, PIMCO Advisors is now majority-owned
indirectly by Allianz AG, with subsidiaries of Pacific Life Insurance Company
retaining a significant minority interest. Allianz AG is a German based insurer.
Pacific Life Insurance Company is a Newport Beach, California based insurer. For
the Portfolio, the change of control as a result of the closing of the
Implementation Agreement resulted in the automatic termination of the current
investment advisory and sub-advisory agreements with OpCap Advisors and Pacific
Investment Management Co., respectively. Prior to the closing of the
Implementation Agreement, the Board of Trustees and stockholders of the
Portfolio approved new agreements with OpCap Advisors and Pacific Investment
Management Co. to become effective upon the closing of the Implementation
Agreement.
(5) SPECIAL MEETING OF SHAREHOLDERS
The Portfolio held a special meeting of shareholders on March 3, 2000.
Shareholders voted to: 1) approve a new investment advisory agreement between
OpCap Advisors and the Portfolio; 2) approve an investment sub-advisory
agreement by and among OpCap Advisors and Pacific Investment Management Co.;
3) elect V. Lee Barnes, Paul Y. Clinton, Thomas W. Courtney, Lacy B. Herrmann,
Joseph M. La Motta and Theodore Mason as Trustees of the Portfolio; and, 4)
ratifiy the appointment of PricewaterhouseCoopers LLP as independent accountants
for the fiscal year ending December 31, 2000.
<PAGE>
OCC ACCUMULATION TRUST
MANAGED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED) (CONCLUDED)
The resulting vote count for each proposal is indicated below.
<TABLE>
<CAPTION>
WITHHHOLD
AFFIRMATIVE AGAINST AUTHORITY
----------- -------- ---------
<S> <C> <C> <C>
1. Approval of new investment advisory agreement between
OpCap Advisors and the Portfolio:........................ 16,344,349 341,809 956,291
2. Approval of investment sub-advisory agreement by and
among OpCap Advisors and Pacific Investment Management
Co.:..................................................... 16,160,276 399,526 1,082,647
3. Election of Trustees:
V. Lee Barnes............................................. 17,073,497 -- 568,952
Paul Y. Clinton........................................... 17,057,894 -- 584,555
Thomas W. Courtney........................................ 17,075,158 -- 567,291
Lacy B. Herrmann.......................................... 17,065,252 -- 577,197
Joseph M. La Motta........................................ 17,061,167 -- 581,282
Theodore T. Mason......................................... 17,069,268 -- 573,181
</TABLE>
4. Ratification of the appointment of PricewaterhouseCoopers LLP as the
Portfolio's independent accountants for the fiscal year ending December 31,
2000.
<TABLE>
<S> <C> <C> <C>
16,769,615 148,572 724,262
</TABLE>
<PAGE>
OCC ACCUMULATION TRUST
1345 AVENUE OF THE AMERICAS
NEW YORK, NY 10105
<TABLE>
<S> <C>
TRUSTEES AND PRINCIPAL OFFICERS
Susan A. Murphy President
Joseph M. LaMotta Trustee & Chairman
V. Lee Barnes Trustee
Paul Y. Clinton Trustee
Thomas W. Courtney Trustee
Lacy B. Herrmann Trustee
Theodore T. Mason Trustee
Steven Calabria Vice President
Bernard H. Garil Vice President
Jeffrey J. Hughes Vice President
Eric V. Retzlaff Vice President
Kenneth W. Corba Vice President and Portfolio Manager
Mark F. Degenhart Vice President and Portfolio Manager
Michael F. Gaffney Vice President and Portfolio Manager
John C. Giusio, Jr. Vice President and Portfolio Manager
Richard J. Glasebrook, II Vice President and Portfolio Manager
Colin Glinsman Vice President and Portfolio Manager
Louis Goldstein Vice President and Portfolio Manager
William Gross Vice President and Portfolio Manager
Benjamin D. Gutstein Vice President and Portfolio Manager
Vikki Hanges Vice President and Portfolio Manager
Elisa A. Mazen Vice President and Portfolio Manager
Dennis McKechnie Vice President and Portfolio Manager
Jeffrey D. Parker Vice President and Portfolio Manager
Brian S. Shlissel Treasurer
Elliot M. Weiss Secretary
</TABLE>
INVESTMENT ADVISER
OpCap Advisors
1345 Avenue of the Americas
New York, NY 10105
SUB-ADVISER--MANAGED PORTFOLIO
Pacific Investment Management Co.
840 Newport Center Drive
Newport Beach, CA 92660
CUSTODIAN AND TRANSFER AGENT
State Street Corp.
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.
