Semiannual Report June 30, 2000
Government Securities
Portfolio
A Series of Panorama Series Fund, Inc.
[Logo]OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
Panorama Series Fund, Inc.--Government Securities Portfolio
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Objective
Panorama Series Fund, Inc.--Government Securities Portfolio seeks a high level
of current income with a high degree of safety of principal by investing
primarily in U.S. government securities and U.S. government-related securities.
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Narrative by David Negri and John Kowalik, Portfolio Managers
We are pleased with the performance of Panorama Government Securities Portfolio
over the six-month period that ended June 30, 2000, with a 30-day standardized
yield of 5.89%.(1) Although the reporting period was characterized by a
rising-interest-rate environment, which had the general effect of lowering bond
prices, we were able to keep the Fund's actual interest-rate risk lower than
normal to help protect the value of the portfolio.
During the reporting period, the Federal Reserve Board (the Fed)
implemented three interest-rate increases. Prompted by ongoing inflation
concerns, Fed Chairman Alan Greenspan continued to employ a gradual approach to
slowing an overheated domestic economy, raising rates by a quarter point on two
occasions, then concluding with the more aggressive half-point increase.
Although this measured course of action, which followed three previous rate
increases in the second half of 1999, at first appeared to produce no tangible
signs of cooling, reports toward the end of the period suggest a slight
moderation in economic growth.
Another event relevant to the Fund was the federal government's
announcement that it would buy back long-term Treasury debt, because of its
budget surplus. Before this announcement, which came in late January 2000, the
government had been issuing 30-year bonds only once a year, which meant that
long-term bonds were already in short supply. These two factors combined to
raise an already high demand for longer-term bonds, pushing price up and yield
down. As a result, long-term bonds' prices actually outperformed those of
shorter-term issues.
To control interest-rate risk, we kept the portfolio's duration (a
measure of sensitivity to interest rate changes) fairly short. Throughout the
reporting period, we used different strategies to maintain a short duration
while selecting assets with both short- and longer-term maturities.
Just before the reporting period began, we had shifted some of the
portfolio's short- and medium-maturity Treasuries into 30-year bonds to benefit
from the increase in the long bond's value that we anticipated from the
government's buy-back program. Since then, long-term Treasury issues have
performed particularly well for the Fund.
In terms of other types of holdings in the Fund, we generally allocate
part of the portfolio to mortgage-backed securities, which typically provide
extra yield above Treasuries without a substantial increase in volatility.
During the period, prices continued to decline, boosting yield. We took
advantage of the attractive prices and added to our position in these
securities. The result was extra income for the Fund.
Looking ahead, we are maintaining our income-oriented investment style
with a mix of higher-yielding mortgage products as well as Treasuries. Over the
long term, this disciplined approach, combined with our proprietary research and
risk-management systems, has helped provide consistently good returns for our
shareholders.
Because the stock market can be volatile, the Fund's performance may be subject
to substantial short-term changes.
1. Includes changes in net asset value per share without deducting any
sales charges, and reflects the reinvestment of dividends and capital-gains
distributions based on net investment income for the 30-day period ended June
30, 2000.
2 Government Securities Portfolio
<PAGE>
Statement of Investments June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal Market Value
Amount Note 1
===================================================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--25.0%
-------------------------------------------------------------------------------------------------------------------
Government Agency--25.0%
-------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--10.1%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, 10.50%, 10/1/20 $ 69,641 $ 74,517
-------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 2/1/09-8/1/28 1,736,279 1,646,901
7.50%, 9/1/22 122,442 121,487
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1,842,905
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GNMA/Guaranteed--14.9%
Government National Mortgage Assn.:
6.50%, 7/15/28 1,108,687 1,052,754
7%, 10/15/23-3/15/26 1,727,076 1,683,618
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2,736,372
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Total Mortgage-Backed Obligations (Cost $4,771,903) 4,579,277
===================================================================================================================
U.S. Government Obligations--60.4%
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U.S. Treasury Bonds:
7.50%, 11/15/16(1) 2,175,000 2,450,275
8.125%, 8/15/19 500,000 603,281
9.25%, 2/15/16 1,200,000 1,555,126
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U.S. Treasury Nts.:
5.75%, 8/15/03 500,000 491,562
7.50%, 11/15/01-2/15/05 3,405,000 3,557,505
7.875%, 11/15/04 2,255,000 2,387,481
-----------
Total U.S. Government Obligations (Cost $10,875,866) 11,045,230
===================================================================================================================
Short-Term Notes--8.8%
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Federal Farm Credit Bank, Medium-Term Nts., 6.37%, 9/1/00 1,000,000 999,530
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Federal Home Loan Bank, 6.57%, 7/3/00 600,000 599,781
-----------
Total Short-Term Notes (Cost $1,600,562) 1,599,311
===================================================================================================================
Repurchase Agreements--4.5%
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Repurchase agreement with Zion First National Bank, 6.55%, dated 6/30/00, to be
repurchased at $817,446 on 7/3/00, collateralized by U.S. Treasury Bonds,
7.25%-7.875%, 5/15/16-2/15/21, with a value of $520,489 and U.S. Treasury Nts.,
5.25%-6.625%, 6/30/01-2/15/06, with a value of $314,419 (Cost $817,000) 817,000 817,000
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Total Investments, at Value (Cost $18,065,331) 98.7% 18,040,818
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Other Assets Net of Liabilities 1.3 233,120
---------- -----------
Net Assets 100.0% $18,273,938
========== ===========
</TABLE>
1. Securities with an aggregate market value of $44,725 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
Government Securities Portfolio 3
<PAGE>
Statement of Assets and Liabilites June 30, 2000 (Unaudited)
<TABLE>
=============================================================================================
<S> <C>
Assets
Investments, at value (cost $18,065,331)--see accompanying statement $18,040,818
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Cash 843
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Receivables and other assets:
Interest and principal paydowns 250,020
Shares of capital stock sold 445
Other 711
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Total assets 18,292,837
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Liabilities
Payables and other liabilities:
Shareholder reports 5,998
Shares of capital stock redeemed 4,855
Legal, auditing and other professional fees 4,648
Daily variation on futures contracts 1,875
Directors' compensation 686
Transfer and shareholder servicing agent fees 176
Other 661
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Total liabilities 18,899
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Net Assets $18,273,938
===========
=============================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 17,853
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Additional paid-in capital 18,595,247
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Undistributed net investment income 561,393
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Accumulated net realized loss on investment transactions (896,104)
---------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (4,451)
-----------
Net assets--applicable to 17,853,391 shares of capital stock outstanding $18,273,938
===========
=============================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $1.02
</TABLE>
See accompanying Notes to Financial Statements.
4 Government Securities Portfolio
<PAGE>
Statement of Operations For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
================================================================================
<S> <C>
Investment Income
Interest $656,426
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Expenses
Management fees 50,196
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Legal, auditing and other professional fees 8,517
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Shareholder reports 5,601
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Accounting service fees 2,968
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Custodian fees and expenses 1,696
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Transfer and shareholder servicing agent fees 1,043
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Directors' compensation 682
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Other 437
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Total expenses 71,140
Less expenses paid indirectly (1,694)
--------
Net expenses 69,446
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Net Investment Income 586,980
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Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (10,458)
Closing of futures contracts 39,135
--------
Net realized gain 28,677
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Net change in unrealized appreciation on investments 320,064
--------
Net realized and unrealized gain 348,741
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Net Increase in Net Assets Resulting from Operations $935,721
========
</TABLE>
See accompanying Notes to Financial Statements.
Government Securities Portfolio 5
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31,
(Unaudited) 1999
===============================================================================================================
<S> <C> <C>
Operations
Net investment income $ 586,980 $ 1,315,506
--------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 28,677 (322,128)
--------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 320,064 (1,564,589)
----------- -----------
Net increase (decrease) in net assets resulting from operations 935,721 (571,211)
==============================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (1,331,594) (1,340,571)
==============================================================================================================
Capital Stock Transactions
Net decrease in net assets resulting from capital stock transactions (1,480,628) (2,860,658)
==============================================================================================================
Net Assets
Total decrease (1,876,501) (4,772,440)
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Beginning of period 20,150,439 24,922,879
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End of period (including undistributed net investment
income of $561,393 and $1,306,007, respectively) $18,273,938 $20,150,439
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
6 Government Securities Portfolio
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
2000 (Unaudited) 1999 1998 1997 1996(1) 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $1.05 $1.13 $1.11 $1.09 $1.07 $0.95
---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .03 .07 .06 .07 .07 .06
Net realized and unrealized gain (loss) .01 (.09) .03 .02 (.05) .12
---------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations .04 (.02) .09 .09 .02 .18
---------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net investment income (.07) (.06) (.07) (.07) --(2) (.06)
---------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders (.07) (.06) (.07) (.07) -- (.06)
---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.02 $1.05 $1.13 $1.11 $1.09 $1.07
===== ===== ===== ===== ===== =====
===========================================================================================================================
Total Return, at Net Asset Value(3) 4.19% (1.73)% 8.14% 8.82% 1.93% 18.91%
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $18,274 $20,150 $24,923 $23,719 $23,236 $24,309
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Average net assets (in thousands) $19,217 $22,683 $24,044 $23,034 $23,880 $23,157(4)
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Ratios to average net assets:(5)
Net investment income 6.14% 5.80% 5.64% 5.96% 6.11% 6.08%
Expenses 0.75% 0.70% 0.68%(6) 0.67%(6) 0.62%(6) 0.71%(6)
Expenses, net of expenses paid indirectly 0.73% N/A N/A N/A N/A N/A
---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 0% 14% 43% 0% 6% 55%
</TABLE>
1. On March 1, 1996, OppenheimerFunds, Inc. became the investment advisor to the
Portfolio.
2. Less than $0.005 per share.
3. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods of less than one full year. Total
return information does not reflect expenses that apply at the separate account
level or to related insurance products. Inclusion of these charges would reduce
figures for all periods shown.
4. This information is not covered by the auditors' opinion.
5. Annualized for periods of less than one full year.
6. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
Government Securities Portfolio 7
<PAGE>
Notes to Financial Statements (Unaudited)
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1. Significant Accounting Policies
Government Securities Portfolio (the Portfolio) is a series of Panorama Series
Portfolio, Inc. (the Company) which is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The
Portfolio's investment objective is to seek a high level of current income with
a high degree of safety of principal, by investing primarily (at least 65% of
its total assets under normal market conditions) in U.S. government securities
and U.S. government-related securities. The Portfolio's investment advisor is
OppenheimerFunds, Inc. (the Manager). Shares of the Portfolio are sold only to
separate accounts of life insurance companies, a majority of such shares are
held by separate accounts of Massachusetts Mutual Life Insurance Co., an
affiliate of the investment advisor. The following is a summary of significant
accounting policies consistently followed by the Portfolio.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Portfolio's
assets are valued. In the absence of a sale, the security is valued at the last
sale price on the prior trading day, if it is within the spread of the closing
bid and asked prices, and if not, at the closing bid price. Securities
(including restricted securities) for which quotations are not readily available
are valued primarily using dealer-supplied valuations, a portfolio pricing
service authorized by the Board of Directors, or at their fair value. Fair value
is determined in good faith under consistently applied procedures under the
supervision of the Board of Directors. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
Repurchase Agreements. The Portfolio requires the custodian to take possession,
to have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Portfolio may be delayed or limited.
--------------------------------------------------------------------------------
Federal Taxes. The Portfolio intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. As of December 31,
1999, the Portfolio had available for federal income tax purposes an unused
capital loss carryover of approximately $862,000, which expires between 2002 and
2007.
--------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
8 Government Securities Portfolio
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
1. Significant Accounting Policies (continued)
Classification of Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. Also, due to timing
of dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or realized gain was
recorded by the Portfolio.
--------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Portfolio.
--------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
accreted over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Capital Stock
The Portfolio has authorized 200 million shares of $0.001 par value capital
stock. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 Year Ended December 31, 1999
-------------------------------- -------------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 918,272 $ 944,665 2,089,799 $ 2,246,159
Dividends and/or distributions reinvested 1,331,594 1,331,594 1,264,689 1,340,571
Redeemed (3,674,156) (3,756,887) (6,090,812) (6,447,388)
---------- ----------- ---------- -----------
Net decrease (1,424,290) $(1,480,628) (2,736,324) $(2,860,658)
========== =========== ========== ===========
</TABLE>
================================================================================
3. Purchases and Sales of Securities
There were no purchases or sales of securities, other than short-term
obligations, for the six months ended June 30, 2000.
Government Securities Portfolio 9
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
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4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Portfolio. The annual fees are 0.525% of
the first $300 million average daily net assets of the Portfolio, 0.50% of the
next $100 million and 0.45% of average daily net assets over $400 million. The
Portfolio's management fee for the six months ended June 30, 2000, was an
annualized rate of 0.525%, before any waiver by the Manager.
--------------------------------------------------------------------------------
Accounting Fees. The Manager acts as the accounting agent for the Portfolio at
an annual fee of $15,000, plus out-of-pocket costs and expenses reasonably
incurred.
--------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Portfolio and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Portfolio. OFS
provides these services for cost.
================================================================================
5. Futures Contracts
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Portfolio may buy and sell futures contracts that relate to
broadly-based securities indices "financial futures" or debt securities
"interest rate futures" in order to gain exposure to or to seek to protect
against changes in market value of stock and bonds or interest rates. The
Portfolio may also buy or write put or call options on these futures contracts.
The Portfolio generally sells futures contracts to hedge against
increases in interest rates and decreases in market value of portfolio
securities. The Portfolio may also purchase futures contracts to gain exposure
to changes in interest rates as it may be more efficient or cost effective than
actually buying fixed income securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Portfolio each day. The variation margin payments
are equal to the daily changes in the contract value and are recorded as
unrealized gains and losses. The Portfolio recognizes a realized gain or loss
when the contract is closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
As of June 30, 2000, the Portfolio had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Contract Description Date Contracts June 30, 2000 Appreciation
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Purchase
---------------------
U.S. Treasury Bonds, 20 yr. 9/20/00 12 $1,168,125 $20,062
=======
</TABLE>
10 Government Securities Portfolio
<PAGE>
Government Securities Portfolio
A Series of Panorama Series Fund, Inc.
<TABLE>
================================================================================
<S> <C>
Officers and Directors James C. Swain, Director and Chairman of the Board
Bridget A. Macaskill, President
William L. Armstrong, Director
Robert G. Avis, Director
William A. Baker, Director
Jon S. Fossel, Director
Sam Freedman, Director
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
Peter M. Antos, Vice President
George Evans, Vice President
Alan Gilston, Vice President
John S. Kowalik, Vice President
Stephen F. Libera, Vice President
David P. Negri, Vice President
Thomas P. Reedy, Vice President
Michael C. Strathearn, Vice President
Kenneth B. White, Vice President
Arthur J. Zimmer, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Transfer Agent OppenheimerFunds Services
================================================================================
Custodian of Portfolio
Securities The Bank of New York
================================================================================
Independent Auditors Deloitte & Touche LLP
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been
taken from the records of the Portfolio without
examination of those records by the independent
auditors.
This is a copy of a report to shareholders of
Government Securities Portfolio. For other material
information concerning the Portfolio, see its
prospectus. This report must be preceded or
accompanied by the Portfolio's prospectus, the
separate account prospectus, and current
standardized average annual total returns for the
separate account being offered.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, are not insured by the FDIC or any other
agency, and involve investment risks, including the
possible loss of the principal amount invested.
</TABLE>
(C)Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
Government Securities Portfolio 11
