OPPENHEIMER VARIABLE ACCOUNT FUNDS
Prospectus dated May 1, 1995
OPPENHEIMER VARIABLE ACCOUNT FUNDS (the "Trust") is a diversified open-
end investment company consisting of nine separate funds (collectively,
the "Funds"):
OPPENHEIMER MONEY FUND ("Money Fund") seeks the maximum current income
from investments in "money market" securities consistent with low capital
risk and the maintenance of liquidity. Its shares are neither insured nor
guaranteed by the U.S. government, and there is no assurance that this
Fund will be able to maintain a stable net asset value of $1.00 per share.
OPPENHEIMER HIGH INCOME FUND ("High Income Fund") seeks a high level of
current income from investment in high yield fixed-income securities.
High Income Fund's investments include unrated securities or high risk
securities in the lower rating categories, commonly known as "junk bonds,"
which are subject to a greater risk of loss of principal and nonpayment
of interest than higher-rated securities. These securities may be
considered to be speculative.
OPPENHEIMER BOND FUND ("Bond Fund") primarily seeks a high level of
current income from investment in high yield fixed-income securities rated
"Baa" or better by Moody's or "BBB" or better by Standard & Poor's.
Secondarily, this Fund seeks capital growth when consistent with its
primary objective.
OPPENHEIMER CAPITAL APPRECIATION FUND ("Capital Appreciation Fund") seeks
to achieve capital appreciation by investing in "growth-type" companies.
OPPENHEIMER GROWTH FUND ("Growth Fund") seeks to achieve capital
appreciation by investing in securities of well-known established
companies.
OPPENHEIMER MULTIPLE STRATEGIES FUND ("Multiple Strategies Fund") seeks
a total investment return (which includes current income and capital
appreciation in the value of its shares) from investments in common stocks
and other equity securities, bonds and other debt securities, and "money
market" securities.
OPPENHEIMER GROWTH & INCOME FUND ("Growth & Income Fund") seeks a high
total return (which includes growth in the value of its shares as well as
current income) from equity and debt securities. From time to time this
Fund may focus on small to medium capitalization common stocks, bonds and
convertible securities.
OPPENHEIMER GLOBAL SECURITIES FUND ("Global Securities Fund") seeks long-
term capital appreciation by investing a substantial portion of assets in
securities of foreign issuers, "growth-type" companies, cyclical
industries and special situations which are considered to have
appreciation possibilities. Current income is not an objective. These
securities may be considered to be speculative.
OPPENHEIMER STRATEGIC BOND FUND ("Strategic Bond Fund") seeks a high level
of current income principally derived from interest on debt securities and
seeks to enhance such income by writing covered call options on debt
securities. The Fund intends to invest principally in: (i) foreign
government and corporate debt securities, (ii) U.S. Government securities,
and (iii) lower-rated high yield domestic debt securities, commonly known
as "junk bonds", which are subject to a greater risk of loss of principal
and nonpayment of interest than higher-rated securities. These securities
may be considered to be speculative.
Shares of the Funds are sold only to provide benefits under variable
life insurance policies and variable annuity contracts (collectively, the
"Accounts"). The Accounts invest in shares of one or more of the Funds
in accordance with allocation instructions received from Account owners.
Such allocation rights are further described in the accompanying Account
Prospectus. Shares are redeemed to the extent necessary to provide
benefits under an Account.
This Prospectus explains concisely what you should know before
investing in the Trust and the Funds. Please read this Prospectus
carefully and keep it for future reference. You can find more detailed
information about the Funds in the May 1, 1995 Statement of Additional
Information. For a free copy, call Oppenheimer Shareholder Services, the
Funds' Transfer Agent, at 1-800-525-7048, or write to the Transfer Agent
at the address on the back cover. The Statement of Additional Information
has been filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference (which means that it is
legally part of this Prospectus).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
About the Funds
Overview of the Funds
Financial Highlights
Investment Objectives and Policies
How the Funds are Managed
Performance of the Funds
About Your Account
How to Buy Shares
How to Sell Shares
Dividends, Capital Gains and Taxes
Appendix A: Description of Terms
Appendix B: Description of Securities Ratings
<PAGE>
ABOUT THE FUNDS
Overview of the Funds
Some of the important facts about the Funds are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing. Keep the Prospectus for
reference after you invest.
- What Are the Funds' Investment Objectives? The Money Fund's
investment objective is to seek current income from investments in "money
market" securities consistent with low capital risk and the maintenance
of liquidity. The High Income Fund's investment objective is to seek a
high level of current income from investment in high yield fixed-income
securities. The Bond Fund's investment objective is to seek a high level
of current income from investment in high yield fixed-income securities
rate "baa" or better by Moody's or "BBB" or better by Standard & Poor's.
As a secondary investment objective, the Bond Fund seeks capital growth
when consistent with its primary objective. Capital Appreciation Fund's
investment objective is to achieve capital appreciation by investing in
"growth-type" companies. The Growth Fund's investment objective is to
seek to achieve capital appreciation by investing in securities of well-
known established companies. The Multiple Strategies Fund's investment
objective is to seek a total investment return (which includes current
income and capital appreciation in the value of its shares) from
investment in common stocks and other equity securities, bonds and other
debt securities, and "money market" securities. The Growth & Income
Fund's investment objective is to seek a total return (which includes
growth in the value of its shares) as well as current income from equity
and debt securities. The Global Securities Fund's investment objective
is to seek long-term capital appreciation by investing a substantial
portion of assets in securities of foreign issuers, "growth-type"
companies, cyclical industries and special situations which are considered
to have appreciation possibilities. The Strategic Bond Fund's investment
objective is to seek a high level of current income principally derived
from interest on debt securities and seeks to enhance such income by
writing covered call options on debt securities.
- What Do the Funds Invest In? To seek their respective investment
objectives, the Funds invest as follows. Money Fund primarily invests in
money market securities. High Income Fund primarily invests in high yield
fixed-income securities, including unrated securities or high risk
securities in the lower rating categories, commonly known as "junk bonds."
Bond Fund primarily invests in high yield fixed-income securities rated
"Baa" or better by Moody's or "BBB" or better by Standard & Poor's.
Capital Appreciation Fund primarily invests in "growth-type" companies.
Growth Fund primarily invests in securities of well-known established
companies. Multiple Strategies Fund primarily invests in common stocks
and other equity securities, bonds and other debt securities, and money
market securities. Growth & Income Fund is a new fund that will primarily
invest in equity and debt securities and focus from time to time on small
to medium capitalization companies. Global Securities Fund primarily
invests in securities of foreign issuers, "growth-type" companies,
cyclical industries and special situations. Strategic Bond Fund primarily
invests in foreign government and corporate debt securities, U.S.
Government securities, and lower-rated high yield domestic and foreign
debt securities, commonly know as "junk bonds." These investments are
more fully explained for each Fund in "Investment Objectives and
Policies," starting on page ___.
- Who Manages the Funds? The Funds' investment adviser is
Oppenheimer Management Corporation, which (including a subsidiary) advises
investment company portfolios having over $29 billion in assets. Each
Fund's portfolio manager is primarily responsible for the selection of
securities of that Fund. The portfolio managers are as follows: for Money
Fund, Arthur Zimmer; for High Income Fund, Bond Fund, Multiple Strategies
Fund and Strategic Bond Fund, David Negri (joined by Richard Rubinstein
for Multiple Strategies Fund and by Arthur Steinmetz for Strategic Bond
Fund); for Capital Appreciation Fund, Paul LaRocco; for Growth Fund, Jane
Putnam; for Global Securities Fund, George Evans; and for Growth & Income
Fund, John Wallace. The Manager is paid an advisory fee by each Fund,
based on its assets. The Trust's Board of Trustees, elected by
shareholders, oversees the investment adviser and the portfolio manager.
Please refer to "How The Funds Are Managed," starting on page ____ for
more information about the Manager and its fees.
- How Risky Are The Funds? While different types of investments
have risks that differ in type and magnitude, all investments carry risk
to some degree. Changes in overall market movements or interest rates,
or factors affecting a particular industry or issuer, can affect the value
of the Funds' investments and their price per share. Equity investments
are generally subject to a number of risks including the risk that values
will fluctuate as a result of changing expectations for the economy and
individual issuers. For both equity and income investments, foreign
investments are subject to the risk of adverse currency fluctuation and
additional risks and expenses in comparison to domestic investments. In
comparing levels of risk among the equity and equity- income funds, Growth
Fund is most conservative, followed by Multiple Strategies Fund, Growth
& Income Fund, Capital Appreciation Fund and Global Securities Fund.
Fixed-income investments are generally subject to the risk that values
will fluctuate with inflation, with lower-rated fixed-income investments
being subject to a greater risk that the issuer will default in its
interest or principal payment obligations. In comparing levels of risk
among the fixed-income funds, Bond Fund is most conservative, followed by
Strategic Bond Fund and High Income Fund. Money Fund is the most
conservative of all nine Funds in that Money Fund intends to maintain a
stable net asset value, although there is no assurance that it will be
able to do so.
- How Can I Buy or Sell Shares? Shares of each Fund are offered
only for purchase by Accounts as an investment medium for variable life
insurance policies and variable annuity contracts. Account owners should
refer to the accompanying Account Prospectus on how to buy or sell shares
of the Funds.
- How Have the Funds Performed? Money Fund, High Income Fund, Bond
Fund and Strategic Bond Fund measure their performance by quoting their
yields. All of the Funds with the exception of Money Fund may measure
their performance by quoting average annual total return and cumulative
total return, which measure historical performance. Those returns can be
compared to the returns (over similar periods) of other funds. Of course,
other funds may have different objectives, investments, and levels of
risk. The performance of all but two of the Funds can also be compared
to broad market indices, which we have done starting on page ___. Please
remember that past performance does not guarantee future results.
<PAGE>
Financial Highlights
The table on the following pages presents selected financial
information, including per share data and expense ratios and other data
about all the Funds (except Growth & Income Fund, which did not commence
operations until after December 31, 1994). The information is based on
each such Fund's average net assets. This information has been audited
by Deloitte & Touche LLP, the Funds' independent auditors, whose report
on the Funds' financial statements for the fiscal year ended December 31,
1994, is included in the Statement of Additional Information.
<TABLE>
<CAPTION>
OPPENHEIMER
MONEY
FUND
---------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations - net
investment income and net realized gain
on investments .04 .03 .04 .06 .08
Dividends and distributions to shareholders (.04) (.03) (.04) (.06) (.08)
---------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================
===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $89,671 $61,221 $58,266 $58,709 $89,143
Average net assets (in thousands) $90,264 $57,654 $61,317 $75,747 $82,966
Number of shares outstanding at end of year
(in thousands) 89,695 61,221 58,266 58,703 89,141
Ratios to average net assets:
Net investment income 4.18% 3.12% 3.76% 5.97% 7.80%
Expenses .43% .43% .50% .49% .51%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
MONEY
FUND
---------------------------------------------------------------------
1989 1988 1987 1986 1985(1)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations - net
investment income and net realized gain
on investments .09 .07 .06 .06 .05
Dividends and distributions to shareholders (.09) (.07) (.06) (.06) (.05)
---------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================
===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $68,440 $69,468 $42,538 $28,218 $2,506
Average net assets (in thousands) $67,586 $60,241 $35,138 $12,914 $2,080
Number of shares outstanding at end of year
(in thousands) 68,439 69,468 42,538 28,218 2,506
Ratios to average net assets:
Net investment income 8.82% 7.31% 6.33% 5.68% 7.25%(2)
Expenses .53% .55% .59% .75% .75%(2)
</TABLE>
1. For the period from April 3, 1985 (commencement of operations) to December
31, 1985.
2. Annualized.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
HIGH INCOME
FUND
--------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 11.02 $ 9.74 $ 9.40 $ 7.90 $ 8.59
Income (loss) from investment operations:
Net investment income .94 .82 1.19 1.28 1.21
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (1.27) 1.65 .43 1.30 (.82)
--------------------------------------------------------------------
Total income (loss) from investment operations (.33) 2.47 1.62 2.58 .39
--------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.66) (1.19) (1.28) (1.08) (1.08)
Distributions from net realized gain on investments,
options written and foreign currency transactions (.24) -- -- -- --
--------------------------------------------------------------------
Total dividends and distributions to shareholders (.90) (1.19) (1.28) (1.08) (1.08)
--------------------------------------------------------------------
Net asset value, end of period $ 9.79 $ 11.02 $ 9.74 $ 9.40 $ 7.90
==========================================================
==========
TOTAL RETURN, AT NET ASSET VALUE(2) (3.18)% 26.34% 17.92% 33.91%
4.65%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 95,698 $93,011 $40,817 $27,308 $19,172
Average net assets (in thousands) $101,096 $67,000 $36,861 $23,663 $21,493
Number of shares outstanding at end of period
(in thousands) 9,779 8,443 4,189 2,905 2,427
Ratios to average net assets:
Net investment income 9.15% 10.50% 12.08% 14.26% 14.32%
Expenses .67% .68% .73% .75% .75%
Portfolio turnover rate(4) 110.1% 135.7% 144.2% 108.0% 95.1%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
HIGH INCOME
FUND
-----------------------------------------------------
1989 1988 1987 1986(1)
-----------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 9.30 $ 9.14 $ 10.04 $ 10.00
Income (loss) from investment operations:
Net investment income 1.09 1.12 1.30 .72
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (.65) .23 (.51) (.24)
-----------------------------------------------------
Total income (loss) from investment operations .44 1.35 .79 .48
-----------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.08) (1.07) (1.55) (.44)
Distributions from net realized gain on investments,
options written and foreign currency transactions (.07) (.12) (.14) --
-----------------------------------------------------
Total dividends and distributions to shareholders (1.15) (1.19) (1.69) (.44)
-----------------------------------------------------
Net asset value, end of period $ 8.59 $ 9.30 $ 9.14 $ 10.04
=====================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 4.84% 15.58% 8.07% 4.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $23,698 $25,551 $21,768 $14,833
Average net assets (in thousands) $26,040 $24,530 $20,637 $ 8,036
Number of shares outstanding at end of period
(in thousands) 2,760 2,746 2,382 1,478
Ratios to average net assets:
Net investment income 11.52% 11.94% 13.13% 11.18%(3)
Expenses .75% .75% .75% .75%(3)
Portfolio turnover rate(4) 78.7% 57.9% 42.1% 18.3%
</TABLE>
1. For the period from April 30, 1986 (commencement of operations) to December
31, 1986.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
BOND
FUND
--------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 11.65 $ 10.99 $ 11.15 $ 10.33 $ 10.49
Income (loss) from investment operations:
Net investment income .76 .65 .87 .95 .97
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions (.98) .76 (.17) .80 (.18)
--------------------------------------------------------------------
Total income (loss) from investment
operations (.22) 1.41 .70 1.75 .79
--------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.62) (.75) (.86) (.93) (.95)
Distributions from net realized gain on
investments and foreign currency
transactions (.03) -- -- -- --
--------------------------------------------------------------------
Total dividends and distributions to
shareholders (.65) (.75) (.86) (.93) (.95)
--------------------------------------------------------------------
Net asset value, end of period $ 10.78 $ 11.65 $ 10.99 $ 11.15 $ 10.33
==========================================================
==========
TOTAL RETURN, AT NET ASSET VALUE(2) (1.94)% 13.04% 6.50% 17.63% 7.92%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $135,067 $111,846 $63,354 $32,762 $16,576
Average net assets (in thousands) $121,884 $ 87,215 $45,687 $22,169 $15,088
Number of shares outstanding at end of period
(in thousands) 12,527 9,602 5,766 2,939 1,604
Ratios to average net assets:
Net investment income 7.30% 7.20% 7.81% 8.73% 9.30%
Expenses .57% .46% .56% .64% .61%
Portfolio turnover rate(4) 35.1% 36.3% 41.3% 7.6% 7.4%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
BOND
FUND
--------------------------------------------------------------------
1989 1988 1987 1986 1985(1)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.15 $ 10.19 $ 11.15 $ 11.27 $ 10.00
Income (loss) from investment operations:
Net investment income .98 .94 .97 .97 .86
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .32 (.05) (.71) .09 .99
--------------------------------------------------------------------
Total income (loss) from investment
operations 1.30 .89 .26 1.06 1.85
--------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.96) (.93) (1.17) (1.03) (.58)
Distributions from net realized gain on
investments and foreign currency
transactions -- -- (.05) (.15) --
--------------------------------------------------------------------
Total dividends and distributions to
shareholders (.96) (.93) (1.22) (1.18) (.58)
--------------------------------------------------------------------
Net asset value, end of period $ 10.49 $ 10.15 $ 10.19 $ 11.15 $ 11.27
==========================================================
==========
TOTAL RETURN, AT NET ASSET VALUE(2) 13.32% 8.97% 2.53% 10.12% 18.82%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $13,422 $ 9,989 $10,415 $7,377 $2,725
Average net assets (in thousands) $11,167 $11,028 $ 8,748 $4,647 $1,614
Number of shares outstanding at end of period
(in thousands) 1,280 984 1,022 662 242
Ratios to average net assets:
Net investment income 9.34% 9.08% 9.17% 8.71% 10.52%(3)
Expenses .64% .70% .75% .75% .75%(3)
Portfolio turnover rate(4) 5.4% 36.3% 5.9% 27.7% 101.3%
</TABLE>
1. For the period from April 3, 1985 (commencement of operations) to December
31, 1985.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
CAPITAL APPRECIATION
FUND
----------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 31.64 $ 26.04 $ 23.24 $ 15.24 $ 20.40
Income (loss) from investment operations:
Net investment income .10 .05 .06 .08 .32
Net realized and unrealized gain (loss) on
investments and options written (2.22) 6.71 3.43 8.18 (3.54)
----------------------------------------------------------------------
Total income (loss) from investment operations (2.12) 6.76 3.49 8.26 (3.22)
----------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) (.06) (.14) (.26) (.53)
Distributions from net realized gain on
investments and options written (3.53) (1.10) (.55) -- (1.41)
----------------------------------------------------------------------
Total dividends and distributions to
shareholders (3.57) (1.16) (.69) (.26) (1.94)
----------------------------------------------------------------------
Net asset value, end of period $ 25.95 $ 31.64 $ 26.04 $ 23.24 $ 15.24
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(3) (7.59)% 27.32% 15.42% 54.72%
(16.82)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $185,774 $136,885 $83,335 $49,371 $23,295
Average net assets (in thousands) $153,832 $98,228 $56,371 $34,887 $24,774
Number of shares outstanding at end of period
(in thousands) 7,158 4,326 3,201 2,125 1,528
Ratios to average net assets:
Net investment income .50% .23% .30% .81% 1.93%
Expenses .57% .47% .54% .63% .71%
Portfolio turnover rate(5) 96.5% 122.8% 78.9% 122.3% 222.0%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
CAPITAL APPRECIATION
FUND
----------------------------------------------------------------------
1989 1988 1987 1986(2) 1986(1)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 16.31 $ 14.39 $ 13.12 $ 16.21 $ 13.71
Income (loss) from investment operations:
Net investment income .50 .33 .21 .12 .09
Net realized and unrealized gain (loss) on
investments and options written 3.93 1.60 1.67 (1.24) 3.40
----------------------------------------------------------------------
Total income (loss) from investment operations 4.43 1.93 1.88 (1.12) 3.49
----------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.34) -- (.34) (.21) (.20)
Distributions from net realized gain on
investments and options written -- (.01) (.27) (1.76) (.79)
----------------------------------------------------------------------
Total dividends and distributions to
shareholders (.34) (.01) (.61) (1.97) (.99)
----------------------------------------------------------------------
Net asset value, end of period $ 20.40 $ 16.31 $ 14.39 $ 13.12 $ 16.21
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(3) 27.57% 13.41% 14.34% (1.65)% N/A
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $27,523 $13,667 $9,692 $4,549 $3,852
Average net assets (in thousands) $21,307 $13,239 $8,598 $3,099 $2,292
Number of shares outstanding at end of period
(in thousands) 1,349 838 674 347 238
Ratios to average net assets:
Net investment income 3.27% 2.13% 1.68% 2.36%(4) 2.27%
Expenses .68% .73% .75% 1.01%(4) 2.17%
Portfolio turnover rate(5) 130.5% 128.7% 138.7% 100.1% 464.8%
</TABLE>
1. For the year ended June 30, 1986. Operating results were achieved by
Centennial Capital Appreciation Fund, a separate investment company
acquired by OCAP on August 14, 1986.
2. For the six months ended December 31, 1986. Operating results prior to
August 15, 1986 were achieved by Centennial Capital Appreciation Fund, a
separate investment company acquired by OCAP on August 14, 1986.
3. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
GROWTH
FUND
---------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 17.70 $ 16.96 $ 15.17 $ 12.54 $ 16.38
Income (loss) from investment operations:
Net investment income .22 .46 .16 .30 .56
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions (.05) .74 1.99 2.82 (1.79)
---------------------------------------------------------------------
Total income from investment operations .17 1.20 2.15 3.12 (1.23)
---------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.15) (.14) (.36) (.49) (.62)
Distributions from net realized gain on
investments and foreign currency
transactions (.04) (.32) -- -- (1.99)
---------------------------------------------------------------------
Total dividends and distributions to (.19) (.46) (.36) (.49) (2.61)
shareholders
---------------------------------------------------------------------
Net asset value, end of period $ 17.68 $ 17.70 $ 16.96 $ 15.17 $ 12.54
==========================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(2) .97% 7.25% 14.53% 25.54% (8.21)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $63,283 $56,701 $36,494 $22,032 $15,895
Average net assets (in thousands) $59,953 $46,389 $25,750 $18,810 $17,235
Number of shares outstanding at end of period
(in thousands) 3,580 3,203 2,152 1,453 1,267
Ratios to average net assets:
Net investment income 1.38% 1.13% 1.36% 2.82% 4.09%
Expenses .58% .50% .61% .70% .71%
Portfolio turnover rate(4) 53.8% 12.6% 48.7% 133.9% 267.9%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
GROWTH
FUND
---------------------------------------------------------------------
1989 1988 1987 1986 1985(1)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 13.64 $ 11.21 $ 12.53 $ 10.95 $ 10.00
Income (loss) from investment operations:
Net investment income .66 .29 .20 .13 .16
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 2.50 2.19 .24 1.76 .79
---------------------------------------------------------------------
Total income from investment operations 3.16 2.48 .44 1.89 .95
---------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.35) -- (.34) (.15) --
Distributions from net realized gain on
investments and foreign currency
transactions (.07) (.05) (1.42) (.16) --
---------------------------------------------------------------------
Total dividends and distributions to
shareholders (.42) (.05) (1.76) (.31) --
---------------------------------------------------------------------
Net asset value, end of period $ 16.38 $ 13.64 $ 11.21 $ 12.53 $ 10.95
==========================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(2) 23.59% 22.09% 3.32% 17.76% 9.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $19,301 $17,746 $14,692 $8,287 $ 820
Average net assets (in thousands) $18,596 $15,585 $15,121 $3,744 $ 388
Number of shares outstanding at end of period
(in thousands) 1,179 1,301 1,311 661 75
Ratios to average net assets:
Net investment income 3.72% 2.39% 1.56% 2.62% 4.25%(3)
Expenses .70% .70% .75% .75% .75%(3)
Portfolio turnover rate(4) 148.0% 132.5% 191.0% 100.9% 132.9%
</TABLE>
1. For the period from April 3, 1985 (commencement) to December 31, 1985.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
MULTIPLE STRATEGIES
FUND
------------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 13.88 $ 12.47 $ 11.96 $ 10.90 $ 12.30
Income (loss) from investment operations:
Net investment income .63 .55 .55 .69 .73
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (.90) 1.41 .50 1.15 (.97)
------------------------------------------------------------------------
Total income (loss) from investment operations (.27) 1.96 1.05 1.84 (.24)
------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.60) (.55) (.54) (.78) (.70)
Distributions from net realized gain on
investments, options written and foreign
currency transactions (.10) -- -- -- (.46)
------------------------------------------------------------------------
Total dividends and distributions to shareholders (.70) (.55) (.54) (.78) (1.16)
------------------------------------------------------------------------
Net asset value, end of period $ 12.91 $ 13.88 $ 12.47 $ 11.96 $ 10.90
==========================================================
==============
TOTAL RETURN, AT NET ASSET VALUE(2) (1.95)% 15.95% 8.99% 17.48%
(1.91)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $292,067 $250,290 $159,464 $124,634 $118,888
Average net assets (in thousands) $279,949 $199,954 $139,011 $117,000 $123,231
Number of shares outstanding at end of period (in
thousands) 22,620 18,026 12,792 10,421 10,908
Ratios to average net assets:
Net investment income 4.90% 4.44% 4.63% 5.95% 6.53%
Expenses .56% .48% .55% .54% .55%
Portfolio turnover rate(4) 31.4% 32.4% 57.8% 80.3% 99.2%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
MULTIPLE STRATEGIES
FUND
---------------------------------------
1989 1988 1987(1)
---------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 11.58 $ 10.04 $ 10.00
Income (loss) from investment operations:
Net investment income .73 .66 .44
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions 1.04 1.53 .07
---------------------------------------
Total income (loss) from investment operations 1.77 2.19 .51
---------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.68) (.65) (.43)
Distributions from net realized gain on
investments, options written and foreign
currency transactions (.37) -- (.04)
---------------------------------------
Total dividends and distributions to shareholders (1.05) (.65) (.47)
=======================================
Net asset value, end of period $ 12.30 $ 11.58 $ 10.04
TOTAL RETURN, AT NET ASSET VALUE(2) 15.76% 22.15% 3.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $121,286 $78,386 $53,291
Average net assets (in thousands) $101,057 $64,298 $34,256
Number of shares outstanding at end of period (in
thousands) 9,860 6,766 5,306
Ratios to average net assets:
Net investment income 6.36% 6.18% 6.12%(3)
Expenses .57% .58% .65%(3)
Portfolio turnover rate(4) 66.9% 110.0% 46.9%
</TABLE>
1. For the period from February 9, 1987 (commencement of operations) to
December 31, 1987.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
GLOBAL SECURITIES
FUND
---------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990(1)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 16.30 $ 9.57 $ 10.38 $ 10.04 $ 10.00
Income (loss) from investment operations:
Net investment income .04 (.02) .07 .04 --
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (.96) 6.75 (.80) .30 .04
---------------------------------------------------------------------
Total income (loss) from investment operations (.92) 6.73 (.73) .34 .04
---------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) -- (.04) -- --
Distributions from net realized gain on
investments and foreign currency transactions (.25) -- (.04) -- --
---------------------------------------------------------------------
Total dividends and distributions to shareholders (.29) -- (.08) -- --
---------------------------------------------------------------------
Net asset value, end of period $ 15.09 $ 16.30 $ 9.57 $ 10.38 $ 10.04
==========================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(2) (5.72)% 70.32% (7.11)% 3.39%
.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $297,842 $96,425 $13,537 $7,339 $ 432
Average net assets (in thousands) $214,545 $31,696 $11,181 $3,990 $ 263
Number of shares outstanding at end of period (in
thousands) 19,743 5,917 1,415 707 43
Ratios to average net assets:
Net investment income .54% .72% 1.04% .75% .08%(3)
Expenses .91% .92% 1.06% 1.32% 6.84%(3)
Portfolio turnover rate(4) 70.4% 65.1% 34.1% 29.5% 0.0%
</TABLE>
1. For the period from November 12, 1990 (commencement of operations) to
December 31, 1990.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
STRATEGIC BOND
FUND
--------------------------------
Year Ended
December 31, 1994 1993(1)
--------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 5.12 $ 5.00
Income (loss) from investment operations:
Net investment income .35 .10
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (.54) .11
--------------------------------
Total income (loss) from investment operations (.19) .21
--------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.32) (.09)
Distributions from net realized gain on
investments, options written and foreign
currency transactions -- --
Distributions in excess of net realized gain on investments (.01) --
--------------------------------
Total dividends and distributions to shareholders (.33) (.09)
--------------------------------
Net asset value, end of period $ 4.60 $ 5.12
================================
TOTAL RETURN, AT NET ASSET VALUE(2) (3.78)% 4.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $20,320 $9,887
Average net assets (in thousands) $15,389 $4,259
Number of shares outstanding at end of period (in thousands) 4,418 1,930
Ratios to average net assets:
Net investment income 8.36% 5.67%(3)
Expenses .87% .96%(3)
Portfolio turnover rate(4) 136.6% 10.9%
</TABLE>
1. For the period from May 3, 1993 (commencement of operations) to December
31, 1993.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
<PAGE>
Investment Objectives and Policies
Investment Objective and Policies - Money Fund. The objective of Money
Fund is to seek the maximum current income from investments in "money
market" securities consistent with low capital risk and the maintenance
of liquidity. The Securities and Exchange Commission Rule 2a-7 ("Rule 2a-
7") under the Investment Company Act of 1940 (the "Investment Company
Act") places restrictions on a money market fund's investments. Under
Rule 2a-7, Money Fund may purchase only "Eligible Securities," as defined
below, that the Trust's Board of Trustees has determined have minimal
credit risk. An "Eligible Security" is (a) a security that has received
a rating in one of the two highest short-term rating categories by any two
"nationally-recognized statistical rating organizations" as defined in
Rule 2a-7 ("Rating Organizations"), or, if only one Rating Organization
has rated that security, by that Rating Organization, or (b) an unrated
security that is judged by the Trust's investment adviser, Oppenheimer
Management Corporation (the "Manager") to be of comparable quality to
investments that are "Eligible Securities" rated by Rating Organizations.
Rule 2a-7 permits Money Fund to purchase "First Tier Securities," which
are Eligible Securities rated in the highest category for short-term debt
obligations by at least two Rating Organizations, or, if only one Rating
Organization has rated a particular security, by that Rating Organization,
or comparable unrated securities. Under Rule 2a-7, Money Fund may invest
only up to 5% of its assets in "Second Tier Securities," which are
Eligible Securities that are not "First Tier Securities." In addition to
the overall 5% limit on Second Tier Securities, Money Fund may not invest
(i) more than 5% of its total assets in the securities of any one issuer
(other than the U.S. Government, its agencies or instrumentalities) or
(ii) more than 1% of its total assets or $1 million (whichever is greater)
in Second Tier Securities of any one issuer. The Trust's Board must
approve or ratify the purchase of Eligible Securities that are unrated or
are rated by only one Rating Organization. Additionally, under Rule 2a-7,
Money Fund must maintain a dollar-weighted average portfolio maturity of
no more than 90 days, and the maturity of any single portfolio investment
may not exceed 397 days. The Trust's Board has adopted procedures under
Rule 2a-7 pursuant to which the Board has delegated to the Manager the
responsibility of conforming Money Fund's investments with the
requirements of Rule 2a-7 and those Procedures.
Ratings at the time of purchase will determine whether securities may
be acquired under the above restrictions. The rating restrictions
described in this Prospectus do not apply to banks in which the Trust's
cash is kept. Subsequent downgrades in ratings may require reassessment
of the credit risk presented by a security and may require its sale. See
"Investment Objectives and Policies -- Money Fund" in the Statement of
Additional Information for further details.
The Trust intends to exercise due care in the selection of portfolio
securities. However, a risk may exist that the issuers of Money Fund's
portfolio securities may not be able to meet their duties and obligations
on interest or principal payments at the time called for by the
instrument. There is also the risk that because of a redemption demand
greater than anticipated by management, some of Money Fund's portfolio may
have to be liquidated prior to maturity at prices less than the original
cost or maturity value. Any of these risks, if encountered, could cause
a reduction in the net asset value of Money Fund's shares.
The types of instruments that will form the major part of Money
Fund's investments are certificates of deposit, bankers' acceptances,
commercial paper, U.S. Treasury bills, securities of U.S. government
agencies or instrumentalities and other debt instruments (including bonds)
issued by corporations, including variable and floating rate instruments,
and variable rate master demand notes. Some of such instruments may be
supported by letters of credit or may be subject to repurchase
transactions (described below). Except as described below, Money Fund
will purchase certificates of deposit or bankers' acceptances only if
issued or guaranteed by a domestic bank subject to regulation by the U.S.
Government or by a foreign bank having total assets at least equal to U.S.
$1 billion. Money Fund may invest in certificates of deposit of up to
$100,000 of a domestic bank if such certificates of deposit are fully
insured as to principal by the Federal Deposit Insurance Corporation. For
purposes of this section, the term "bank" includes commercial banks,
savings banks, and savings and loan associations and the term "foreign
bank" includes foreign branches of U.S. banks (issuers of "Eurodollar"
instruments), U.S. branches and agencies of foreign banks (issuers of
"Yankee dollar" instruments) and foreign branches of foreign banks. Money
Fund also may purchase obligations issued by other entities if they are:
(i) guaranteed as to principal and interest by a bank or corporation whose
certificates of deposit or commercial paper may otherwise be purchased by
Money Fund, or (ii) subject to repurchase agreements (explained below),
if the collateral for the agreement complies with Rule 2a-7. In addition,
the Fund may also invest in other types of securities described above in
accordance with the requirements of the rule. For further information,
see "Foreign Securities" and "Other Investment Restrictions" below. See
Appendix A below and "Investment Objectives and Policies" in the Statement
of Additional Information for further information on the investments which
Money Fund may make. See Appendix B below for a description of the rating
categories of the Rating Organizations.
Investment Objectives and Policies - High Income Fund, Bond Fund and
Strategic Bond Fund.
High Income Fund. The objective of High Income Fund is to earn a high
level of current income by investing primarily in a diversified portfolio
of high yield, fixed-income securities (long-term debt and preferred stock
issues, including convertible securities) believed by the Manager not to
involve undue risk. The Fund may also acquire participation interests in
loans that are made to corporations (see "Participation Interests,"
below). High Income Fund's investment policy is to assume certain risks
(discussed below) in seeking high yield, which is ordinarily associated
with high risk securities, commonly known as "junk bonds," in the lower
rating categories of the established securities ratings services (i.e.,
securities rated "Baa" or lower by Moody's Investor Service, Inc.
("Moody's") or "BBB" or lower by Standard & Poor's Corporation ("Standard
& Poor's")), and unrated securities. The investments in which High Income
Fund will invest principally will be in the lower rating categories; it
may invest in securities rated as low as "C" by Moody's or "D" by Standard
& Poor's. Such ratings indicate that the obligations are speculative in
a high degree and may be in default. Appendix B of this Prospectus
describes these rating categories.
High Income Fund is not obligated to dispose of securities whose
issuers subsequently are in default or if the rating is subsequently
downgraded. High Income Fund may invest, without limit, in unrated
securities if such securities offer, in the opinion of the Manager, yields
and risks comparable to rated securities. Risks of high yield securities
are discussed under "Risk Factors" below. High Income Fund's portfolio
at December 31, 1994 contained domestic and foreign corporate bonds in the
following rating categories as rated by Standard & Poor's (the percentages
relate to the weighted average value of the bonds in each rating category
as a percentage of that Fund's total assets): AAA, 1.70%; AA, 2.10%; A,
3.06%; BBB, 1.06%; BB, 5.93%; B, 37.14%; CCC, 5.53%; CC, 1.04%; D, 1.69%;
and unrated, 18.02%. If a bond was not rated by Standard & Poor's but was
rated by Moody's, it is included in the comparable category. The Manager
will not rely principally on the ratings assigned by rating services. The
Manager's analysis may include consideration of the financial strength of
the issuer, including its historic and current financial condition, the
trading activity in its securities, present and anticipated cash flow,
estimated current value of assets in relation to historical cost, the
issuer's experience and managerial expertise, responsiveness to changes
in interest rates and business conditions, debt maturity schedules,
current and future borrowing requirements, and any change in the financial
condition of the issuer and the issuer's continuing ability to meet its
future obligations. The Manager also may consider anticipated changes in
business conditions, levels of interest rates of bonds as contrasted with
levels of cash dividends, industry and regional prospects, the
availability of new investment opportunities and the general economic,
legislative and monetary outlook for specific industries, the nation and
the world.
Bond Fund. Bond Fund's primary objective is to earn a high level of
current income by investing primarily in a diversified portfolio of high
yield fixed-income securities. As a secondary objective, Bond Fund seeks
capital growth when consistent with its primary objective. As a matter
of non-fundamental policy, Bond Fund will, under normal market conditions,
invest at least 65% of its total assets in bonds. Bond Fund will invest
only in securities rated "Baa" or better by Moody's or "BBB" or better by
Standard & Poor's. However, Bond Fund is not obligated to dispose of
securities if the rating is reduced, and therefore will from time to time
hold securities rated lower than "Baa" by Moody's or "BBB" by Standard &
Poor's.
Strategic Bond Fund. The investment objective of Strategic Bond Fund is
to seek a high level of current income principally derived from interest
on debt securities and to enhance such income by writing covered call
options on debt securities. Although the premiums received by Strategic
Bond Fund from writing covered calls are a form of capital gain, the Fund
generally will not make investments in securities with the objective of
seeking capital appreciation.
The Fund intends to invest principally in: (i) lower-rated high yield
domestic debt securities; (ii) U.S. Government securities, and (iii)
foreign government and corporate debt securities. Under normal
circumstances, the Fund's assets will be invested in each of these three
sectors. However, Strategic Bond Fund may from time to time invest up to
100% of its total assets in any one sector if, in the judgment of the
Manager, the Fund has the opportunity of seeking a high level of current
income without undue risk to principal. Accordingly, the Fund's
investments should be considered speculative. Distributable income will
fluctuate as the Fund assets are shifted among the three sectors.
- High Yield Securities. The higher yields and high income sought
by Strategic Bond Fund are generally obtainable from securities in the
lower rating categories of the established rating services, commonly known
as "junk bonds." Such securities are rated "Baa" or lower by Moody's or
"BBB" or lower by Standard & Poor's. Strategic Bond Fund may invest in
securities rated as low as "C" by Moody's or "D" by Standard & Poor's.
Such ratings indicate that the obligations are speculative in a high
degree and may be in default. Risks of high yield, high risk securities
are discussed under "Risk Factors" below. Strategic Bond Fund's portfolio
at December 31, 1994, contained securities in the following rating
categories as rated by Standard & Poor's (the percentages relate to the
weighted average of the bonds in each rating category as a percentage of
that Fund's total assets): AAA, 22.53%; AA, 2.41%; BBB, .41%; BB, 5.32%;
B, 20.57%; CCC, 3.17%; D, .62%; unrated, 17.76%. If a bond was not rated
by Standard & Poor's but was rated by Moody's, it is included in the
comparable category. The Manager will not rely principally on the ratings
assigned by rating services. Strategic Bond Fund is not obligated to
dispose of securities whose issuers subsequently are in default or if the
rating of such securities is reduced. Appendix B of this Prospectus
describes these rating categories. Strategic Bond Fund may also invest
in unrated securities which, in the opinion of the Manager, offer yields
and risks comparable to those of securities which are rated.
- International Securities. The Fund may invest in foreign
government and foreign corporate debt securities (which may be denominated
in U.S. dollars or in non-U.S. currencies) issued or guaranteed by foreign
corporations, certain supranational entities (such as the World Bank) and
foreign governments (including political subdivisions having taxing
authority) or their agencies or instrumentalities. These investments may
include (i) U.S. dollar-denominated debt obligations known as "Brady
Bonds," which are issued for the exchange of existing commercial bank
loans to foreign entities for new obligations that are generally
collateralized by zero coupon Treasury securities having the same
maturity, (ii) debt obligations such as bonds (including sinking fund and
callable bonds), (iii) debentures and notes (including variable rate and
floating rate instruments), and (iv) preferred stocks and zero coupon
securities. Further information about investments in foreign securities
is set forth below under "Other Investment Techniques and Strategies -
Foreign Securities."
- U.S. Government Securities. U.S. Government Securities are debt
obligations issued by or guaranteed by the United States Government or one
of its agencies or instrumentalities. Although U.S. Government Securities
are considered among the most creditworthy of fixed-income investments and
their yields are generally lower than the yields available from corporate
debt securities, the values of U.S. Government Securities (and of fixed-
income securities generally) will vary inversely to changes in prevailing
interest rates. To compensate for the lower yields available on U.S.
Government securities, Strategic Bond Fund will attempt to augment these
yields by writing covered call options against them. See "Hedging,"
below. Certain of these obligations, including U.S. Treasury notes and
bonds, and mortgage-backed securities guaranteed by the Government
National Mortgage Association ("Ginnie Maes"), are supported by the full
faith and credit of the United States. Certain other U.S. Government
Securities, issued or guaranteed by Federal agencies or government-
sponsored enterprises, are not supported by the full faith and credit of
the United States. These latter securities may include obligations
supported by the right of the issuer to borrow from the U.S. Treasury,
such as obligations of Federal Home Loan Mortgage Corporation ("Freddie
Macs"), and obligations supported by the credit of the instrumentality,
such as Federal National Mortgage Association bonds ("Fannie Maes"). U.S.
Government Securities in which the Fund may invest include zero coupon
U.S. Treasury securities, mortgage-backed securities and money market
instruments.
Zero coupon Treasury securities are: (i) U.S. Treasury notes and
bonds which have been stripped of their unmatured interest coupons and
receipts; or (ii) certificates representing interests in such stripped
debt obligations or coupons. Because a zero coupon security pays no
interest to its holder during its life or for a substantial period of
time, it usually trades at a deep discount from its face or par value and
will be subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable maturities
which make current distributions of interest. Because the Fund accrues
taxable income from these securities without receiving cash, the Fund may
be required to sell portfolio securities in order to pay cash dividends
or to meet redemptions. The Fund may invest up to 50% of its total assets
at the time of purchase in zero coupon securities issued by either
corporations or the U.S. Treasury.
- Domestic Securities. The Fund's investments in domestic securities
may include preferred stocks, participation interests and zero coupon
securities. Domestic investments include fixed-income securities and
dividend-paying common stocks issued by domestic corporations in any
industry which may be denominated in U.S. dollars or non-U.S. currencies.
The Fund's investments may include securities which represent
participation interests in loans made to corporations (see "Participation
Interests," below) and in pools of residential mortgage loans which may
be guaranteed by agencies or instrumentalities of the U.S. Government
(e.g. Ginnie Maes, Freddie Macs and Fannie Maes), including collateralized
mortgage-backed obligations ("CMOs"), or which may not be guaranteed.
Such securities differ from conventional debt securities which provide for
periodic payment of interest in fixed amounts (usually semi-annually) with
principal payments at maturity or specified call dates. Mortgage-backed
securities provide monthly payments which are, in effect, a "pass-through"
of the monthly interest and principal payments (including any prepayments)
made by the individual borrowers on the pooled mortgage loans. The Fund's
reinvestment of scheduled principal payments and unscheduled prepayments
it receives may occur at lower rates than the original investment, thus
reducing the yield of the Fund. CMOs in which the Fund may invest are
securities issued by a U.S. Government instrumentality or private
corporation that are collateralized by a portfolio of mortgages or
mortgage-backed securities which may or may not be guaranteed by the U.S.
Government. The issuer's obligation to make interest and principal
payments is secured by the underlying portfolio of mortgages or mortgage-
backed securities. Mortgage-backed securities may be less effective than
debt obligations of similar maturity at maintaining yields during periods
of declining interest rates.
The Fund may also invest in CMOs that are "stripped." That means
that the security is divided into two parts, one of which receives some
or all of the principal payments (and is known as a "P/O") and the other
which receives some or all of the interest (and is known as an "I/O").
P/Os and I/Os are generally referred to as "derivative investments,"
discussed further below.
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
Stripped securities that pay "interest only" are therefore subject to
greater price volatility when interest rates change, and they have the
additional risk that if the underlying mortgages are prepaid, the Fund
will lose the anticipated cash flow from the interest on the prepaid
mortgages. That risk is increased when general interest rates fall, and
in times of rapidly falling interest rates, the Fund might receive back
less than its investment.
The value of "principal only" securities generally increases as
interest rates decline and prepayment rates rise. The price of these
securities is typically more volatile than that of coupon-bearing bonds
of the same maturity.
Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established
trading markets have not yet developed for these securities. Therefore,
some stripped securities may be deemed "illiquid." If the Fund holds
illiquid stripped securities, the amount it can hold will be subject to
the Fund's investment policy limiting investments in illiquid securities
to 15% of the Fund's assets.
The Fund may also enter into "forward roll" transactions with
mortgage-backed securities. The Fund sells mortgage-backed securities it
holds to banks or other buyers and simultaneously agrees to repurchase a
similar security from that party at a later date at an agreed-upon price.
Forward rolls are considered to be a borrowing. The Fund is required to
place liquid assets in a segregated account with its custodian bank in an
amount equal to its obligation under the forward roll. The main risk of
this investment strategy is risk of default by the counterparty.
The Fund may also invest in asset-backed securities, which are
securities that represent fractional undivided interests in pools of
consumer loans and trade receivables, similar in structure to the
mortgage-backed securities in which the Fund may invest, described above.
Payments of principal and interest are passed through to holders of asset-
backed securities and are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guarantee
by another entity or having a priority to certain of the borrower's other
securities. The degree of credit enhancement varies, and generally
applies to only a fraction of the asset-backed security's par value until
exhausted.
Risk Factors. The securities in which High Income Fund and Strategic Bond
Fund principally invest are considered speculative and involve greater
risk than lower yielding, higher rated fixed-income securities, while
providing higher yields than such securities. Lower rated securities may
be less liquid, and significant losses could be experienced if a
substantial number of other holders of such securities decide to sell at
the same time. Other risks may involve the default of the issuer or price
changes in the issuer's securities due to changes in the issuer's
financial strength or economic conditions. Issuers of lower rated or
unrated securities are generally not as financially secure or creditworthy
as issuers of higher-rated securities. These Funds are not obligated to
dispose of securities when issuers are in default or if the rating of the
security is reduced. These risks are discussed in more detail in the
Statement of Additional Information.
Investment Objectives and Policies - Capital Appreciation Fund, Growth
Fund, Multiple Strategies Fund, Growth & Income Fund and Global Securities
Fund.
Capital Appreciation Fund. In seeking its objective of capital
appreciation, Capital Appreciation Fund will emphasize investments in
securities of "growth-type" companies. Such companies are believed to
have relatively favorable long-term prospects for increasing demand for
their goods or services, or to be developing new products, services or
markets, and normally retain a relatively larger portion of their earnings
for research, development and investment in capital assets. "Growth-type"
companies may also include companies developing applications for recent
scientific advances. Capital Appreciation Fund may also invest in
cyclical industries and in "special situations" that the Manager believes
present opportunities for capital growth. "Special situations" are
anticipated acquisitions, mergers or other unusual developments which, in
the opinion of the Manager, will increase the value of an issuer's
securities, regardless of general business conditions or market movements.
An additional risk is present in this type of investment since the price
of the security may be expected to decline if the anticipated development
fails to occur.
Growth Fund. In seeking its objective of capital appreciation, Growth
Fund will emphasize investments in securities of well-known and
established companies. Such securities generally have a history of
earnings and dividends and are issued by seasoned companies (having an
operating history of at least five years, including predecessors).
Current income is a secondary consideration in the selection of Growth
Fund's portfolio securities.
Multiple Strategies Fund. The objective of Multiple Strategies Fund is
to seek a high total investment return, which includes current income as
well as capital appreciation in the value of its shares. In seeking that
objective, Multiple Strategies Fund may invest in equity securities
(including common stocks, preferred stocks, convertible securities and
warrants), debt securities (including bonds, participation interests,
asset-backed securities, private-label mortgage-backed securities and
CMOs, zero coupon securities and U.S. government obligations, described
above under "Investment Objectives and Policies - High Income Fund, Bond
Fund and Strategic Bond Fund" and under "Participation Interests" below)
and cash and cash equivalents (identified above as the types of
instruments in which the Money Fund may invest).
The composition of Multiple Strategies Fund's portfolio among the
different types of permitted investments will vary from time to time based
upon the Manager's evaluation of economic and market trends and perceived
relative total anticipated return from such types of securities.
Accordingly, there is neither a minimum nor a maximum percentage of
Multiple Strategies Fund's assets that may, at any given time, be invested
in any of the types of investments identified above. In the event future
economic or financial conditions adversely affect equity securities, it
is expected that Multiple Strategies Fund would assume a defensive
position by investing in debt securities (with an emphasis on securities
maturing in one year or less from the date of purchase), or cash and cash
equivalents.
Growth & Income Fund. The objective of Growth & Income Fund is to seek
a high total return, which includes growth in the value of its shares as
well as current income from equity and debt securities. In seeking that
objective, Growth & Income Fund may invest in equity and debt securities.
Its equity investments will include common stocks, preferred stocks,
convertible securities and warrants. Its debt securities will include
bonds, participation interests, asset-backed securities, private-label
mortgage-backed securities and CMOs, zero coupon securities and U.S.
government obligations. From time to time Growth & Income Fund may focus
on small to medium capitalization issuers, the securities of which may be
subject to greater price volatility than those of larger capitalized
issuers.
The composition of Growth & Income Fund's portfolio among equity and
fixed-income investments will vary from time to time based upon the
Manager's evaluation of economic and market trends and perceived relative
total anticipated return from such types of investments. Accordingly,
there is neither a minimum nor a maximum percentage of Growth & Income
Fund's assets that may, at any given time, be invested in either type of
investment. In the event future economic or financial conditions
adversely affect equity securities, it is expected that Growth & Income
Fund would assume a defensive position by investing in debt securities
(with an emphasis on securities maturing in one year or less from the date
of purchase).
Global Securities Fund. The objective of Global Securities Fund is to
seek long-term capital appreciation. Current income is not an objective.
In seeking its objective, the Fund will invest a substantial portion of
its invested assets in securities of foreign issuers, "growth-type"
companies (those which, in the opinion of the Manager, have relatively
favorable long-term prospects for increasing demand or which develop new
products and retain a significant part of earnings for research and
development), cyclical industries (e.g. base metals, paper and chemicals)
and special investment situations which are considered to have
appreciation possibilities (e.g., private placements of start-up
companies). The Fund may invest without limit in "foreign securities" (as
defined below in "Other Investment Techniques and Strategies - Foreign
Securities") and thus the relative amount of such investments will change
from time to time. It is currently anticipated that Global Securities
Fund may invest as much as 80% or more of its total assets in foreign
securities. Under normal market conditions, the Fund will invest its
total assets in securities of issuers traded in markets of at least three
countries (which may include the United States). See "Other Investment
Techniques and Strategies - Foreign Securities," below, for further
discussion as to the possible rewards and risks of investing in foreign
securities and as to additional diversification requirements for the
Fund's foreign investments.
- Can the Funds' Investment Objectives and Policies Change? The
Funds have investment objectives, described above, as well as investment
policies each follows to try to achieve its objectives. Additionally, the
Funds use certain investment techniques and strategies in carrying out
those investment policies. The Funds' investment policies and techniques
are not "fundamental" unless this Prospectus or the Statement of
Additional Information says that a particular policy is "fundamental."
Each Fund's investment objectives are fundamental policies.
The Trust's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus. Fundamental policies are those
that cannot be changed without the approval of a "majority" of the Fund's
outstanding voting shares. The term "majority" is defined in the
Investment Company Act to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information).
Other Investment Techniques and Strategies. Some of the Funds can also
use the investment techniques and strategies described below. These
techniques involve certain risks. The Statement of Additional Information
contains more information about these practices, including limitations on
their use that are designed to reduce some of the risks.
- Special Risks - Borrowing for Leverage. From time to time, Capital
Appreciation Fund, Strategic Bond Fund, Growth Fund, Multiple Strategies
Fund, Growth & Income Fund and Global Securities Fund may borrow money
from banks to buy securities. These Funds will borrow only if they can
do so without putting up assets as security for a loan. This is a
speculative investment method known as "leverage." This investing
technique may subject the Fund to greater risks and costs than funds that
do not borrow. These risks may include the possibility that a Fund's net
asset value per share will fluctuate more than funds that don't borrow,
since a Fund pays interest on borrowings and interest expense affects a
Fund's share price and yield. Growth Fund may borrow only up to 5% of the
value of its total assets and Global Securities Fund may borrow up to 10%
of the value of its total assets. Global Securities Fund will not borrow,
if as a result of such borrowing more than 25% of its total assets would
consist of investments in when-issued or delayed delivery securities or
borrowed funds. Borrowing for Leverage is subject to regulatory limits
described in more detail in "Borrowing" in the Statement of Additional
Information.
Pursuant to an undertaking by Capital Appreciation Fund, Strategic
Bond Fund, Multiple Strategies Fund, Growth & Income Fund and Global
Securities Fund, borrowing by each such Fund is limited to 25% of the
value of its net assets, which is further limited to 10% if the borrowing
is for a purpose other than to facilitate redemptions. Neither percentage
limitation is a fundamental policy.
- Investments In Small, Unseasoned Companies. Money Fund, Capital
Appreciation Fund, Multiple Strategies Fund, Growth & Income Fund, Growth
Fund, Global Securities Fund and Strategic Bond Fund may each invest in
securities of small, unseasoned companies. These are companies that have
been in operation for less than three years, counting the operations of
any predecessors. Securities of these companies may have limited
liquidity (which means that the Fund may have difficulty selling them at
an acceptable price when it wants to) and the prices of these securities
may be volatile. It is not currently intended that investments in
securities of companies (including predecessors) that have operated less
than three years will exceed 5% of the net assets of either Growth Fund
or Multiple Strategies Fund. Money Fund, Capital Appreciation Fund,
Growth & Income Fund, Global Securities Fund and Strategic Bond Fund are
not subject to this restriction.
- Participation Interests. Strategic Bond Fund, Global Securities
Fund, High Income Fund and Multiple Strategies Fund and Growth & Income
Fund may acquire participation interests in U.S. dollar-denominated loans
that are made to U.S. or foreign companies (the "borrower"). They may be
interests in, or assignments of, the loan, and are acquired from the banks
or brokers that have made the loan or are members of the lending
syndicate. No more than 5% of a Fund's net assets can be invested in
participation interests of the same borrower. The Manager has set certain
creditworthiness standards for issuers of loan participations, and
monitors their creditworthiness. The value of loan participation
interests primarily depends upon the creditworthiness of the borrower, and
its ability to pay interest and principal. Borrowers may have difficulty
making payments. If a borrower fails to make scheduled interest or
principal payments, the Fund could experience a decline in the net asset
value of its shares. Some borrowers may have senior securities rated as
low as "C" by Moody's or "D" by Standard & Poor's, but may be deemed
acceptable credit risks. Participation interests are subject to each
Fund's limitations on investments in illiquid securities. See "Illiquid
and Restricted Securities" below.
- Foreign Securities. Each Fund may purchase "foreign securities"
that is, securities of companies organized under the laws of countries
other than the United States that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. Securities of
foreign issuers that are represented by American Depository Receipts
("ADRs"), or that are listed on a U.S. securities exchange or are traded
in the United States over-the-counter markets are not considered "foreign
securities" for this purpose because they are not subject to many of the
special considerations and risks (discussed below and in the Statement of
Additional Information) that apply to foreign securities traded and held
abroad. If a Fund's securities are held abroad, the countries in which
such securities may be held and the sub-custodians holding them must be
approved by the Fund's Board of Trustees under applicable SEC rules. Each
Fund may also invest in debt obligations issued or guaranteed by foreign
corporations, certain supranational entities (such as the World Bank) and
foreign governments (including political subdivisions having taxing
authority) or their agencies or instrumentalities, subject to the
investment policies described above. Foreign securities which the Funds
may purchase may be denominated in U.S. dollars or in non-U.S. currencies.
The Funds may convert U.S. dollars into foreign currency, but only to
effect securities transactions and not to hold such currency as an
investment, other than in hedging transactions (see "Hedging" below).
It is currently intended that each Fund (other than Global Securities
Fund, Multiple Strategies Fund, Growth & Income Fund or Strategic Bond
Fund) will invest no more than 25% of its total assets in foreign
securities or in government securities of any foreign country or in
obligations of foreign banks. Multiple Strategies Fund will invest no
more than 35% of its total assets in foreign securities or in government
securities of any foreign country or in obligations of foreign banks.
Global Securities Fund, Growth & Income Fund and Strategic Bond Fund have
no restrictions on the amount of their assets that may be invested in
foreign securities. Investments in securities of issuers in non-
industrialized countries generally involve more risk and may be considered
highly speculative.
The Funds have undertaken to comply with the foreign country
diversification guidelines of Section 10506 of the California Insurance
Code, as follows: Whenever a Fund's investment in foreign securities
exceeds 25% of its net assets, it will invest its assets in securities of
issuers located in a minimum of two different foreign countries; this
minimum is increased to three foreign countries if foreign investments
comprise 40% or more of a Fund's net assets, to four if 60% or more and
to five if 80% or more. In addition, no such Fund will have more than 20%
of its net assets invested in securities of issuers located in any one
foreign country; that limit is increased to 35% for Australia, Canada,
France, Japan, the United Kingdom or Germany.
The percentage of each Fund's assets that will be allocated to
foreign securities will vary depending on the relative yields of foreign
and U.S. securities, the economies of foreign countries, the condition of
their financial markets, the interest rate climate of such countries, and
the relationship of such countries' currencies to the U.S. dollar. These
factors are judged on the basis of fundamental economic criteria (e.g.,
relative inflation levels and trends, growth rate forecasts, balance of
payments status, and economic policies) as well as technical and political
data. Subsequent foreign currency losses may result in a Fund having
previously distributed more income in a particular period than was
available from investment income, which could result in a return of
capital to shareholders. Each such Fund's portfolio of foreign securities
may include those of a number of foreign countries or, depending upon
market conditions and subject to the above diversification requirements
those of a single country. In summary, foreign securities markets may be
less liquid and more volatile than the markets in the U.S. Risks of
foreign securities investing may include foreign withholding taxation,
changes in currency rates or currency blockage, currency exchange costs,
difficulty in obtaining and enforcing judgments against foreign issuers,
relatively greater brokerage and custodial costs, risk of expropriation
or nationalization of assets, less publicly available information, and
differences between domestic and foreign legal, auditing, brokerage and
economic standards. See "Investment Objectives and Policies - Foreign
Securities" in the Statement of Additional Information for further
details.
- Warrants and Rights. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time. Rights
are options to purchase securities, normally granted to current holders
by the issuer. Each of the Funds (except Money Fund) may invest up to 5%
of its total assets in warrants and rights. That 5% does not apply to
warrants and rights that have been acquired as part of units with other
securities or that were attached to other securities. No more than 2% of
each such Fund's total assets may be invested in warrants that are not
listed on either the New York or American Stock Exchanges. For further
details about these investments, see "Warrants and Rights" in the
Statement of Additional Information.
- Repurchase Agreements. Each Fund may acquire securities that are
subject to repurchase agreements to generate income while providing
liquidity. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
Repurchase agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may incur
costs in disposing of the collateral and may experience losses if there
is any delay in its ability to do so. No Fund will enter into a
repurchase agreement that causes more than 15% of its net assets (10% of
net assets for Money Fund) to be subject to repurchase agreements having
a maturity beyond seven days. There is no limit on the amount of a Fund's
net assets that may be subject to repurchase agreements of seven days or
less.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Board of Trustees, the Manager determines
the liquidity of a Fund's investments. Investments may be illiquid
because of the absence of a trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual restriction on resale or cannot be
sold publicly until it is registered under the Securities Act of 1933.
No Fund will invest more than 15% of its net assets in illiquid or
restricted securities; no Fund presently intends to invest more than 10%
of its net assets in illiquid or restricted securities. This policy
applies to participation interests, bank time deposits, master demand
notes and repurchase transactions maturing in more than seven days, over-
the-counter ("OTC") options held by any Fund and that portion of assets
used to cover such OTC options (High Income, Global Securities and
Strategic Bond Funds); it does not apply to certain restricted securities
that are eligible for resale to qualified institutional purchasers.
- Loans of Portfolio Securities. To attempt to increase its income,
each Fund may lend its portfolio securities to brokers, dealers and other
financial institutions. These loans are limited to 25% of the Fund's net
assets and are subject to other conditions described in the Statement of
Additional Information. The Funds presently do not intend to lend
portfolio securities, but if any Fund does, the value of securities loaned
is not expected to exceed 5% of the value of that Fund's total assets.
- "When-Issued" or Delayed Delivery Transactions. Each Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There may be a risk of loss to a Fund
if the value of the security changes prior to the settlement date.
- Hedging. As described below, the Funds (other than Money Fund)
may purchase and sell certain kinds of futures contracts, put and call
options, forward contracts, and options on futures and broadly-based stock
or bond indices, or enter into interest rate swap agreements. These are
all referred to as "hedging instruments." The Funds do not use hedging
instruments for speculative purposes, and have limits on the use of them,
described below. The hedging instruments the Funds may use are described
below and in greater detail in "Other Investment Techniques and
Strategies" in the Statement of Additional Information.
The Funds may buy and sell options, futures and forward contracts for
a number of purposes. They may do so to try to manage their exposure to
the possibility that the prices of their portfolio securities may decline,
or to establish a position in the securities market as a temporary
substitute for purchasing individual securities. High Income Fund, Bond
Fund, Multiple Strategies Fund, Growth & Income Fund and Strategic Bond
Fund may do so to try to manage their exposure to changing interest rates.
Some of these strategies, such as selling futures, buying puts and writing
covered calls, hedge the Funds' portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options,
tend to increase the Funds' exposure to the securities market. Forward
contracts are used to try to manage foreign currency risks on Funds'
foreign investments. Foreign currency options are used to try to protect
against declines in the dollar value of foreign securities the Funds own,
or to protect against an increase in the dollar cost of buying foreign
securities. Writing covered call options may also provide income to the
Funds for liquidity purposes or to raise cash to distribute to
shareholders.
- Futures. Global Securities Fund, Capital Appreciation Fund,
Growth Fund, Multiple Strategies Fund, Growth & Income Fund and Strategic
Bond Fund may buy and sell futures contracts that relate to broadly-based
stock indices (these are referred to as Stock Index Futures). The latter
three Funds and Global Securities Fund, Bond Fund and High Income Fund may
buy and sell futures contracts that relate to interest rates (these are
referred to as Interest Rate Futures). These types of Futures are
described in "Hedging" in the Statement of Additional Information.
- Put and Call Options. The Funds may buy and sell certain kinds
of put options (puts) and call options (calls).
The Funds may buy calls only on securities, broadly-based stock and
bond indices, foreign currencies and Futures that the Fund is permitted
to buy and sell (as explained above) or to terminate their obligation on
a call that the Fund previously wrote. The Funds may write (that is,
sell) covered call options on up to 100% of each Fund's assets. When a
Fund writes a call, it receives cash (called a premium). The call gives
the buyer the ability to buy the investment on which the call was written
from that Fund at the call price during the period in which the call may
be exercised. If the value of the investment does not rise above the call
price, it is likely that the call will lapse without being exercised,
while the Fund keeps the cash premium (and the investment).
The Funds may purchase put options. Buying a put on an investment
gives that Fund the right to sell the investment at a set price to a
seller of a put on that investment. The Funds can buy only those puts
that relate to (1) securities (whether or not that Fund owns such
securities), (2) Futures that the Fund is permitted to buy and sell (as
explained above), (3) broadly-based stock or bond indices or (4) foreign
currencies. A Fund can buy a put on a Future whether or not that Fund
owns the particular Future in its portfolio. A Fund may not sell a put
other than a put that it previously purchased.
The Funds may buy and sell puts and calls only if certain conditions
are met: (1) calls the Funds buy or sell must be listed on a securities
or commodities exchange, or quoted on the Automated Quotation System of
the National Association of Securities Dealers, Inc. ("NASDAQ"); (2) in
the case of puts and calls on foreign currency, they must be traded on a
securities or commodities exchange, or in the over-the-counter market, or
quoted by recognized dealers in those options; (3) none of the Funds will
write puts if, as a result, more than 50% of its net assets would be
required to be segregated liquid assets; (4) each call the Funds write
must be "covered" while it is outstanding: that means a Fund must own the
investment on which the call was written or it must own other securities
that are acceptable for the escrow arrangements required for calls; (5)
a Fund may write calls on Futures contracts it owns, but these calls must
be covered by securities or other liquid assets the Fund owns and
segregates to enable it to satisfy its obligations if the call is
exercised; (6) a call or put option may not be purchased if the value of
all of a Fund's put and call options would exceed 5% of that Fund's total
assets.
If a call written by a Fund is exercised, the Fund forgoes any
possible profit from an increase in the market price of the underlying
security over the exercise price less the commissions paid on the sale.
In addition, the Fund could experience capital losses which might cause
previously distributed short-term capital gains to be recharacterized as
non-taxable return of capital to shareholders.
- Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Funds (other than Money Fund) use
them to "lock-in" the U.S. dollar price of a security denominated in a
foreign currency that a Fund has bought or sold, or to protect against
losses from changes in the relative values of the U.S. dollar and a
foreign currency. Such Funds may also use "cross hedging," where a Fund
hedges against changes in currencies other than the currency in which a
security it holds is denominated.
- Interest Rate Swaps. Strategic Bond Fund, High Income Fund and
Bond Fund can also enter into interest rate swap transactions. In an
interest rate swap, a Fund and another party exchange their right to
receive or their obligation to pay interest on a security. For example,
they may swap a right to receive floating rate payments for fixed rate
payments. A Fund enters into swaps only on securities it owns. Each of
these Funds may not enter into swaps with respect to more than 50% of its
total assets. Also, each Fund will segregate liquid assets (such as cash
or U.S. Government securities) to cover any amounts it could owe under
swaps that exceed the amounts it is entitled to receive, and it will
adjust that amount daily, as needed.
Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce that Fund's return. A Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Funds. There are also special risks in particular hedging
strategies. If a covered call written by a Fund is exercised on a
security that has increased in value, that Fund will be required to sell
the security at the call price and will not be able to realize any profit
if the security has increased in value above the call price. The use of
forward contracts may reduce the gain that would otherwise result from a
change in the relationship between the U.S. dollar and a foreign currency.
To limit its exposure in foreign currency exchange contracts, each Fund
limits its exposure to the amount of its assets denominated in the foreign
currency. Interest rate swaps are subject to credit risks (if the other
party fails to meet its obligations) and also to interest rate risks. The
Funds could be obligated to pay more under their swap agreements they
receive under them, as a result of interest rate changes. These risks are
described in greater detail in the Statement of Additional Information.
- Derivative Investments. Each Fund (other than Money Fund) can
invest in a number of different kinds of "derivative investments." Such
Funds may use some types of derivatives for hedging purposes, and may
invest in others because they offer the potential for increased income and
principal value. In general, a "derivative investment" is a specially-
designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index or
currency. In the broadest sense, derivative investments include exchange-
traded options and futures contracts (please refer to "Hedging").
One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security might not perform the way the Manager expected it to perform.
The performance of derivative investments may also be influenced by
interest rate changes in the U.S. and abroad. All of these risks can mean
that a Fund will realize less income than expected from its investments,
or that it can lose part of the value of its investments, which will
affect that Fund's share price. Certain derivative investments held by
the Funds may trade in the over-the-counter markets and may be illiquid.
If that is the case, the Funds' investment in them will be limited, as
discussed in "Illiquid and Restricted Securities."
Another type of derivative the Funds (other than Money Fund) may
invest in is an "index-linked" note. On the maturity of this type of debt
security, payment is made based on the performance of an underlying index,
rather than based on a set principal amount for a typical note. Another
derivative investment such Funds may invest in are currency-indexed
securities. These are typically short-term or intermediate-term debt
securities. Their value at maturity or the interest rates at which they
pay income are determined by the change in value of the U.S. dollar
against one or more foreign currencies or an index. In some cases, these
securities may pay an amount at maturity based on a multiple of the amount
of the relative currency movements. This variety of index security offers
the potential for greater income but at a greater risk of loss.
Other derivative investments the Funds (other than Money Fund) may
invest in include "debt exchangeable for common stock" of an issuer or
"equity-linked debt securities" of an issuer. At maturity, the debt
security is exchanged for common stock of the issuer or is payable in an
amount based on the price of the issuer's common stock at the time of
maturity. In either case there is a risk that the amount payable at
maturity will be less than the principal amount of the debt (because the
price of the issuer's common stock is not as high as was expected).
- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." The Funds may engage frequently in
short-term trading to try to achieve their objectives. High turnover and
short-term trading involve correspondingly greater commission expenses and
transaction costs for Capital Appreciation Fund, Growth Fund, Multiple
Strategies Fund, Growth & Income Fund and Global Securities Fund and to
a lesser extent, higher transaction costs for Money Fund, Bond Fund,
Strategic Bond Fund and High Income Fund. The "Financial Highlights,"
above show the portfolio turnover for the past fiscal years for each Fund
except Growth & Income Fund, which is not expected to exceed a portfolio
turnover rate of 200% in the current fiscal year. If any Fund derives 30%
or more of its gross income from the sale of securities held less than
three months, it may fail to qualify under the tax laws as a regulated
investment company (see "Dividends, Capital Gains and Taxes," below).
- Short Sales Against-the-Box. In a short sale, the seller does not
own the security that is sold, but normally borrows the security to
fulfill its delivery obligation. The seller later buys the security to
repay the loan, in the expectation that the price of the security will be
lower when the purchase is made, resulting in a gain. The Funds may not
sell securities short except that each Fund (except Money Fund) may sell
securities short in collateralized transactions referred to as "short
sales against-the-box." No more than 15% of any Fund's net assets will
be held as collateral for such short sales at any one time.
Other Investment Restrictions
Each of the Funds has certain investment restrictions which, together
with its investment objective, are fundamental policies. Under some of
those restrictions, each Fund cannot: (1) with respect to 75% of its total
assets, invest in securities (except those of the U.S. Government or its
agencies or instrumentalities) of any issuer if immediately thereafter,
either (a) more than 5% of that Fund's total assets would be invested in
securities of that issuer, or (b) that Fund would then own more than 10%
of that issuer's voting securities or 10% in principal amount of the
outstanding debt securities of that issuer (the latter limitation on debt
securities does not apply to Strategic Bond Fund); (2) lend money except
in connection with the acquisition of debt securities which a Fund's
investment policies and restrictions permit it to purchase; the Funds may
also make loans of portfolio securities (see "Loans of Portfolio
Securities"); (3) pledge, mortgage or hypothecate any assets to secure a
debt; the escrow arrangements which are involved in options trading are
not considered to involve such a mortgage, hypothecation or pledge; (4)
concentrate investments in any particular industry, other than securities
of the U.S. Government or its agencies or instrumentalities (Money Fund,
Bond Fund and High Income Fund, only); therefore these Funds will not
purchase the securities of issuers primarily engaged in the same industry
if more than 25% of the total value of that Fund's assets would (in the
absence of special circumstances) consist of securities of companies in
a single industry; however, there is no limitation as to concentration of
investments by Money Fund in obligations issued by domestic banks, foreign
branches of domestic banks (if guaranteed by the domestic parent), savings
and loan associations or in obligations issued by the federal government
and its agencies and instrumentalities; and (5) deviate from the
percentage requirements and other restrictions listed under "Warrants and
Rights," and the first paragraph under "Special Risks-Borrowing for
Leverage." None of the percentage limitations and restrictions described
above and in the Statement of Additional Information for the Funds with
respect to writing covered calls, hedging, short sales and derivatives is
a fundamental policy.
All of the percentage restrictions described above and elsewhere in
this Prospectus, other than those described under "Other Investment
Techniques and Strategies--Special Risks-Borrowing for Leverage," apply
only at the time a Fund purchases a security. A Fund need not dispose of
a security merely because the size of the Fund's assets has changed or the
security has increased in value relative to the size of the Fund. Money
Fund has separately undertaken to exclude savings and loan associations
from the exception to the concentration limitation set forth under
investment restriction (4), above. There are other fundamental policies
discussed in the Statement of Additional Information. The Trustees of the
Trust are required to monitor events to identify any irreconcilable
conflicts which may arise between the variable life insurance policies and
variable annuity contracts that invest in the Funds. Should any conflict
arise which ultimately requires that any substantial amount of assets be
withdrawn from any Fund, its operating expenses could increase.
How the Funds are Managed
Organization and History. The Trust was organized in 1984 as a
Massachusetts business trust. The Trust is an open-end, diversified
management investment company, with an unlimited number of authorized
shares of beneficial interest. It consists of nine separate Funds - Money
Fund, Bond Fund and Growth Fund, all organized in 1984, High Income Fund,
Capital Appreciation Fund and Multiple Strategies Fund, all organized in
1986, Global Securities Fund, organized in 1990, Strategic Bond Fund,
organized in 1993 and Growth & Income Fund, which is expected to commence
operations in 1995.
The Trust is governed by a Board of Trustees, which is responsible
for protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Funds'
activities, review performance, and review the actions of the Manager.
"Trustees and Officers of the Trust" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Trust. Although the Trust is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Trust's Declaration of Trust.
The Manager and Its Affiliates. The Funds are managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting the
Funds' investments and handles its day-to-day business. The Manager
carries out its duties, subject to the policies established by the Board
of Trustees, under Investment Advisory Agreements for each Fund which
state the Manager's responsibilities. The Agreements set forth the fees
paid by each Fund to the Manager and describe the expenses that each Fund
is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other OppenheimerFunds, with assets of more than $29 billion as
of December 31, 1994, and with more than 2.4 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.
- Portfolio Managers. The Portfolio Manager of High Income Fund,
Bond Fund, Multiple Strategies Fund and Strategic Bond Fund is David P.
Negri, joined by Richard H. Rubinstein for Multiple Strategies Fund and
by Arthur P. Steinmetz for Strategic Bond Fund. They are the persons
principally responsible for the day-to-day management of those Funds since
July 1989, January 1990, July 1989 (April 1991 for Mr. Rubinstein) and May
1993, respectively. During the past five years, Messrs. Steinmetz and
Negri have also served as officers of other OppenheimerFunds. During the
past five years, Mr. Rubinstein has served as an officer of other
OppenheimerFunds and was formerly Vice President and Portfolio
Manager/Security Analyst for Oppenheimer Capital Corp., an investment
adviser. The Portfolio Manager of Global Securities Fund is George Evans.
He has been the person principally responsible for the day-to-day
management of that Fund since February, 1991. During the past five years,
he has also served as an Associate Portfolio Manager for other
OppenheimerFunds and formerly served as an international equities
portfolio manager/analyst with Brown Brothers Harriman & Co. The
Portfolio Manager of the Money Fund is Arthur Zimmer. Since October 1990,
he has been the person principally responsible for the day-to-day
management of that Fund's portfolio. During the past five years, he has
also served as an officer of other OppenheimerFunds and formerly served
as Vice President of Hanifen Imhoff Management Company (mutual fund
investment adviser). The Portfolio Manager of Growth Fund is Jane Putnam.
She has been the person principally responsible for the day-to-day
management of that Fund's portfolio since May 1994. During the past five
years, Ms. Putnam has also served as an Associate Portfolio Manager for
other OppenheimerFunds and formerly served as a portfolio manager and
equity research analyst for Chemical Bank. The Portfolio Manager of
Capital Appreciation Fund is Paul LaRocco. He has been the person
principally responsible for the day-to-day management of that Fund's
portfolio since January 1994. During the past five years, he has also
served as an Associate Portfolio Manager for other OppenheimerFunds and
formerly served as a securities analyst with Columbus Circle Investors,
prior to which he was an investment analyst for Chicago Title & Trust Co.
The Portfolio Manager of Growth & Income Fund is John Wallace. He will
be the person principally responsible for the day-to-day management of
that Fund after its inception in 1995. He is a Vice President of the
Manager and an officer of other OppenheimerFunds. During the past five
years, he has also been a Securities Analyst and Assistant Portfolio
Manager for the Manager. Messrs. Negri, Evans, Zimmer and Rubinstein are
Vice Presidents of the Manager, Mr. Steinmetz is a Senior Vice President
of the Manager, and Ms. Putnam and Mr. LaRocco are Assistant Vice
Presidents of the Manager. Each of the Portfolio Managers named above are
also Vice Presidents of the Trust.
- Fees and Expenses. The monthly management fee payable to the
Manager is computed separately on the net assets of each Fund as of the
close of business each day. The management fee rates that became
effective September 1, 1994 are as follows: (i) for Money Fund: 0.450%
of the first $500 million of net assets, 0.425% of the next $500 million,
0.400% of the next $500 million, and 0.375% of net assets over $1.5
billion; (ii) for Capital Appreciation Fund, Growth Fund, Multiple
Strategies Fund, Growth & Income Fund and Global Securities Fund: 0.75%
of the first $200 million of net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60%
of net assets over $800 million; and (iii) for High Income Fund, Bond Fund
and Strategic Bond Fund: 0.75% of the first $200 million of net assets,
0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of
the next $200 million, 0.60% of the next $200 million, and 0.50% of net
assets over $1 billion. The management fee rates in effect prior to
September 1, 1994 are contained in note 8 to the Funds' financial
statements included in the Statement of Additional Information.
During the fiscal year ended December 31, 1994, the management fee
(computed on an annualized basis as a percentage of the net assets of all
the Funds as of the close of business each day) and the total operating
expenses as a percentage of average net assets of each Fund, when restated
to reflect the current management fee rates described above and the
current limitation on expenses described in the Statement of Additional
Information, were as follows:
<TABLE>
<CAPTION>
Total
Management Operating
Fees Expenses(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Money Fund .45% .50%
High Income Fund .75% .81%
Bond Fund .75% .81%
Capital Appreciation Fund .75% .80%
Growth Fund .75% .81%
Multiple Strategies Fund .74% .79%
Global Securities Fund .75% .95%
Strategic Bond Fund .75% .93%
Growth & Income Fund(2) .75% .93%
<FN>
____________________
(1) This table does not reflect expenses that apply at the separate account level or to related insurance products.
(2) Because Growth & Income Fund is a new fund and has not completed a full fiscal year, the expenses shown above are based
on amounts estimated to be payable in the current fiscal year, assuming that Growth & Income Fund will have average net assets
of $15 million at the end of the current fiscal year.
</TABLE>
The Funds pay expenses related to their daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Funds' assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement is contained in the Statement of Additional Information.
There is also information about the Funds' brokerage policies and
practices in "Brokerage Policies of the Funds" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Funds' portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the investment advisory
agreements to consider whether brokers have sold shares of the Funds or
any other funds for which the Manager serves as investment adviser.
- Shareholder Inquiries. Inquiries by policyowners for Account
information are to be directed to the insurance company issuing the
Account at the address or telephone number shown in the accompanying
Account Prospectus.
Performance of the Funds
Explanation of Performance Terminology. Money Fund uses the terms
"yield" to illustrate its performance. High Income Fund, Bond Fund and
Strategic Bond Fund use the terms "yield," "total return," and "average
annual total return" to illustrate performance. All the Funds, except
Money Fund, use the terms "average annual total return" and "total return"
to illustrate their performance. This performance information may be
useful to help you see how well your investment has done and to compare
it to other funds or market indices, as we have done below.
It is important to understand that the Funds' total returns and yields
represent past performance and should not be considered to be predictions
of future returns or performance. This performance data is described
below, but more detailed information about how total returns and yields
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Funds' performance. Each Fund's investment performance will vary over
time, depending on market conditions, the composition of the portfolio and
expenses.
- Yields. Money Fund's "yield" is the income generated by an
investment in that Fund over a seven-day period, which is then
"annualized." In annualizing, the amount of income generated by the
investment during that seven days is assumed to be generated each week
over a 52-week period, and is shown as a percentage of the investment.
The compounded "effective yield" is calculated similarly, but the
annualized income earned by an investment in Money Fund is assumed to be
reinvested. The compounded effective yield will therefore be slightly
higher than the yield because of the effect of the assumed reinvestment.
Yield for High Income Fund, Strategic Bond Fund or Bond Fund will be
computed in a standardized manner for mutual funds, by dividing that
Fund's net investment income per share earned during a 30-day base period
by the maximum offering price (equal to the net asset value) per share on
the last day of the period. This yield calculation is compounded on a
semi-annual basis, and multiplied by 2 to provide an annualized yield. The
Statement of Additional Information describes a dividend yield and a
distribution return that may also be quoted for these Funds.
- Total Returns. There are different types of total returns used to
measure each Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Funds' actual year-by-year
performance.
How Have the Funds Performed? Below is a discussion by the Manager of the
Funds' performance during their last fiscal year ended December 31, 1994,
followed by a graphical comparison of each Fund's performance, except
Money Fund and Growth & Income Fund (which commenced operations after that
date) to an appropriate broad-based market index.
- Management's Discussion of Performance. During the Funds' fiscal
year ended December 31, 1994, the Manager emphasized the following
investment strategies and techniques. For High Income Fund, bonds issued
by U.S. companies that derive a large percentage of their earnings from
Europe were emphasized, together with bonds positioned to benefit from
rising commodity prices, notably those issued by companies in the
chemicals, industrial metals and forest product sectors. For Bond Fund,
intermediate and long-term U.S. government bonds were emphasized. For
Capital Appreciation Fund, stocks of well-managed, innovative companies
in sectors with high potential were emphasized, including technology,
health care and consumer cyclicals, such as specialty retailing. For
Growth Fund, consumer and industrial company stocks were emphasized,
including financial, technology and health care issues. Multiples
Strategies Fund's equity portfolio emphasized technology, health care and
industrial issues; its fixed income portfolio emphasized commodity-based
industries, telecommunications and media issues. For Global Securities
Fund, emerging markets such as Latin America were emphasized, including
stocks with strong earnings potential driven by corporate restructurings
and the privatization of state-owned industries. For Strategic Bond Fund,
corporate bonds in U.S. companies that derive a large percentage of their
earnings from Europe were emphasized, foreign fixed-income securities were
emphasized in Latin American, Asian and Eastern European countries, and
U.S. government securities of a longer term were emphasized.
- Comparing each Fund's Performance to the Market. The charts below
show the performance of hypothetical $10,000 investments in each Fund
(except for Money Fund and Growth & Income Fund) held until December 31,
1994. Performance information does not reflect charges that apply to
separate accounts investing in the Funds and is not restated to reflect
the increased management fee rates that took effect September 1, 1994.
If these charges and expenses were taken into account, performance would
be lower.
High Income Fund's performance is compared to the performance of the
Salomon Brothers High Yield Market Index which is an unmanaged index of
below-investment grade (but rated at least BB+/Ba1 by Standard & Poor's
or Moody's) U.S. corporate debt obligations, widely-recognized as a
measure of the performance of the high-yield corporate bond market. Bond
Fund's performance is compared to the performance of the Lehman Brothers
Corporate Bond Index, which is an unmanaged index of publicly-issued non-
convertible investment grade corporate debt of U.S. issuers, widely
recognized as a measure of the U.S. fixed-rate corporate bond market. The
performance of Capital Appreciation Fund and Growth Fund is compared to
the performance of the S&P 500 Index, a broad-based index of equity
securities widely regarded as a general measurement of the performance of
the U.S. equity securities market. Multiple Strategies Fund's performance
is compared to the S&P 500 Index and the Lehman Brothers Aggregate Bond
Index, a broad-based, unmanaged index of U.S. corporate bond issues, U.S.
government securities and mortgage-backed securities, widely recognized
as a measure of the performance of the domestic debt securities market.
Global Securities Fund's performance is compared to the Morgan Stanley
World Index, an unmanaged index of issuers listed on the stock exchanges
of 20 foreign countries and the U.S., and is widely recognized as a
measure of global stock market performance. Strategic Bond Fund's
performance is compared to the Lehman Brothers Aggregate Bond Index and
the Salomon Brothers World Government Bond Index. The Salomon Brothers
World Government Bond Index is an unmanaged index of fixed-rate bonds
having a maturity of one year or more, and is widely recognized as a
benchmark of fixed income performance on a world-wide basis. Index
performance reflects the reinvestment of dividends but does not consider
the effect of capital gains or transaction costs, and none of the data
below shows the effect of taxes. Also, a Fund's performance reflects the
effect of that Fund's business and operating expenses. While index
comparisons may be useful to provide a benchmark for a Fund's performance,
it must be noted that the Fund's investments are not limited to the
securities in the one index. Moreover, the index performance data does
not reflect any assessment of the risk of the investments included in the
index.
Comparison of Change in Value of $10,000 Hypothetical Investments in High
Income Fund Versus Salomon Brothers High Yield Market Index
(Graph comparing total return of High Income Fund shares to performance
of Salomon Brothers High Yield Market Index)
Average Annual Total Return at 12/31/94 (1)
1 year 5 years Life of Fund
-3.18% 15.09% 12.47%
(1) The inception date of the Fund was 4/30/86. The average annual total
returns and the ending account value in the graph reflect reinvestment of
all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
Comparison of Change in Value of $10,000 Hypothetical Investments in Bond
Fund Versus Lehman Brothers Corporate Bond Index
(Graph comparing total return of Bond Fund shares to performance of Lehman
Brothers Corporate Bond Index)
Average Annual Total Return at 12/31/94(1)
1 year 5 years Life of Fund
-1.94% 8.43% 9.78%
(1) The inception date of the Fund was 4/3/85. The average annual total
returns and the ending account value in the graph reflect reinvestment of
all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
Comparison of Change in Value of $10,000 Hypothetical Investments in
Capital Appreciation Fund Versus S&P 500 Index
(Graph comparing total return of Capital Appreciation Fund shares to
performance of S&P 500 Index)
Average Annual Total Return at 12/31/94(1)
1 year 5 years Life of Fund
-7.59% 11.81% 13.28%
(1) The inception date of the Fund was 8/15/86. The average annual total
returns and the ending account value in the graph reflect reinvestment of
all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
Comparison of Change in Value of $10,000 Hypothetical Investments in
Growth Fund Versus S&P 500 Index
(Graph comparing total return of Growth Fund shares to performance of S&P
500 Index)
Average Annual Total Return at 12/31/94(1)
1 year 5 years Life of Fund
0.97% 7.40% 11.44%
(1) The inception date of the Fund was 4/3/85. The average annual total
returns and the ending account value in the graph reflect reinvestment of
all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
Comparison of Change in Value of $10,000 Hypothetical Investments in
Multiple Strategies Fund Versus S&P 500 Index and Lehman Brothers
Aggregate Bond Index
(Graph comparing total return of Multiple Strategies Fund shares to
performance of S&P 500 Index and Lehman Brothers Aggregate Bond Index)
Average Annual Total Return at 12/31/94(1)
1 year 5 years Life of Fund
-1.95% 7.38% 9.85%
(1) The inception date of the Fund was 2/9/87. The average annual total
returns and the ending account value in the graph reflect reinvestment of
all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
Comparison of Change in Value of $10,000 Hypothetical Investments in
Global Securities Fund Versus Morgan Stanley World Index
(Graph comparing total return of Global Securities Fund shares to
performance of Morgan Stanley World Index)
Average Annual Total Return at 12/31/94(1)
1 year Life of Fund
-5.72% 11.15%
(1) The inception date of the Fund was 11/12/90. The average annual total
returns and the ending account value in the graph reflect reinvestment of
all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
Comparison of Change in Value of $10,000 Hypothetical Investments in
Strategic Bond Fund Versus Lehman Brothers Aggregate Bond Index and
Salomon Brothers World Government Bond Index
(Graph comparing total return of Strategic Bond Fund to performance of
Lehman Brothers Aggregate Bond Index and Salomon Brothers World Government
Bond Index)
Average Annual Total Return at 12/31/94(1)
1 year Life of Fund
-3.78% 0.19%
______________
(1) The inception date of the Fund was 5/3/93. The average annual total
returns and the ending account value in the graph reflect reinvestment of
all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Shares of each Fund are offered only for purchase by Accounts as an
investment medium for variable life insurance policies and variable
annuity contracts, as described in the accompanying Account Prospectus.
The sale of shares will be suspended during any period when the
determination of net asset value is suspended and may be suspended by the
Board of Trustees whenever the Board judges it in that Fund's best
interest to do so. Shares of each Fund are offered at their respective
offering price, which (as used in this Prospectus and the Statement of
Additional Information) is net asset value (without sales charge). Shares
of Growth & Income Fund will not be offered prior to July 1, 1995.
All purchase orders are processed at the offering price next
determined after receipt by the Trust of a purchase order in proper form.
The offering price (and net asset value) is determined as of the close of
The New York Stock Exchange, which is normally 4:00 P.M., New York time,
but may be earlier on some days. Net asset value per share of each Fund
is determined by dividing the value of that Fund's net assets by the
number of its shares outstanding. The Board of Trustees has established
procedures for valuing each Fund's securities. In general, those
valuations are based on market value. Under Rule 2a-7, the amortized cost
method is used to value Money Fund's net asset value per share, which is
expected to remain fixed at $1.00 per share except under extraordinary
circumstances; see "About Your Account - How to Buy Shares - Money Fund
Net Asset Valuation" in the Statement of Additional Information for
further information. There can be no assurance that Money Fund's net
asset value will not vary. Further details are in "About Your Account-
How to Buy Shares - Money Fund Net Asset Valuation" in the Statement of
Additional Information.
How to Sell Shares
Payment for shares tendered by an Account for redemption is made
ordinarily in cash and forwarded within seven days after receipt by the
Trust's transfer agent, Oppenheimer Shareholder Services (the "Transfer
Agent"), of redemption instructions in proper form, except under unusual
circumstances as determined by the Securities and Exchange Commission.
The Trust understands that payment to the Account owner will be made in
accordance with the terms of the accompanying Account Prospectus. The
redemption price will be the net asset value next determined after the
receipt by the Transfer Agent of a request in proper form. The market
value of the securities in the portfolio of the Funds is subject to daily
fluctuations and the net asset value of the Funds' shares (other than
shares of the Money Fund) will fluctuate accordingly. Therefore, the
redemption value may be more or less than the investor's cost.
Dividends, Capital Gains And Taxes
Dividends of the Money Fund. The Trust intends to declare Money Fund's
dividends from its net investment income on each day the New York Stock
Exchange is open for business. Such dividends will be payable on shares
held of record at the time of the previous determination of net asset
value. Daily dividends accrued since the prior dividend payment will be
paid to shareholders monthly as of a date selected by the Board of
Trustees. Money Fund's net income for dividend purposes consists of all
interest income accrued on portfolio assets, less all expenses of that
Fund for such period. Accrued market discount is included in interest
income; amortized market premium is treated as an expense. Although
distributions from net realized gains on securities, if any, will be paid
at least once each year, and may be made more frequently, Money Fund does
not expect to realize long-term capital gains, and therefore does not
contemplate payment of any capital gains distribution. Distributions from
net realized gains will not be distributed unless Money Fund's capital
loss carry forwards, if any, have been used or have expired. Money Fund
seeks to maintain a net asset value of $1.00 per share for purchases and
redemptions. To effect this policy, under certain circumstances the Money
Fund may withhold dividends or make distributions from capital or capital
gains (see "Dividends, Capital Gains and Taxes" in the Statement of
Additional Information).
Dividends and Distributions of High Income Fund, Bond Fund, Strategic Bond
Fund, Growth & Income Fund and Multiple Strategies Fund. The Trust
intends to declare High Income Fund, Bond Fund, Strategic Bond Fund,
Growth & Income Fund and Multiple Strategies Fund dividends quarterly,
payable in March, June, September and December.
Dividends and Distributions of Capital Appreciation Fund, Growth Fund and
Global Securities Fund. The Trust intends to declare Capital Appreciation
Fund, Growth Fund and Global Securities Fund dividends on an annual basis.
Capital Gains. Any Fund (other than Money Fund) may make a supplemental
distribution annually in December out of any net short-term or long-term
capital gains derived from the sale of securities, premiums from expired
calls written by the Fund, and net profits from hedging transactions.
Each such Fund may also make a supplemental distribution of capital gains
and ordinary income following the end of its fiscal year. All dividends
and capital gains distributions paid on shares of any of the Funds are
automatically reinvested in additional shares of that Fund at net asset
value determined on the distribution date. There are no fixed dividend
rates and there can be no assurance as to payment of any dividends or the
realization of any capital gains.
Tax Treatment to the Account As Shareholder. Dividends paid by each Fund
from its ordinary income and distributions of each Fund's net realized
short-term or long-term capital gains are includable in gross income of
the Accounts holding such shares. The tax treatment of such dividends and
distributions depends on the tax status of that Account.
Tax Status of the Funds. If the Funds qualify as "regulated investment
companies" under the Internal Revenue Code, the Trust will not be liable
for Federal income taxes on amounts paid as dividends and distributions
from any of the Funds. The Funds did qualify during their last fiscal
year and the Trust intends that they will qualify in current and future
years. However, the Code contains a number of complex tests relating to
qualification which any Fund might not meet in any particular year (see,
e.g., "Other Investment Techniques and Strategies - Portfolio Turnover").
If any Fund does not so qualify, it would be treated for tax purposes as
an ordinary corporation and would receive no tax deduction for payments
made to shareholders of that Fund. The above discussion relates solely to
Federal tax laws. This discussion is not exhaustive and a qualified tax
adviser should be consulted.
<PAGE>
APPENDIX A - DESCRIPTION OF TERMS
Some of the terms used in the Prospectus and the Statement of Additional
Information are described below:
Bank obligations include certificates of deposit which are negotiable
certificates evidencing the indebtedness of a commercial bank to repay
funds deposited with it for a definite period of time (usually 14 days to
one year) at a stated interest rate. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which has
been drawn on it by a customer; these instruments reflect the obligation
both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. Time deposits are non-negotiable deposits
maintained in a banking institution for a specified period of time at a
stated interest rate. Bank notes are short-term direct credit obligations
of the issuing bank or bank holding company.
Commercial paper consists of short-term (usually 1 to 270 days) unsecured
promissory notes issued by corporations in order to finance their current
operations. Variable rate master demand notes are obligations that permit
the investment of fluctuating amounts at varying rates of interest
pursuant to direct arrangement between the holder and the borrower. The
holder has the right to increase the amount under the note at any time up
to the face amount, or to decrease the amount borrowed, and the borrower
may repay up to the face amount of the note without penalty.
Corporate obligations are bonds and notes issued by corporations and other
business organizations, including business trusts, in order to finance
their long-term credit needs.
Letters of credit are obligations by the issuer (a bank or other person)
to honor drafts or other demands for payment upon compliance with
specified conditions.
Securities issued or guaranteed by the United States Government or its
agencies or instrumentalities include issues of the United States
Treasury, such as bills, certificates of indebtedness, notes and bonds,
and issues of agencies and instrumentalities established under the
authority of an act of Congress. Such agencies and instrumentalities
include, but are not limited to, Bank for Cooperatives, Federal Financing
Bank, Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal
Land Banks, Federal National Mortgage Association and Tennessee Valley
Authority. Issues of the United States Treasury are direct obligations
of the United States Government. Issues of agencies or instrumentalities
are (i) guaranteed by the United States Treasury, or (ii) supported by the
issuing agency's or instrumentality's right to borrow from the United
States Treasury, or (iii) supported by the issuing agency's or
instrumentality's own credit.
<PAGE>
APPENDIX B - DESCRIPTION OF SECURITIES RATINGS
This is a description of (i) the two highest rating categories for Short
Term Debt and Long Term Debt by the Rating Organizations referred to under
"Investment Objectives and Policies -- Money Fund", and (ii) additional
rating categories that apply principally to investments by High Income
Fund, Strategic Bond Fund and Bond Fund. The rating descriptions are
based on information supplied by the Rating Organizations to subscribers.
Short Term Debt Ratings.
Moody's Investors Service, Inc. ("Moody's"): The following rating
designations for commercial paper (defined by Moody's as promissory
obligations not having original maturity in excess of nine months), are
judged by Moody's to be investment grade, and indicate the relative
repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be
evidenced by the following characteristics: (a) leveling market positions
in well-established industries; (b) high rates of return on funds
employed; (c) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (d) broad margins in earning
coverage of fixed financial charges and high internal cash generation; and
(e) well established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.
Standard & Poor's Corporation ("S&P"): The following ratings by S&P for
commercial paper (defined by S&P as debt having an original maturity of
no more than 365 days) assess the likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the relative
degree of safety is not as high as for issues designated "A-1".
Fitch Investors Service, Inc. ("Fitch"): Fitch assigns the following
short-term ratings to debt obligations that are payable on demand or have
original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and
investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is only
slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues assigned
"F-1+" or "F-1" ratings.
Duff & Phelps, Inc. ("Duff & Phelps"): The following ratings are for
commercial paper (defined by Duff & Phelps as obligations with maturities,
when issued, of under one year), asset-backed commercial paper, and
certificates of deposit (the ratings cover all obligations of the
institution with maturities, when issued, of under one year, including
bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors
are small.
IBCA Limited or its affiliate IBCA Inc. ("IBCA"): Short-term ratings,
including commercial paper (with maturities up to 12 months), are as
follows:
A1+: Obligations supported by the highest capacity for timely repayment.
A1: Obligations supported by a very strong capacity for timely repayment.
A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic, or financial conditions.
Thomson BankWatch, Inc. ("TBW"): The following short-term ratings apply
to commercial paper, certificates of deposit, unsecured notes, and other
securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety regarding
timely repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings.
These rating categories apply principally to investments by High Income
Fund, Strategic Bond Fund and Bond Fund. For Money Fund only, the two
highest rating categories of each Rating Organization are relevant for
securities purchased with a remaining maturity of 397 days or less, or for
rating issuers of short-term obligations.
Moody's: Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin,
and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong positions of such issues.
Aa: Judged to be of high quality by all standards. Together with the
"Aaa" group, they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may
not be as large as in "Aaa" securities or fluctuations of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in
"Aaa" securities.
A: Possess many favorable investment attributes and are to be considered
as upper-medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Considered medium grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Judged to have speculative elements; their future cannot be
considered well-assured. Often the protection of interest and principal
payments may be very moderate and not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds rated "B" generally lack characteristics of desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa: Of poor standing and may be in default or there may be present
elements of danger with respect to principal or interest.
Ca: Represent obligations which are speculative in a high degree and are
often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies numerical modifiers "1", "2" and "3" in each generic
rating classification from "Aa" through "B" in its corporate bond rating
system. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower
end of its generic rating category.
Standard & Poor's: Bonds are rated as follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest and
repay principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ from
"AAA" rated issues only in small degree.
A: Have a strong capacity to pay principal and interest, although they
are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.
BBB: Regarded as having an adequate capacity to pay principal and
interest. Whereas they normally exhibit protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this
capacity than for bonds in the "A" category.
BB, B, CCC, CC: Regarded, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. "BB" indicates the lowest
degree of speculation and"CC" the highest degree. While such bonds will
likely have some equality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
Fitch:
AAA: Considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA". Plus (+) and minus (-)
signs are used in the "AA" category to indicate the relative position of
a credit within that category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
Duff & Phelps:
AAA: The highest credit quality. The risk factors are negligible, being
only slightly more than the risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
Plus (+) and minus (-) signs are used in the "AA" category to indicate the
relative position of a credit within that category.
IBCA: Long-term obligations (with maturities of more than 12 months) are
rated as follows:
AAA: The lowest expectation for investment risk. Capacity for timely
repayment of principal and interest is substantial such that adverse
changes in business, economic, or financial conditions are unlikely to
increase investment risks significantly.
AA: A very low expectation for investment risk. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in
business, economic, or financial conditions may increase investment risk
albeit not very significantly.
A plus (+) or minus (-) sign may be appended to a long term rating to
denote relative status within a rating category.
TBW: TBW issues the following ratings for companies. These ratings
assess the likelihood of receiving payment of principal and interest on
a timely basis and incorporate TBW's opinion as to the vulnerability of
the company to adverse developments, which may impact the market's
perception of the company, thereby affecting the marketability of its
securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its
natural money markets. If weakness or vulnerability exists in any aspect
of the company's business, it is entirely mitigated by the strengths of
the organization.
A/B: The company is financially very solid with a favorable track record
and no readily apparent weakness. Its overall risk profile, while low,
it not quite as favorable as for companies in the highest rating category.
<PAGE>
APPENDIX TO PROSPECTUS
Graphic material included in Prospectus of Oppenheimer Variable
Account Funds: "Comparison of Total Return of Oppenheimer Variable Account
Funds with Broad-Based Indices - Changes in Value of a $10,000
Hypothetical Investment"
Linear graphs will be included in the Prospectus of Oppenheimer
Variable Account Funds (the "Funds") depicting the initial account value
and subsequent account value of a hypothetical $10,000 investment in
shares of the Funds for the life of each Fund (except Oppenheimer Money
Fund and Oppenheimer Growth & Income Fund) and comparing such values with
the same investments over the same time periods in the Broad-Based
Indices. Set forth below are the relevant data points that will appear
on the linear graphs. Additional information with respect to the
foregoing, including a description of the Broad-Based Indices, is set
forth in the Prospectus under "How Have the Funds Performed? -
Management's Discussion of Performance."
<TABLE>
<CAPTION>
Salomon
Brothers
Fiscal High Yield
Year Ended High Income Fund Market Index
<S> <C> <C>
04/30/86(1) $10,000 $10,000
12/31/86 $10,473 $10,510
12/31/87 $11,318 $10,990
12/31/88 $13,081 $12,664
12/31/89 $13,715 $13,012
12/31/90 $14,352 $12,096
12/31/91 $19,220 $16,851
12/31/92 $22,664 $19,859
12/31/93 $28,632 $24,878
12/31/94 $27,722 $24,569
Lehman
Brothers
Fiscal Corporate
Year Ended Bond Fund Bond Index
04/03/85 $10,000 $10,000
12/31/85 $11,882 $11,819
12/31/86 $13,084 $13,770
12/31/87 $13,415 $14,112
12/31/88 $14,618 $15,352
12/31/89 $16,565 $17,526
12/31/90 $17,877 $18,811
12/31/91 $21,028 $22,325
12/31/92 $22,395 $24,294
12/31/93 $25,315 $27,209
12/31/94 $24,825 $26,139
Fiscal Capital
Year Ended Appreciation Fund S&P 500 Index
08/15/86(1) $10,000 $10,000
12/31/86 $ 9,835 $ 9,684
12/31/87 $11,245 $10,192
12/31/88 $12,754 $11,880
12/31/89 $16,269 $15,638
12/31/90 $13,533 $15,152
12/31/91 $20,938 $19,758
12/31/92 $24,167 $21,261
12/31/93 $30,770 $23,400
12/31/94 $28,434 $23,706
Fiscal
Year Ended Growth Fund S&P 500 Index
04/30/85 $10,000 $10,000
12/31/85 $10,950 $12,076
12/31/86 $12,894 $14,331
12/31/87 $13,322 $15,083
12/31/88 $16,265 $17,581
12/31/89 $20,101 $23,141
12/31/90 $18,450 $22,422
12/31/91 $23,163 $29,238
12/31/92 $26,528 $31,463
12/31/93 $28,451 $34,668
12/31/94 $28,726 $35,081
Lehman
Brothers
Fiscal Multiple Aggregate
Year Ended Strategies Fund S&P 500 Index Bond Index
02/09/87(1) $10,000 $10,000 $10,000
12/31/87 $10,397 $ 8,923 $10,063
12/31/88 $12,700 $10,401 $10,857
12/31/89 $14,701 $13,690 $12,434
12/31/90 $14,421 $13,265 $13,549
12/31/91 $16,941 $17,297 $15,716
12/31/92 $18,463 $18,613 $16,879
12/31/93 $21,408 $20,486 $18,525
12/31/94 $20,991 $20,754 $17,984
Morgan
Fiscal Global Stanley
Year Ended Securities Fund World Index
11/12/90(1) $10,000 $10,000
12/31/90 $10,040 $10,211
12/31/91 $10,380 $12,148
12/31/92 $ 9,642 $11,582
12/31/93 $16,423 $14,261
12/31/94 $15,483 $14.985
Lehman Salomon
Brothers Brothers World
Fiscal Strategic Aggregate Government
Year Ended Bond Fund Bond Index Bond Index
05/03/93(1) $10,000 $10,000 $10,000
12/31/93 $10,425 $10,453 $10,426
12/31/94 $10,032 $10,147 $10,671
<FN>
________________________
(1) Commencement of operations.
</TABLE>
<PAGE>
Oppenheimer Variable Account Funds
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
PR0600.001.0495
<PAGE>
Oppenheimer Variable Account Funds
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated May 1, 1995.
OPPENHEIMER VARIABLE ACCOUNT FUNDS (the "Trust") is an investment company
consisting of nine separate Funds (the "Funds"):
Oppenheimer Money Fund ("Money Fund")
Oppenheimer High Income Fund ("High Income Fund")
Oppenheimer Bond Fund ("Bond Fund")
Oppenheimer Capital Appreciation Fund ("Capital Appreciation Fund")
Oppenheimer Growth Fund ("Growth Fund")
Oppenheimer Multiple Strategies Fund ("Multiple Strategies Fund")
Oppenheimer Growth & Income Fund ("Growth & Income Fund")
Oppenheimer Global Securities Fund ("Global Securities Fund")
Oppenheimer Strategic Bond Fund ("Strategic Bond Fund")
Shares of the Funds are sold only to provide benefits under variable life
insurance policies and variable annuity contracts (collectively the
"Accounts"), as described in the Account Prospectus.
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated May 1, 1995. It should be read
together with the Trust's Prospectus, which may be obtained by writing to
the Funds' Transfer Agent, Oppenheimer Shareholder Services, at P.O. Box
5270, Denver, Colorado 80217, or by calling the Transfer Agent at the
toll-free number shown above, and the Account Prospectus.
TABLE OF CONTENTS
Page
About the Funds
Investment Objectives and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 10
Other Investment Restrictions 19
How the Funds are Managed 20
Organization and History 20
Trustees and Officers of the Trust 20
The Manager and Its Affiliates 25
Brokerage Policies of the Funds 27
Performance of the Funds 29
About Your Account
How to Buy Shares 32
Dividends, Capital Gains and Taxes 34
Additional Information About the Funds 35
Financial Information About the Funds
Independent Auditors' Report 36
Financial Statements 37
Appendix A: Industry Classifications A-1
<PAGE>
ABOUT THE FUNDS
Investment Objectives and Policies
Investment Policies and Strategies. The investment objectives and
policies of each of the Funds are described in the Prospectus. Set
forth below is supplemental information about those policies. Certain
capitalized terms used in this Additional Statement are defined in the
Prospectus.
- Money Fund. The Prospectus describes "Eligible Securities" in
which Money Fund may invest and indicates that if a security's rating
is downgraded, the Manager and/or the Board may have to reassess the
security's credit risk. If a security has ceased to be a First Tier
Security, the Manager will promptly reassess whether the security
continues to present "minimal credit risk." If the Manager becomes
aware that any Rating Organization has downgraded its rating of a
Second Tier Security or rated an unrated security below its second
highest rating category, the Trust's Board of Trustees shall promptly
reassess whether the security presents minimal credit risk and whether
it is in Money Fund's best interests to dispose of it; but if Money
Fund disposes of the security within 5 days of Oppenheimer Management
Corporation (the "Manager") learning of the downgrade, the Manager will
provide the Board with subsequent notice of such downgrade. If a
security is in default, or ceases to be an Eligible Security, or is
determined no longer to present minimal credit risks, the Board must
determine whether it would be in Money Fund's best interests to dispose
of the security. The Rating Organizations currently designated as such
by the Securities and Exchange Commission ("SEC") are Standard & Poor's
Corporation, Moody's Investors Services, Inc., Fitch Investors
Services, Inc., Duff & Phelps, Inc., IBCA Limited and its affiliate,
IBCA, Inc., and Thomson BankWatch, Inc. See Appendix B to the
Prospectus for a description of the rating categories of the Rating
Organizations.
- Time Deposits. The Fund may invest in fixed time deposits, which
are non-negotiable deposits in a bank for a specified period of time at
a stated interest rate, whether or not subject to withdrawal penalties;
however, such deposits which are subject to such penalties, other than
deposits maturing in less than 7 days, are subject to the 10%
investment limitation for illiquid securities set forth in "Other
Investment Techniques and Strategies - Illiquid and Restricted
Securities" in the Prospectus.
- Floating Rate/Variable Rate Notes. Money Fund may invest in
instruments with floating or variable interest rates. The interest
rate on a floating rate obligation is based on a stated prevailing
market rate, such as a bank's prime rate, the 90-day U.S. Treasury Bill
rate, the rate of return on commercial paper or bank certificates of
deposit, or some other standard, and is adjusted automatically each
time such market rate is adjusted. The interest rate on a variable
rate obligation is also based on a stated prevailing market rate but is
adjusted automatically at a specified interval of no less than one
year. Some variable rate or floating rate obligations in which Money
Fund may invest have a demand feature entitling the holder to demand
payment at an amount approximately equal to amortized cost or the
principal amount thereof plus accrued interest at any time, or at
specified intervals not exceeding one year. These notes may or may not
be backed by bank letters of credit. Variable rate demand notes may
include master demand notes which are obligations that permit Money
Fund to invest fluctuating amounts, which may change daily without
penalty, pursuant to direct arrangements between Money Fund, as lender,
and the borrower. The interest rates on these notes fluctuate from
time to time. The issuer of such obligations normally has a
corresponding right, after a given period, to prepay in its discretion
the outstanding principal amount of the obligations plus accrued
interest upon a specified number of days' notice to the holders of such
obligations. Generally, the changes in the interest rate on such
securities reduce the fluctuation in their market value. As interest
rates decrease or increase, the potential for capital appreciation or
depreciation is less than that for fixed-rate obligations of the same
maturity. Because these obligations are direct lending arrangements
between the lender and the borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not
secured by letters of credit or other credit support arrangements,
Money Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies and Money Fund may
invest in obligations which are not so rated only if the Manager
determines that at the time of investment the obligations are of
comparable quality to the other obligations in which Money Fund may
invest. The Manager, on behalf of Money Fund, will consider on an
ongoing basis the creditworthiness of the issuers of the floating and
variable rate obligations in Money Fund's portfolio. There is no limit
on the amount of the Money Fund's assets that may be invested in
floating rate and variable rate obligations. Floating rate or variable
rate obligations which do not provide for recovery of principal and
interest within seven days' notice will be subject to the limitations
applicable to illiquid securities described in "Other Investment
Techniques and Strategies -Illiquid and Restricted Securities" in the
Prospectus.
- Master Demand Notes. Master demand notes are corporate
obligations that permit the investment of fluctuating amounts by Money
Fund at varying rates of interest pursuant to direct arrangements
between Money Fund, as lender, and the corporate borrower that issues
the note. These notes permit daily changes in the amounts borrowed.
Money Fund has the right to increase the amount under the note at any
time up to the full amount provided by the note agreement, or to
decrease the amount. The borrower may repay up to the full amount of
the note at any time without penalty. It is not generally contemplated
that master demand notes will be traded because they are direct lending
arrangements between the lender and the borrower. There is no
secondary market for these notes, although they are redeemable and
thus immediately repayable by the borrower at face value, plus accrued
interest, at any time. Accordingly, Money Fund's right to redeem is
dependent upon the ability of the borrower to pay principal and
interest on demand. In evaluating the master demand arrangements, the
Manager considers the earning power, cash flow, and other liquidity
ratios of the issuer. If they are not rated, Money Fund may invest in
them only if, at the time of an investment, they are Eligible
Securities. The Manager will continuously monitor the borrower's
financial ability to meet all of its obligations because Money Fund's
liquidity might be impaired if the borrower were unable to pay
principal and interest on demand.
- Money Fund, High Income Fund, Bond Fund and Strategic Bond Fund.
The market value of fixed income securities in which Money Fund, High
Income Fund, Bond Fund and Strategic Bond Fund may invest generally
will be affected by changes in the level of interest rates. An
increase in interest rates will tend to reduce the market value of
fixed income investments, and a decline in interest rates will tend to
increase their value. In order to take advantage of differences in
securities prices and yields or of fluctuations in interest rates,
consistent with their respective investment objectives, these Funds may
trade for short-term profits.
- High Yield Securities. As stated in the Prospectus, the
corporate debt in which High Income Fund and Strategic Bond Fund will
principally invest may be in the lower rating categories.
Risks of high yield securities include: (i) limited liquidity and
secondary market support, (ii) substantial market price volatility
resulting from changes in prevailing interest rates, (iii)
subordination to the prior claims of banks and other senior lenders,
(iv) the operation of mandatory sinking fund or call/redemption
provisions during periods of declining interest rates which may cause
the Fund to invest premature redemption proceeds in lower yielding
portfolio securities, (v) the possibility that earnings of the issuer
may be insufficient to meet its debt service, and (vi) the issuer's low
creditworthiness and potential for insolvency during periods of rising
interest rates and economic downturn. As a result of the limited
liquidity of high yield securities, their prices have at times
experienced significant and rapid decline when a substantial number of
holders decided to sell. A decline is also likely in the high yield
bond market during an economic downturn. An economic downturn or an
increase in interest rates could severely disrupt the market for high
yield bonds and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest. In addition,
there have been several Congressional attempts to limit the use of tax
and other advantages of high yield bonds which, if enacted, could
adversely affect the value of these securities and the net asset value
of these two Funds. For example, federally-insured savings and loan
associations have been required to divest their investments in high
yield bonds.
- Capital Appreciation Fund, Growth Fund, Multiple Strategies Fund,
Growth & Income Fund, Strategic Bond Fund and Global Securities Fund.
The investment risks and rewards of certain of the investment policies
of these six Funds are discussed below.
- Securities of Growth-Type Companies. Capital Appreciation Fund,
Growth Fund and Global Securities Fund may emphasize securities of
"growth-type" companies. Such issuers typically are those whose goods
or services have relatively favorable long-term prospects for
increasing demand, or ones which develop new products, services or
markets and normally retain a relatively large part of their earnings
for research, development and investment in capital assets. They may
include companies in the natural resources fields or those developing
industrial applications for new scientific knowledge having potential
for technological innovation, such as nuclear energy, oceanography,
business services and new customer products.
- Small, Unseasoned Companies. Each of these six Funds may invest
in securities of small unseasoned companies. These are companies that
have been in operation for less than three years, even after including
the operations of any of their predecessors. Securities of these
companies may have a limited liquidity (which means that a Fund may
have difficulty selling them at an acceptable price when it wants to)
and the price of those securities may be volatile.
- Domestic Securities. Investments by Strategic Bond Fund, Growth
& Income Fund and Multiple Strategies Fund in fixed-income securities
issued by domestic corporations may include participation interests,
asset-backed securities and other debt obligations (bonds, debentures,
notes, mortgage-backed securities and CMOs) together with preferred
stocks.
- Investment Policies - Collateralized Securities. Each of these
Funds may invest in the collaterized securities described below. High
Income Fund, Bond Fund and Strategic Bond Fund are most likely to make
such investments.
- Asset-Backed Securities. The value of an asset-backed security
is affected by changes in the market's perception of the asset backing
the security, the creditworthiness of the servicing agent for the loan
pool, the originator of the loans, or the financial institution
providing any credit enhancement, and is also affected if any credit
enhancement has been exhausted. The risks of investing in asset-backed
securities are ultimately dependent upon payment of consumer loans by
the individual borrowers. As a purchaser of an asset-backed security,
the Fund would generally have no recourse to the entity that originated
the loans in the event of default by a borrower. The underlying loans
are subject to prepayments, which shorten the weighted average life of
asset-backed securities and may lower their return, in the same manner
as described above for prepayments of a pool of mortgage loans
underlying mortgage-backed securities.
- Mortgage-Backed Securities. These securities represent
participation interests in pools of residential mortgage loans which
may or may not be guaranteed by agencies or instrumentalities of the
U.S. Government. Such securities differ from conventional debt
securities which generally provide for periodic payment of interest in
fixed or determinable amounts (usually semi-annually) with principal
payments at maturity or specified call dates. Mortgage-backed
securities may be backed by the full faith and credit of the U.S.
Treasury (e.g., direct pass-through certificates of Government National
Mortgage Association); some are supported by the right of the issuer to
borrow from the U.S. Government (e.g., obligations of Federal Home Loan
Mortgage Corporation); and some are backed by only the credit of the
issuer itself. Those guarantees do not extend to the value or yield of
the mortgage-backed securities themselves or to the net asset value of
the Fund's shares. Any of those government agencies may also issue
collateralized mortgage-backed obligations, discussed below.
The yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual
life of any particular pool will be shortened by any unscheduled or
early payments of principal and interest. Principal prepayments
generally result from the sale of the underlying property or the
refinancing or foreclosure of underlying mortgages. The occurrence of
prepayments is affected by a wide range of economic, demographic and
social factors and, accordingly, it is not possible to predict
accurately the average life of a particular pool. Yield on such pools
is usually computed by using the historical record of prepayments for
that pool, or, in the case of newly-issued mortgages, the prepayment
history of similar pools. The actual prepayment experience of a pool
of mortgage loans may cause the yield realized by the Fund to differ
from the yield calculated on the basis of the expected average life of
the pool.
Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will
most likely decline. When prevailing interest rates rise, the value of
a pass-through security may decrease as do the values of other debt
securities, but, when prevailing interest rates decline, the value of a
pass-through security is not likely to rise to the extent that the
values of other debt securities rise, because of the prepayment feature
of pass-through securities. The Fund's reinvestment of scheduled
principal payments and unscheduled prepayments it receives may occur at
times when available investments offer higher or lower rates than the
original investment, thus affecting the yield of the Fund. Monthly
interest payments received by the Fund have a compounding effect which
may increase the yield to the Fund more than debt obligations that pay
interest semi-annually. Because of those factors, mortgage-backed
securities may be less effective than Treasury bonds of similar
maturity at maintaining yields during periods of declining interest
rates. The Fund may purchase mortgage-backed securities at a premium
or at a discount. Accelerated prepayments adversely affect yields for
pass-through securities purchased at a premium (i.e., at a price in
excess of their principal amount) and may involve additional risk of
loss of principal because the premium may not have been fully amortized
at the time the obligation is repaid. The opposite is true for pass-
through securities purchased at a discount. The Fund may purchase
mortgage-backed securities at a premium or at a discount.
The Fund may invest in "stripped" mortgage backed securities, in
which the principal and interest portions of the security are separated
and sold. Stripped mortgage-backed securities usually have at least
two classes each of which receives different proportions of interest
and principal distributions on the underlying pool of mortgage assets.
One common variety of stripped mortgage-backed security has one class
that receives some of the interest and most of the principal, while the
other class receives most of the interest and remainder of the
principal. In some cases, one class will receive all of the interest
(the "interest-only" or "IO" class), while the other class will receive
all of the principal (the "principal-only" or "PO" class). Interest
only securities are extremely sensitive to interest rate changes, and
prepayments of principal on the underlying mortgage assets. An
increase in principal payments or prepayments will reduce the income
available to the IO security. In other types of CMOs, the underlying
principal payments may apply to various classes in a particular order,
and therefore the value of certain classes or "tranches" of such
securities may be more volatile that the value of the pool as a whole,
and losses may be more severe than on other classes.
- Collateralized Mortgage-Backed Obligations ("CMOs"). CMOs are
fully-collateralized bonds that are the general obligations of the
issuer thereof, either the U.S. Government, a U.S. Government
instrumentality, or a private issuer. Such bonds generally are secured
by an assignment to a trustee (under the indenture pursuant to which
the bonds are issued) of collateral consisting of a pool of mortgages.
Payments with respect to the underlying mortgages generally are made to
the trustee under the indenture. Payments of principal and interest on
the underlying mortgages are not passed through to the holders of the
CMOs as such (i.e., the character of payments of principal and interest
is not passed through, and therefore payments to holders of CMOs
attributable to interest paid and principal repaid on the underlying
mortgages do not necessarily constitute income and return of capital,
respectively, to such holders), but such payments are dedicated to
payment of interest on and repayment of principal of the CMOs. CMOs
often are issued in two or more classes with different characteristics
such as varying maturities and stated rates of interest. Because
interest and principal payments on the underlying mortgages are not
passed through to holders of CMOs, CMOs of varying maturities may be
secured by the same pool of mortgages, the payments on which are used
to pay interest on each class and to retire successive maturities
(known as "tranches") in sequence. Unlike other mortgage-backed
securities (discussed above), CMOs are designed to be retired as the
underlying mortgages are repaid. In the event of prepayment on such
mortgages, the class of CMO first to mature generally will be paid
down. Therefore, although in most cases the issuer of CMOs will not
supply additional collateral in the event of such prepayment, there
will be sufficient collateral to secure CMOs that remain outstanding.
- Participation Interests. Strategic Bond Fund, Global Securities
Fund, High Income Fund, Multiple Strategies Fund and Growth & Income
Fund may invest in participation interests, subject to the limitation,
described in "Illiquid and Restricted Securities" in the Prospectus, on
investments by the Fund in illiquid investments. Participation
interests provide the Fund an undivided interest in a loan made by the
issuing financial institution in the proportion that the Fund's
participation interest bears to the total principal amount of the loan.
It is currently intended that no more than 5% of the net assets of
Multiple Strategies Fund, Growth & Income Fund or Strategic Bond Fund
can be invested in participation interests of the same issuing bank.
Participation interests are primarily dependent upon the
creditworthiness of the borrowing corporation, which is obligated to
make payments of principal and interest on the loan, and there is a
risk that such borrowers may have difficulty making payments. In the
event the borrower fails to pay scheduled interest or principal
payments, the Fund could experience a reduction in its income and might
experience a decline in the net asset value of its shares. In the
event of a failure by the financial institution to perform its
obligation in connection with the participation agreement, the Fund
might incur certain costs and delays in realizing payment or may suffer
a loss of principal and/or interest.
- Foreign Securities. The obligations of foreign governmental
entities may or may not be supported by the full faith and credit of a
foreign government. Obligations of supranational entities include
those of international organizations designated or supported by
governmental entities to promote economic reconstruction or development
and of international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the Inter-American
Development Bank. The governmental members, or "stockholders," usually
make initial capital contributions to the supranational entity and in
many cases are committed to make additional capital contributions if
the supranational entity is unable to repay its borrowings. Each
supranational entity's lending activities are limited to a percentage
of its total capital (including "callable capital" contributed by
members at the entity's call), reserves and net income. There is no
assurance that foreign governments will be able or willing to honor
their commitments.
Investing in foreign securities involves considerations and possible
risks not typically associated with investing in securities in the U.S.
The values of foreign securities will be affected by changes in
currency rates or exchange control regulations or currency blockage,
application of foreign tax laws, including withholding taxes, changes
in governmental administration or economic or monetary policy (in the
U.S. or abroad) or changed circumstances in dealings between nations.
Costs will be incurred in connection with conversions between various
currencies. Foreign brokerage commissions are generally higher than
commissions in the U.S., and foreign securities markets may be less
liquid, more volatile and less subject to governmental regulation than
in the U.S. Investments in foreign countries could be affected by other
factors not generally thought to be present in the U.S., including
expropriation or nationalization, confiscatory taxation and potential
difficulties in enforcing contractual obligations, and could be subject
to extended settlement periods.
Because each Fund, other than Money Fund, may purchase securities
denominated in foreign currencies, a change in the value of any such
currency against the U.S. dollar will result in a change in the U.S.
dollar value of each Fund's assets and each Fund's income available for
distribution. In addition, although a portion of each Fund's
investment income may be received or realized in foreign currencies,
the Fund will be required to compute and distribute its income in U.S.
dollars, and absorb the cost of currency fluctuations. High Income
Fund, Strategic Bond Fund, Multiple Strategies Fund, Growth & Income
Fund and Global Securities Fund may engage in foreign currency exchange
transactions for hedging purposes to attempt to protect against changes
in future exchange rates. See "Hedging - Forward Contracts," below.
The values of foreign investments and the investment income derived
from them may also be affected unfavorably by changes in currency
exchange control regulations. Although each Fund, other than Money
Fund, will invest only in securities denominated in foreign currencies
that at the time of investment do not have significant government-
imposed restrictions on conversion into U.S. dollars, there can be no
assurance against subsequent imposition of currency controls. In
addition, the values of foreign securities will fluctuate in response
to changes in U.S. and foreign interest rates.
Investments in foreign securities offer potential benefits not
available from investments solely in securities of domestic issuers by
offering the opportunity to invest in foreign issuers that appear to
offer growth potential, or in foreign countries with economic policies
or business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. From
time to time, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
reimposed.
- Warrants and Rights. As described in the Prospectus, each Fund
other than Money Fund may invest in warrants and rights. Warrants
basically are options to purchase equity securities at set prices valid
for a specified period of time. Their prices do not necessarily move
in a manner parallel to the prices of the underlying securities. Any
price paid for a warrant will be lost unless the warrant is exercised
prior to its expiration. Rights are similar to warrants, but normally
have a short duration and are distributed directly by the issuer to its
shareholders. Warrants and rights have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.
- Repurchase Agreements. These Funds may acquire securities that
are subject to repurchase agreements in order to generate income while
providing liquidity as set forth in the prospectus. Money Fund's
repurchase agreements must comply with the collateral requirements of
Rule 2a-7 under the Investment Company Act. In a repurchase
transaction, a Fund acquires a security from, and simultaneously
resells it to, an approved vendor (a U.S. commercial bank or the U.S.
branch of a foreign bank or broker-dealer which has been designated a
primary dealer in government securities which must meet the credit
requirements set by the Trust's Board of Trustees from time to time for
delivery on an agreed-upon future date. The resale price exceeds the
purchase price by an amount that reflects an agreed-upon interest rate
effective for the period during which the repurchase agreement is in
effect. The majority of these transactions run from day to day, and
delivery pursuant to resale typically will occur within one to five
days of the purchase. Repurchase agreements are considered "loans"
under the Investment Company Act, collateralized by the underlying
security. The Funds' repurchase agreements require that at all times
while the repurchase agreement is in effect, the value of the
collateral must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Funds'
Manager will impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the
collateral's value.
- Loans of Portfolio Securities. Each Fund may lend its respective
portfolio securities subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral must, on each business day, at
least equal the value of the loaned securities and must consist of
cash, bank letters of credit, U.S. Government securities, or certain
other cash equivalents. To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by the Trust if
the demand meets the terms of the letter. Such terms and the issuing
bank must be satisfactory to the Trust. Any Fund lending its
securities receives amounts equal to the dividends declared or interest
paid on the loaned securities during the term of the loan as well as
the interest on the collateral securities, less any finders' or
administrative fees the Fund pays in arranging the loan. A Fund may
share the interest it receives on the collateral securities with the
borrower as long as it realizes at least a minimum amount of interest
required by the lending guidelines established by the Board of
Trustees. The lending Fund will not lend its portfolio securities to
any officer, trustee, employee or affiliate of the Fund or its Manager.
The terms of a Fund's loans must meet certain tests under the Internal
Revenue Code and permit it to reacquire loaned securities on five days'
notice or in time to vote on any important matter.
- Borrowing. From time to time, each of Capital Appreciation Fund,
Strategic Bond Fund, Growth Fund, Multiple Strategies Fund, Growth &
Income Fund and Global Fund may borrow from banks on an unsecured basis
to invest the borrowed funds in portfolio securities. Borrowing is
subject to the restrictions stated in the Prospectus. Any such
borrowing will be made only from banks. In addition to the percentage
restrictions stated in the Prospectus, the Investment Company Act
requires that any such borrowing will be made only to the extent that
the value of that Fund's assets, less its liabilities other than
borrowings, is equal to at least 300% of all borrowings including the
proposed borrowing. If the value of such Fund's assets, when computed
in that manner, should fail to meet the 300% asset coverage
requirement, that Fund is required within three days to reduce its bank
debt to the extent necessary to meet such requirement. To do so, the
Fund may have to sell a portion of its investments at a time when it
would otherwise not want to sell the securities. Borrowing for
investment increases both investment opportunity and risk. Interest on
money borrowed is an expense these six Funds would not otherwise incur,
so that they may have little or no net investment income during periods
of substantial borrowings. Since substantially all of these Funds'
assets fluctuate in value whereas borrowing obligations are fixed, when
a Fund has outstanding borrowings, its net asset value will tend to
increase and decrease more when its portfolio assets increase or
decrease than would otherwise be the case.
- When-Issued and Delayed Delivery Transactions. Each Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although a Fund will
enter into such transactions for the purpose of acquiring securities
for its portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to settlement.
"When-issued" or "delayed delivery" refers to securities whose terms
and indenture are available and for which a market exists, but which
are not available for immediate delivery. When such transactions are
negotiated the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. The commitment to purchase
a security for which payment will be made on a future date may be
deemed a separate security and involve risk of loss if the value of the
security declines prior to the settlement date. During the period
between commitment by a Fund and settlement (generally within two
months but not to exceed 120 days), no payment is made for the
securities purchased by the purchaser, and no interest accrues to the
purchaser from the transaction. Such securities are subject to market
fluctuation; the value at delivery may be less than the purchase price.
The Fund will maintain a segregated account with its Custodian,
consisting of cash, U.S. Government securities, or other high grade
debt securities rated "A" or better by Moody's or Standard & Poor's at
least equal to the value of purchase commitments until payment is made.
The Funds will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When a Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure to do so may
result in the Fund losing the opportunity to obtain a price and yield
considered to be advantageous. If any of the Funds chooses to (i)
dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against
a forward commitment, it may incur a gain or loss. At the time the
Fund makes a commitment to purchase or sell a security on a when-issued
or forward commitment basis, it records the transaction and reflects
the value of the security purchased, or if a sale, the proceeds to be
received in determining its net asset value.
To the extent any Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and
not for the purposes of investment leverage. Each Fund enters into
such transactions only with the intention of actually receiving or
delivering the securities, although (as noted above), when-issued
securities and forward commitments may be sold prior to settlement
date. In addition, changes in interest rates in a direction other than
that expected by the Manager before settlement will affect the value of
such securities and may cause loss to that Fund.
When-issued transactions and forward commitments allow a Fund a
technique to use against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated
falling prices. In periods of falling interest rates and rising
prices, a Fund might sell portfolio securities and purchase the same or
similar securities on a when-issued or forward commitment basis,
thereby obtaining the benefit of currently higher cash yields.
Other Investment Techniques and Strategies
Covered Calls and Hedging
As described in the Prospectus, each Fund (except Money Fund) may
each write covered calls and may also employ one or more types of
Hedging Instruments, including the futures identified in the Prospectus
("Futures").
The Funds' strategy of hedging with Futures and options on Futures
will be incidental to each such Fund's activities in the underlying
cash market. When hedging to attempt to protect against declines in
the market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment
reasons, a given Fund would: (i) sell Futures, (ii) purchase puts on
such Futures or securities, or (iii) write covered calls on securities
or on Futures. When hedging to permit a Fund to establish a position
in the securities markets as a temporary substitute for purchasing
individual securities (which that Fund will normally purchase, and then
terminate that hedging position), or to attempt to protect against the
possibility that a Fund's portfolio debt securities are not fully
included in a rise in the securities market, these Funds may: (i)
purchase Futures, or (ii) purchase calls on such Futures or on
securities.
When hedging to attempt to protect against declines in the dollar
value of a foreign currency-denominated security or in a payment on
such security, a Fund would: (a) purchase puts on that foreign currency
or on foreign currency Futures, (b) write calls on that currency or on
such Futures, or (c) enter into Forward Contracts at a lower or higher
rate than the spot ("cash") rate. Additional information about the
Hedging Instruments these Funds may use is provided below. At present,
the Funds do not intend to purchase or sell Futures or related options
if, after any such purchase, the sum of initial margin deposits on
Futures and premiums paid for related options exceeds 5% of the value
of that Fund's total assets. Certain options on foreign currencies are
considered related options for this purpose. In the future, a Fund may
employ Hedging Instruments and strategies that are not presently
contemplated but which may be developed, to the extent such investment
methods are consistent with that Fund's investment objective, legally
permissible and adequately disclosed.
Writing Covered Call Options. When any of the Funds (except Money
Fund) write a call on a security, it receives a premium and agrees to
sell the underlying security to a purchaser of a corresponding call on
the same security during the call period (usually not more than 9
months) at a fixed exercise price (which may differ from the market
price of the underlying security), regardless of market price changes
during the call period. Such Fund has retained the risk of loss should
the price of the underlying security decline during the call period,
which may be offset to some extent by the premium.
To terminate its obligation on a call it has written, each such Fund
may purchase a corresponding call in a "closing purchase transaction."
A profit or loss will be realized, depending upon whether the net of
the amount of the option transaction costs and the premium received on
the call written was more or less than the price of the call
subsequently purchased. A profit may also be realized if the call
expires unexercised, because a Fund retains the underlying security and
the premium received. Any such profits are considered short-term
capital gains for Federal income tax purposes, and when distributed by
each such Fund are taxable as ordinary income. If the Fund could not
effect a closing purchase transaction due to lack of a market, it would
have to hold the callable securities until the call expired or was
exercised. Call writing may affect a Fund's turnover rate and
brokerage commissions. The exercise of calls written by a Fund may
cause that Fund to sell related portfolio securities, thus increasing
its turnover rate in a manner beyond its control.
The Funds may also write (and purchase) calls on foreign currencies.
A call written on a foreign currency by any of the Funds is "covered"
if the Fund owns the underlying foreign currency covered by the call or
has an absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon
conversion or exchange of other foreign currency held in its portfolio.
A call written by any of the Funds on a foreign currency is for cross-
hedging purposes if it is not covered, but is designed to provide a
hedge against a decline (due to an adverse change in the exchange rate)
in the U.S. dollar value of a security which the Fund owns or has the
right to acquire and which is denominated in the currency underlying
the option. In such circumstances, the Fund collateralizes the option
by maintaining in a segregated account with the Funds' custodian, cash
or U.S. Government securities in an amount not less than the value of
the underlying foreign currency in U.S. dollars marked-to-market daily.
A Fund may also write calls on Futures without owning a futures
contract (or, with respect to the High Income Fund, a deliverable bond)
provided that at the time the call is written, the Fund covers the call
by segregating in escrow an equivalent dollar amount of liquid assets.
The Fund will segregate additional liquid assets if the value of the
escrowed assets drops below 100% of the current value of the Future.
In no circumstances would an exercise notice require a Fund to deliver
a futures contract; it would simply put the Fund in a short futures
position, which is permitted by each Fund's hedging policies.
Hedging. Set forth below are the Hedging Instruments which the Funds
(except Money Fund) may use.
Writing Put Options. A put option on securities gives the purchaser
the right to sell, and the writer the obligation to buy, the underlying
investment at the exercise price during the option period. Writing a
put covered by segregated liquid assets equal to the exercise price of
the put has the same economic effect to a Fund as writing a covered
call. The premium the Fund receives from writing a put option
represents a profit, as long as the price of the underlying investment
remains above the exercise price. However, a Fund has also assumed the
obligation during the option period to buy the underlying investment
from the buyer of the put at the exercise price, even though the value
of the investment may fall below the exercise price. If the put
expires unexercised, the Fund (as the writer of the put) realizes a
gain in the amount of the premium less transaction costs. If the put
is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price, which will usually exceed
the market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options on securities or on foreign currencies, to
secure its obligation to pay for the underlying security, the Fund will
deposit in escrow liquid assets with a value equal to or greater than
the exercise price of the underlying securities. The Fund therefore
forgoes the opportunity of investing the segregated assets or writing
calls against those assets. As long as the obligation of the Fund as
the put writer continues, it may be assigned an exercise notice by the
exchange or broker-dealer through whom such option was sold, requiring
the Fund to take delivery of the underlying security against payment of
the exercise price. The Fund may be assigned an exercise notice at any
time prior to the termination of its obligation as the writer of the
put. This obligation terminates upon expiration of the put, or such
earlier time at which the Fund effects a closing purchase transaction
by purchasing a put of the same series as that previously sold. Once
the Fund has been assigned an exercise notice, it is thereafter not
allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a
closing purchase transaction will permit the Fund to write another put
option to the extent that the exercise price thereof is secured by the
deposited assets, or to utilize the proceeds from the sale of such
assets for other investments by that Fund. The Fund will realize a
profit or loss from a closing purchase transaction if the cost of the
transaction is less or more than the premium received from writing the
option. As above for writing covered calls, any and all such profits
described herein from writing puts are considered short-term gains for
Federal tax purposes, and when distributed by the Fund, are taxable as
ordinary income.
Purchasing Calls and Puts. When a Fund purchases a call (other than
in a closing purchase transaction), it pays a premium and has the right
to buy the underlying investment from a seller of a corresponding call
on the same investment during the call period at a fixed exercise
price. The Fund benefits only if the call is sold at a profit or if,
during the call period, the market price of the underlying investment
is above the sum of the call price plus the transaction costs and the
premium paid for the call and the call is exercised. If the call is
not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.
When such Fund purchases a put, it pays a premium and has the right
to sell the underlying investment to a seller of a put on a
corresponding investment during the put period at a fixed exercise
price. Buying a put on securities or Futures a Fund owns enables the
Fund to attempt to protect itself during the put period against a
decline in the value of the underlying investment below the exercise
price by selling the underlying investment at the exercise price to a
seller of a corresponding put. If the market price of the underlying
investment is equal to or above the exercise price and, as a result,
the put is not exercised or resold, the put will become worthless at
its expiration date and the Fund will lose its premium payment and the
right to sell the underlying investment; the put may, however, be sold
prior to expiration (whether or not at a profit).
Purchasing a put on either Futures or on securities it does not own
permits a Fund either to resell the put or, if applicable, to buy the
underlying investment and sell it at the exercise price. The resale
price of the put will vary inversely with the price of the underlying
investment. If the market price of the underlying investment is above
the exercise price, and, as a result, the put is not exercised, the put
will become worthless on its expiration date. In the event of a
decline in price of the underlying investment, the Fund could exercise
or sell the put at a profit to attempt to offset some or all of its
loss on its portfolio securities. When the Fund purchases a put on a
Future or security not held by it, the put protects the Fund to the
extent that the prices of the underlying Future or securities move in a
similar pattern to the prices of the securities in a Fund's portfolio.
Futures. No price is paid or received upon the purchase or sale of
a Future. Upon entering into a Futures transaction, a Fund will be
required to deposit an initial margin payment with the futures
commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's Custodian in an account registered in the
futures broker's name; however the futures broker can gain access to
that account only under specified conditions. As the Future is marked
to market to reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the futures
broker on a daily basis. Prior to expiration of the Future, if the
Fund elects to close out its position by taking an opposite position, a
final determination of variation margin is made, additional cash is
required to be paid by or released to the Fund, and any loss or gain is
realized for tax purposes. All futures transactions are effected
through a clearinghouse associated with the exchange on which the
contracts are traded.
Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number of
days from the date of the contract agreed upon by the parties), at a
price set at the time the contract is entered into. These contracts
are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers.
The Funds may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does
not eliminate fluctuations in the prices of the underlying securities
the Fund owns or intends to acquire, but it does fix a rate of exchange
in advance. In addition, although Forward Contracts limit the risk of
loss due to a decline in the value of the hedged currencies, at the
same time they limit any potential gain that might result should the
value of the currencies increase.
These Funds may enter into Forward Contracts with respect to
specific transactions. For example, when a Fund enters into a contract
for the purchase or sale of a security denominated in a foreign
currency, or when a Fund anticipates receipt of dividend payments in a
foreign currency, a Fund may desire to "lock-in" the U.S. dollar price
of the security or the U.S. dollar equivalent of such payment by
entering into a Forward Contract, for a fixed amount of U.S. Dollars
per unit of foreign currency, for the purchase or sale of the amount of
foreign currency involved in the underlying transaction. A Fund will
thereby be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the security
is purchased or sold, or on which the payment is declared, and the date
on which such payments are made or received.
These Funds may also use Forward Contracts to lock in the U.S.
dollar value of portfolio positions ("position hedge"). In a position
hedge, for example, when a Fund believes that foreign currency may
suffer a substantial decline against the U.S. dollar, it may enter into
a forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of that Fund's portfolio
securities denominated in such foreign currency, or when a Fund
believes that the U.S. dollar may suffer a substantial decline against
a foreign currency, it may enter into a forward purchase contract to
buy that foreign currency for a fixed dollar amount. In this situation
the Fund may, in the alternative, enter into a Forward Contract to sell
a different foreign currency for a fixed U.S. dollar amount where that
Fund believes that the U.S. dollar value of the currency to be sold
pursuant to the Forward Contract will fall whenever there is a decline
in the U.S. dollar value of the currency in which portfolio securities
of that Fund are denominated ("cross-hedge").
These Funds will not enter into such Forward Contracts or maintain a
net exposure to such contracts where the consummation of the contracts
would obligate that Fund to deliver an amount of foreign currency in
excess of the value of the Fund's portfolio securities or other assets
denominated in that currency. The Fund, however, in order to avoid
excess transactions and transaction costs, may maintain a net exposure
to Forward Contracts in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency provided the
excess amount is "covered" by liquid, high-grade debt securities,
denominated in that foreign currency or U.S. dollars, at least equal at
all times to the amount of such excess. As an alternative, the Fund
may purchase a call option permitting the Fund to purchase the amount
of foreign currency being hedged by a forward sale contract at a price
no higher than the forward contract price or the Fund may purchase a
put option permitting the Fund to sell the amount of foreign currency
subject to a forward purchase contract at a price as high or higher
than the forward contract price. Unanticipated changes in currency
prices may result in poorer overall performance for the Fund than if it
had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value
of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities
between the date the Forward Contract is entered into and the date it
is sold. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear
the expense of such purchase), if the market value of the security is
less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to
sell on the spot market some of the foreign currency received upon the
sale of the portfolio security if its market value exceeds the amount
of foreign currency a Fund is obligated to deliver. The projection of
short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing a Fund to
sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring any Fund
to sell a currency, the Fund may either sell a portfolio security and
use the sale proceeds to make delivery of the currency or retain the
security and offset its contractual obligation to deliver the currency
by purchasing a second contract pursuant to which the Fund will
obtain, on the same maturity date, the same amount of the currency that
it is obligated to deliver. Similarly, the Fund may close out a
Forward Contract requiring it to purchase a specified currency by
entering into a second contract entitling it to sell the same amount of
the same currency on the maturity date of the first contract. The Fund
would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the
exchange rate or rates between the currencies involved moved between
the execution dates of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because Forward
Contracts are usually entered into on a principal basis, no fees or
commissions are involved. Because such contracts are not traded on an
exchange, a Fund must evaluate the credit and performance risk of each
particular counterparty under a Forward Contract.
Although each Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis. The Fund may convert foreign currency
from time to time, and investors should be aware of the costs of
currency conversion. Foreign exchange dealers do not charge a fee for
conversion, but they do seek to realize a profit based on the
difference between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should that
Fund desire to resell that currency to the dealer.
Interest Rate Swap Transactions. The risk incurred by Bond Fund,
High Income Fund and Strategic Bond Fund in entering into a swap
agreement is twofold: interest rate risk and credit risk. There is a
risk that, based on movements of interest rates in the future, the
payments made by the Fund under a swap agreement will have been greater
than those received by it. Credit risk arises from the possibility
that the counterparty will default. If the counterparty to an interest
rate swap defaults, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received. The
Manager will monitor the creditworthiness of counterparties to the
Fund's interest rate swap transactions on an ongoing basis. These
Funds will enter into swap transactions with appropriate counterparties
pursuant to master netting agreements. A master netting agreement
provides that all swaps done between the Fund and that counterparty
under the master agreement shall be regarded as parts of an integral
agreement. If on any date amounts are payable in the same currency in
respect of one or more swap transactions, the net amount payable on
that date in that currency shall be paid. In addition, the master
netting agreement may provide that if one party defaults generally or
on one swap, the counterparty may terminate the swaps with that party.
Under such agreements, if there is a default resulting in a loss to one
party, the measure of that party's damages is calculated by reference
to the average cost of a replacement swap with respect to each swap
(i.e., the mark-to-market value at the time of the termination of each
swap). The gains and losses on all swaps are then netted, and the
result is the counterparty's gain or loss on termination. The
termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."
Additional Information About Hedging Instruments and Their Use.
Each Fund's Custodian, or a securities depository acting for the
Custodian, will act as that Fund's escrow agent, through the facilities
of the Options Clearing Corporation ("OCC"), as to the securities on
which the Fund has written options or as to other acceptable escrow
securities, so that no margin will be required for such transactions.
OCC will release the securities on the expiration of the option or upon
the Fund's entering into a closing transaction. An option position may
be closed out only on a market which provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option.
When a Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a securities dealer, which would establish a
formula price at which that Fund would have the absolute right to
repurchase that OTC option. This formula price would generally be
based on a multiple of the premium received for the option, plus the
amount by which the option is exercisable below for a put, above for a
call, the market price of the underlying security ("in-the-money").
For any OTC option which any of these three Funds writes, it will treat
as illiquid (for purposes of the 15% of net assets restriction on
illiquid securities, stated in the Prospectus) the mark-to-market value
of any OTC option held by it. The SEC is evaluating the general issue
of whether or not OTC options should be considered as liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.
Each Fund's option activities may affect its turnover rate and
brokerage commissions. As noted above, the exercise of calls written
by a Fund may cause that Fund to sell related portfolio securities,
thus increasing its turnover rate in a manner beyond a Fund's control.
The exercise by a Fund of puts on securities or Futures may cause the
sale of related investments, also increasing portfolio turnover.
Although such exercise is within the Fund's control, holding a put
might cause the Fund to sell the underlying investment for reasons
which would not exist in the absence of the put. Each Fund will pay a
brokerage commission each time it buys or sells a call, buys a put or
sells an underlying investment in connection with the exercise of a put
or call. Such commissions may be higher than those which would apply
to direct purchases or sales of the underlying investments. Premiums
paid for options are small in relation to the market value of such
investments and consequently, put and call options offer large amounts
of leverage. The leverage offered by trading in options could result
in a Fund's net asset value being more sensitive to changes in the
value of the underlying investment.
Regulatory Aspects of Hedging Instruments. These Funds must each
operate within certain restrictions as to its long and short positions
in Futures and options thereon under a rule (the "CFTC Rule") adopted
by the Commodity Futures Trading Commission (the "CFTC") under the
Commodity Exchange Act (the "CEA"), which excludes the Fund from
registration with the CFTC as a "commodity pool operator" (as defined
in the CEA) if it complies with the CFTC Rule. The Rule does not limit
the percentage of each Fund's assets that may be used for Futures
margin and related options premiums for a bona fide hedging position.
However, under the Rule each Fund must limit its aggregate initial
futures margin and related option premiums to no more than 5% of that
Fund's net assets for hedging strategies that are not considered bona
fide hedging strategies under the Rule. Under the restrictions, each
Fund also must, as to its short positions, use Futures and options
thereon solely for bona-fide hedging purposes within the meaning and
intent of the applicable provisions under the CEA. Certain options on
foreign currencies are considered related options for this purpose.
Transactions in options by these Funds are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in
one or more accounts or through one or more exchanges or brokers.
Thus, the number of options which the Fund may write or hold may be
affected by options written or held by other entities, including other
investment companies having the same or an affiliated investment
adviser. Position limits also apply to Futures. An exchange may order
the liquidation of positions found to be in violation of those limits
and may impose certain other sanctions. Due to requirements under the
Investment Company Act, when a Fund purchases a Future, the Fund will
maintain, in a segregated account or accounts with its custodian bank,
cash or readily-marketable, short-term (maturing in one year or less)
debt instruments in an amount equal to the market value of the
securities underlying such Future, less the margin deposit applicable
to it.
Tax Aspects of Hedging Instruments and Covered Calls. Each Fund
intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986. That qualification enables each Fund to
"pass-through" its income and realized capital gains to shareholders
without the Fund having to pay tax on them. One of the tests for each
Fund's qualification is that less than 30% of its gross income must be
derived from gains realized on the sale of securities held for less
than three months. To comply with that 30% cap, the Funds will limit
the extent to which they engage in the following activities, but will
not be precluded from them: (i) selling investments, including Futures,
held for less than three months, whether or not they were purchased on
the exercise of a call held by that Fund; (ii) purchasing calls or puts
which expire in less than three months; (iii) effecting closing
transactions with respect to calls or puts purchased less than three
months previously; (iv) exercising puts held by that Fund for less than
three months; and (v) writing calls on investments held for less than
three months.
Possible Risk Factors in Hedging. In addition to the risks with
respect to options discussed in the Prospectus and above, there is a
risk in using short hedging by: (i) selling Futures or (ii) purchasing
puts on broadly-based indices or Futures to attempt to protect against
declines in the value of the Fund's securities that the prices of the
Futures or applicable index (thus the prices of the Hedging
Instruments) will correlate imperfectly with the behavior of the cash
(i.e., market value prices) of the Fund's securities. The ordinary
spreads between prices in the cash and futures markets are subject to
distortions due to differences in the natures of those markets. First,
all participants in the futures markets are subject to margin deposit
and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets depend on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures
markets could be reduced, thus producing distortion. Third, from the
point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the
futures markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of a
Fund's portfolio diverges from the securities included in the
applicable index. To compensate for the imperfect correlation of
movements in the price of the securities being hedged and movements in
the price of the Hedging Instruments, each Fund may use Hedging
Instruments in a greater dollar amount than the dollar amount of
securities being hedged if the historical volatility of the prices of
such securities being hedged is more than the historical volatility of
the applicable index. It is also possible that where a Fund has used
Hedging Instruments in a short hedge, the market may advance and the
value of securities held in the Fund's portfolio may decline. If this
occurred, the Fund would lose money on the Hedging Instruments and also
experience a decline in value in its securities. However, while this
could occur for a very brief period or to a very small degree, over
time the value of a diversified portfolio of equity securities will
tend to move in the same direction as the indices upon which the
Hedging Instruments are based.
If a Fund uses Hedging Instruments to establish a position in the
securities markets as a temporary substitute for the purchase of
individual securities (long hedging) by buying Futures and/or calls on
such Futures, on securities, or on stock indices, it is possible that
the market may decline. If either Fund then concludes not to invest in
such securities at that time because of concerns as to possible
further market decline or for other reasons, that Fund will realize a
loss on the Hedging Instruments that is not offset by a reduction in
the price of the equity securities purchased.
- Short Sales Against-the-Box. Each Fund (except Money Fund) may
sell securities short in "short sales against-the-box." In a short
sale, the seller does not own the security that is sold, but normally
borrows the security to fulfill the delivery obligation. The seller
later buys the security to repay the loan, in the expectation that the
price of the security will be lower when the purchase is made,
resulting in a gain. In these transactions, where the Fund owns an
equivalent amount of the securities sold short. This technique is
primarily used for tax purposes.
Other Investment Restrictions
The significant investment restrictions of all the Funds are set
forth in the Prospectus. The following investment restrictions are
also fundamental policies. Fundamental policies and the Funds'
investment objectives cannot be changed without the vote of a
"majority" of the outstanding shares of the Trust (or of the Fund, as
to matters affecting only that Fund). Under the Investment Company
Act, such a "majority" vote is defined as the vote of the holders of
the lesser of: (1) 67% or more of the shares present or represented by
proxy at such meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (2) more
than 50% of the outstanding shares.
Under these additional restrictions, each of the Funds cannot: (1)
invest in oil or gas exploration or development programs; (2) invest in
real estate or in interests in real estate, but may purchase securities
of issuers holding real estate or interests therein; (3) invest in
companies for the purpose of acquiring control of management thereof;
(4) underwrite securities of other companies, except insofar as it
might be deemed to be an underwriter for purposes of the Securities Act
of 1933 in the resale of any securities held in its own portfolio; (5)
invest or hold securities of any issuer if those officers and trustees
or directors of the Trust or its adviser owning individually more than
1/2 of 1% of the securities of such issuer together own more than 5% of
the securities of such issuer; or (6) invest in other open-end
investment companies, or invest more than 5% of its net assets at the
time of purchase in closed-end investment companies, including small
business investment companies, nor make any such investments at
commission rates in excess of normal brokerage commissions.
For purposes of the Funds' policy not to concentrate described under
investment restriction number four in the Prospectus, the Funds have
adopted the industry classifications set forth in Appendix A to the
Statement of Additional Information. This is not a fundamental policy.
New York's insurance laws require that investments of each Fund be
made with a degree of care of an "ordinarily prudent person." The
Manager believes that compliance with this standard will not have a
negative impact on the performance of any of the Funds. In addition,
each Fund's investments must comply with the diversification
requirements contained in Section 817(h) of the Internal Revenue Code,
and each Fund has undertaken to comply with the diversification
requirements of Section 10506 of the California Insurance Code (see
"Other Investment Techniques and Strategies -- Foreign Securities" in
the Prospectus) and with the regulations adopted under those statutes.
How the Funds are Managed
Organization and History. As a Massachusetts business trust, the
Trust is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Trust will hold meetings when
required to do so by the Investment Company Act or other applicable
law, or when a shareholder meeting is called by the Trustees or upon
proper request of the shareholders. At all shareholder meetings,
shareholders only vote on matters affecting their Fund. Shareholders
have the right, upon the declaration in writing or vote of two-thirds
of the outstanding shares of the Trust, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of
a Trustee upon the written request of the record holders of 10% of its
outstanding shares. In addition, if the Trustees receive a request
from at least 10 shareholders (who have been shareholders for at least
six months) holding shares of the Trust valued at $25,000 or more or
holding at least 1% of the Trust's outstanding shares, whichever is
less, stating that they wish to communicate with other shareholders to
request a meeting to remove a Trustee, the Trustees will then either
make the Trust's shareholder list available to the applicants or mail
their communication to all other shareholders at the applicants'
expense, or the Trustees may take such other action as set forth under
Section 16(c) of the Investment Company Act. At all shareholder
meetings, shareholders only vote on matters affecting their Fund, and
each Fund votes separately on such matters. However, matters that
require a vote by all shareholders of the Trust are submitted to all
the shareholders, without individual voting by Fund.
The Trust's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Trust's obligations, and
provides for indemnification and reimbursement of expenses out of its
property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Trust
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder
of a business trust (such as the Trust) to be held personally liable as
a "partner" under certain circumstances, the risk of a Trust
shareholder incurring financial loss on account of shareholder
liability is limited to the relatively remote circumstances in which
the Trust would be unable to meet its obligations described above. Any
person doing business with the Trust, and any shareholder of the Trust,
agrees under the Trust's Declaration of Trust to look solely to the
assets of the Trust for satisfaction of any claim or demand which may
arise out of any dealings with the Trust, and the Trustees shall have
no personal liability to any such person, to the extent permitted by
law.
Trustees and Officers of the Trust. The Trust's Trustees and officers
and their principal occupations and business affiliations during the
past five years are set forth below. Each Trustee is also a Trustee,
Director or Managing General Partner of Daily Cash Accumulation Fund,
Inc., Centennial Money Market Trust, Centennial Tax Exempt Trust,
Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial California Tax Exempt Trust, Oppenheimer Total Return Fund,
Inc., Oppenheimer Equity Income Fund, Oppenheimer Champion High Yield
Fund, Oppenheimer High Yield Fund, Oppenheimer Cash Reserves,
Oppenheimer Main Street Funds, Inc., Oppenheimer Integrity Funds,
Oppenheimer Strategic Funds Trust, Oppenheimer Strategic Income &
Growth Fund, Oppenheimer Strategic Investment Grade Bond Fund,
Oppenheimer Strategic Short-Term Income Fund, Centennial America Fund,
L.P., Oppenheimer Tax-Exempt Bond Fund, Oppenheimer Limited-Term
Government Fund, and The New York Tax-Exempt Income Fund, Inc.
(collectively, the "Denver-based OppenheimerFunds"). Mr. Fossel is
President and Mr. Swain is Chairman of each of the Denver-based
OppenheimerFunds. As of March 31, 1995, none of the Trustees or
officers were Account owners and thus none owned any Fund shares.
Robert G. Avis, Trustee*, Age: 63
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
William A. Baker, Trustee; Age: 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age: 64
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems, Co.; formerly
associated with the National Aeronautics and Space Administration.
Jon S. Fossel, President and Trustee*: Age: 53
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a director of the Manager;
President and a director of Oppenheimer Acquisition Corp. ("OAC"), the
Manager's parent holding company; President and a director of
HarbourView Asset Management Corporation ("HarbourView"), a subsidiary
of the Manager; a director of Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc. ("SFSI"), transfer agent
subsidiaries of the Manager; formerly President of the Manager.
Raymond J. Kalinowski, Trustee; Age: 65
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc.; formerly Vice
Chairman and a director of A.G. Edwards, Inc., parent holding company
of A.G. Edwards & Sons, Inc. (a broker-dealer), of which he was a
Senior Vice President.
C. Howard Kast, Trustee; Age: 73
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an
accounting firm).
Robert M. Kirchner, Trustee; Age: 73
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Ned M. Steel, Trustee; Age: 79
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a Director
of Van Gilder Insurance Corp. (insurance brokers).
__________________
*A Trustee who is an "interested person" of the Trust as defined in
the Investment Company Act.
James C. Swain, Chairman and Trustee*; Age: 61
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman and a director of the Manager; President and a director
of Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"); formerly Chairman of the
Board of SSI.
Andrew J. Donohue, Vice President; Age: 44
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of Oppenheimer Management
Corporation ("OMC") (the "Manager") and Oppenheimer Funds Distributor,
Inc. ("OFDI"); an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor; formerly a Partner in Kraft & McManimon (a law firm),
prior to which he was an officer of First Investors Corporation (a
broker-dealer) and First Investors Management Company, Inc. (broker-
dealer and investment adviser) and a director and an officer of the
First Investors Family of Funds and First Investors Life Insurance
Company.
George C. Bowen, Vice President, Secretary and Treasurer; Age: 58
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Paul LaRocco, Vice President; Capital Appreciation Fund Portfolio
Manager; Age: 37
Two World Trade Center, New York, New York 10048-0203
Assistant Vice President of the Manager; Associate Portfolio Manager
for other OppenheimerFunds; formerly a securities analyst with Columbus
Circle Investors, prior to which he was investment analyst for Chicago
Title & Trust Co.
Jane Putnam, Vice President; Growth Fund Portfolio Manager; Age 34
Two World Trade Center, New York, New York 10048-0203
Associate Portfolio Manager of other OppenheimerFunds; formerly a
portfolio manager and equity research analyst for Chemical Bank.
Michael S. Levine, Growth & Income Fund Assistant Portfolio Manager;
Age: 29
Two World Trade Center, New York, New York 10048-0203
Associate Portfolio Manager of the Manager; formerly portfolio manager
and research associate for Amas Securities, Inc.; before which he was
an analyst for Shearson Lehman Hutton, Inc.
David P. Negri, Vice President; High Income Fund, Bond Fund, Multiple
Strategies Fund and Strategic Bond Fund Portfolio Manager; Age: 41
Two World Trade Center, New York, New York 10048
Vice President of the Manager; an officer of other OppenheimerFunds.
__________________
*A Trustee who is an "interested person" of the Trust as defined in the
Investment Company Act.
Richard H. Rubinstein, Vice President; Multiple Strategies Fund
Portfolio Manager; Age: 46
Two World Trade Center, New York, New York 10048
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly Vice President and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corporation (an investment adviser).
Arthur J. Zimmer, Vice President; Money Fund Portfolio Manager; Age: 48
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and Centennial; an officer of other
OppenheimerFunds; formerly Vice President of Hanifen Imhoff Management
Company (mutual fund investment adviser).
George Evans, Vice President; Global Securities Fund Portfolio Manager;
Age: 35
Two World Trade Center, New York, New York 10048
Vice President of the Manager; formerly an International Equities
Portfolio Manager/Analyst with Brown Brothers, Harriman & Co.
John L. Wallace, Vice President; Growth & Income Fund Portfolio
Manager; Age: 41
Two World Trade Center, New York, NY 10048-0203
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly a Securities Analyst and Assistant Portfolio Manager for the
Manager.
Robert G. Zack, Assistant Secretary; Age: 46
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert J. Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting, an
officer of other OppenheimerFunds; previously a Fund Controller for the
Manager, prior to which he was an International Mutual Fund Supervisor
for Brown Brothers Harriman & Co. (a bank) and previously a Senior Fund
Accountant for State Street Bank & Trust Company.
- Remuneration of Trustees. The officers of the Trust are affiliated
with the Manager; they and the Trustees of the Trust who are affiliated
with the Manager (Messrs. Fossel and Swain, who are both officers and
Trustees) receive no salary or fee from the Trust. The Trustees of the
Trust (excluding Messrs. Fossel and Swain) received the total amounts
shown below (i) from the Trust during its fiscal year ended 12/31/94,
and (ii) from all 22 of the Denver-based OppenheimerFunds (including
the Trust) listed in the first paragraph of this section, for services
in the positions shown:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name Position From Fund OppenheimerFunds1
<S> <C> <C> <C>
Robert G. Avis Trustee $3,408.41 $53,000.00
William A. Baker Audit and Review $4,716.40 $73,257.01
Committee Chairman
and Trustee
Charles Conrad, Jr. Audit and Review $4,393.48 $68,293.67
Committee Member
and Trustee
Raymond J. Kalinowski Trustee $3,408.41 $53,000.00
C. Howard Kast Trustee $3,408.41 $53,000.00
Robert M. Kirchner Audit and Review $4,393.48 $68,293.67
Committee Member
and Trustee
Ned M. Steel Trustee $3,408.41 $53,000.00
<FN>
1 For the 1994 calendar year.
</TABLE>
- Major Shareholders. As of March 31, 1995, the holders of 5% or
more of the outstanding shares of any Fund (except Growth & Income
Fund, which had no shares outstanding as of that date) were separate
accounts of (i) Monarch Life Insurance Company ("Monarch"),
Springfield, MA; (ii) Bankers Security Life Insurance Society ("Bankers
Security"), Arlington, VA; (iii) The Life Insurance Company of Virginia
("Life of Virginia"), Richmond, VA; (iv) Nationwide Life Insurance
Company ("Nationwide"), Columbus, OH; (v) Confederation Life Insurance
and Annuity Company ("Confederation"), Atlanta, GA and (vi)
Massachusetts Mutual Life Insurance Company, Springfield, MA (including
its subsidiary, MML Bay Street Life Insurance Company "MassMutual").
Such shares were held as follows:
<TABLE>
<CAPTION>
Bankers Life of
Monarch Security Virginia
<S> <C> <C> <C>
Money Fund 27,692,014.570 11,500,387.510 5,774,622.170
High Income
Fund 1,274,839.638 2,771,761.985 2,911,052.062
Bond Fund 784,658.507 * 1,705,549.628
Capital
Appreciation Fund 763,186.751 1,679,016.594 2,490,858.915
Growth Fund 998,676.400 * 905,702.085
Multiple Strategies
Fund 3,809,233.753 4,426,919.490 2,624,441.836
Bankers Life of
Monarch Security Virginia
Global Securities
Fund -- 1,661,772.214 --
Strategic Bond -- * --
Fund
Nationwide Confederation MassMutual
Money Fund -- 24,709,842.450 *
High Income
Fund -- 3,723,645.939 *
Bond Fund 9,839,158.640 1,716,375.295 *
Capital
Appreciation -- 1,812,185.670 1,082,891.984
Fund
Growth Fund -- 1,933,896.560 *
Multiple Strategies
Fund 9,612,482.494 3,969,862.404 *
Global Securities
Fund 13,499,555.502 3,375,603.049 2,732,019.874
Strategic Bond
Fund -- 3,149,446.160 2,453,577.671
<FN>
__________________
* Less than 5% of the outstanding shares of that Fund.
</TABLE>
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Trust, and two of whom (Mr. Swain and Mr.
Fossel) serve as Trustees of the Trust.
The Manager and the Funds have a Code of Ethics. It is designed
to detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of a Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreements. The investment advisory
agreements between the Manager and the Trust for each of the nine Funds
require the Manager, at its expense, to provide each Fund with adequate
office space, facilities and equipment, and to provide and supervise
the activities of all administrative and clerical personnel required to
provide effective corporate administration for each Fund, including the
compilation and maintenance of records with respect to its operations,
the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale
of shares of each Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement are paid by the Trust. The advisory agreements list examples
of expenses paid by the Trust, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Trustees, legal
and audit expenses, custodian and transfer agent expenses, share
issuance costs, certain printing and registration costs and non-
recurring expenses, including litigation costs. Expenses with respect
to any two or more Funds are allocable in proportion to the net assets
of the respective Funds except where allocations of direct expenses can
be made. The management fees paid by the Funds to the Manager for the
Funds' most recent three fiscal years (except for Growth & Income Fund,
which commenced operations after December 31, 1994) were as follows:
<TABLE>
<CAPTION>
Fiscal year ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Money Fund $ 341,324 $212,358 $259,778
High Income Fund $ 617,198 $382,629 $230,117
Bond Fund $ 630,514 $361,258 $215,989
Capital Appreciation Fund $ 803,231 $407,611 $267,347
Growth Fund $ 307,904 $193,110 $121,993
Multiple Strategies Fund $1,433,107 $831,139 $658,068
Global Securities Fund $1,517,234 $227,226 $ 82,505
Strategic Bond Fund (1) $ 105,760 $18,509(1) --
<FN>
____________________
(1) From May 3, 1993 (commencement of operations) to December 31, 1993.
</TABLE>
The advisory agreements provide that the Manager is not liable for
any loss sustained by the Trust and/or any Fund in connection with
matters to which the Agreements relate, except a loss resulting by
reason of the Manager's willful misfeasance, bad faith or gross
negligence in the performance of its duties or reckless disregard for
its obligations thereunder. The Manager may act as investment adviser
for any other person, firm or corporation, and the Agreements permit
the Manager to use the name "Oppenheimer" in connection with other
investment companies for which it may act as investment adviser or
general distributor. If the Manager shall no longer act as investment
adviser to the Trust, the right of the Trust or any of the Funds to use
the name "Oppenheimer" as part of their names may be withdrawn.
Independently of the advisory agreements, the Manager has
voluntarily undertaken since January 1, 1995 that the total expenses of
any Fund shall not exceed 2.5% of the first $30 million of average net
assets of that Fund, 2.0% of the next $70 million and 1.5% of average
net assets over $100 million. In addition, the Manager has voluntarily
undertaken since September 1, 1994 that it will limit the management
fee charged under Strategic Bond Fund's Agreement so that the ordinary
operating expenses of that Fund would not exceed 1.0% of its average
net assets in any fiscal year. The payment of the management fee will
be reduced or eliminated during any fiscal year in which such payment
would cause the expenses of a Fund to exceed its expense limitation.
Other expense limits were in effect prior to January 1, 1995. The
Manager reserves the right to terminate or amend the undertakings at
any time. Any assumption of a Fund's expenses under these limitations
would lower that Fund's overall expense ratio and increase its total
return during any period in which expenses are limited. The expense
limitations in effect prior to the above dates are contained in note 8
to the Funds' financial statements, below.
- The Transfer Agent. Oppenheimer Shareholder Services, the
Trust's Transfer Agent, is responsible for maintaining the Trust's
shareholder registry and shareholder accounting records.
Brokerage Policies of the Funds
Brokerage Provisions of the Investment Advisory Agreements Affecting
Capital Appreciation Fund, Growth Fund, Multiple Strategies Fund,
Growth & Income Fund, Global Securities Fund and Strategic Bond Fund.
One of the duties of the Manager under the advisory agreements is to
arrange the portfolio transactions for the Funds. The advisory
agreements contain provisions relating to the employment of broker-
dealers ("brokers") to effect the Funds' portfolio transactions. In
doing so, the Manager is authorized by the advisory agreements to
employ broker-dealers, including "affiliated" brokers, as that term is
defined in the Investment Company Act, as may, in its best judgment
based on all relevant factors, implement the policy of the Funds to
obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission bidding
but is expected to minimize the commissions paid to the extent
consistent with the interests and policies of the Funds as established
by the Board of Trustees. Purchases of securities from underwriters
include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the
bid and asked price.
Under the advisory agreements, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Funds
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good faith
determination is made by the Manager that the commission is fair and
reasonable in relation to the services provided.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreements, and the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the
Manager's portfolio managers. In certain instances portfolio managers
may directly place trades and allocate brokerage, also subject to the
provisions of the advisory agreement and the procedures and rules
described above. Regardless, brokerage is allocated under the
supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities and are otherwise paid only if it appears likely that a
better price or execution can be obtained. When Funds engage in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by
the Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account. Option commissions may be relatively higher than those which
would apply to direct purchases and sales of portfolio securities.
Most purchases of money market instruments and debt obligations
are principal transactions at net prices. Instead of using a broker
for those transactions, the Fund normally deals directly with the
selling or purchasing principal or market maker unless the Manager
determines that a better price or execution can be obtained by using a
broker. Purchases of these securities from underwriters include a
commission or concession paid by the issuer to the underwriter.
Purchases from dealers include a spread between the bid and asked
prices. The Funds seek to obtain prompt execution of these orders at
the most favorable net price.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager and
its affiliates, and investment research received for the commissions of
those other accounts may be useful both to the Funds and one or more of
such other accounts. Such research, which may be supplied by a third
party at the instance of a broker, includes information and analyses on
particular companies and industries as well as market or economic
trends and portfolio strategy, receipt of market quotations for
portfolio evaluations, information systems, computer hardware and
similar products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making
process may be paid in commission dollars. The Board of Trustees has
permitted the Manager to use concessions on fixed price offerings to
obtain research in the same manner as is permitted for agency
transactions.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The
Board of Trustees, including the "independent" Trustees of the Trust
(those Trustees of the Trust who are not "interested persons" as
defined in the Investment Company Act) annually reviews information
furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether the
amount of such commissions was reasonably related to the value or
benefit of such services.
Money Fund, High Income Fund, Bond Fund and Strategic Bond Fund. As
most purchases made by Money Fund, High Income Fund, Bond Fund and
Strategic Bond Fund are principal transactions at net prices, these
Funds incur little or no brokerage costs. Purchases of securities from
underwriters include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers include a spread between
the bid and asked price. No principal transactions and, except under
unusual circumstances, no agency transactions for these Funds will be
handled by any affiliated securities dealer. In the unusual
circumstance when these Funds pay brokerage commissions, the above-
described brokerage practices and policies are followed. Money Fund's
policy of investing in short-term debt securities with maturities of
less than 397 days results in high portfolio turnover. However, since
brokerage commissions, if any, are small, high portfolio turnover does
not have an appreciable adverse effect upon the net asset value of that
Fund.
During the Funds' fiscal years ended December 31, 1992, 1993 and
1994, total brokerage commissions paid by the Funds (not including
spreads or concessions on principal transactions on a net trade basis)
were $79,362, $139,429 and $1,570,251, respectively, for Capital
Appreciation Fund; $2,470, $6,723 and $13,640, respectively, for High
Income Fund; $32,228, $33,497 and $96,732, respectively, for Growth
Fund; $187,495, $176,858 and $332,782, respectively, for Multiple
Strategies Fund; $53,828, $352,908 and $2,245,838, respectively for
Global Securities Fund; and $0 and $3,782 for Strategic Bond Fund.
During the fiscal year ended December 31, 1994, $61,327, $64,814,
$80,062, $962,152 and $1,245 was paid by Capital Appreciation Fund,
Growth Fund, Multiple Strategies Fund, Global Securities Fund and High
Income Fund, respectively, to dealers as brokerage commissions in
return for research services; the aggregate amount of those
transactions was $24,444,067, $32,063,309, $30,426,116, $215,822,430
and $123,945 for Capital Appreciation Fund, Growth Fund, Multiple
Strategies Fund, Global Securities Fund and High Income Fund,
respectively.
Performance of the Funds
- Money Fund Yield Information. Money Fund's current yield for a
seven day period of time is determined in accordance with regulations
adopted under the Investment Company Act as follows. First, a base
period return is calculated for the seven-day period by determining the
net change in the value of a hypothetical pre-existing account having
one share at the beginning of a seven day period. The change includes
dividends declared on the original share and dividends declared on any
shares purchased with dividends on that share, but such dividends are
adjusted to exclude any realized or unrealized capital gains or losses
affecting the dividends declared. Next, the base period return is
multiplied by 365/7 to obtain the current yield to the nearest
hundredth of one percent. The compounded effective yield for a seven-
day period is calculated by (a) adding 1 to the base period return
(obtained as described above), (b) raising the sum to a power equal to
365 divided by 7 and (c) subtracting 1 from the result. For the seven
days ended December 31, 1994, Money Fund's "current yield" was 5.45%
and its compounded "effective yield" for that period was 5.60%.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each
daily dividend to the nearest full cent. Since the calculation of
yield under either procedure described above does not take into
consideration any realized or unrealized gains or losses on the Fund's
portfolio securities which may affect dividends, the dividends declared
during a period may not be the same on an annualized basis as the yield
for that period.
- High Income Fund, Bond Fund and Strategic Bond Fund Yield
Information. The "yield" or "standardized yield" of High Income Fund,
Bond Fund and Strategic Bond Fund for a 30-day period is calculated
using the following formula set forth in the SEC rules:
a-b 6
Yield = 2 ((---- + 1) -1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of Fund shares outstanding during
the 30-day period that were entitled to receive dividends.
d = the Fund's maximum offering price (including sales charge)
per share on the last day of the period.
Each Fund's yield for a 30-day period may differ from its yield
for any other period. The SEC formula assumes that the yield for a 30-
day period occurs at a constant rate for a six-month period and is
annualized at the end of the six-month period. For the 30 days ended
December 31, 1994, the yield of High Income Fund, Bond Fund and
Strategic Bond Fund, calculated as described above, was 10.00%, 8.07%
and 10.00%, respectively. The "standardized" yield is not based on
distributions paid by a Fund to shareholders in the 30-day period, but
is a hypothetical yield based upon the return on a Fund's portfolio
investments, and may differ from a Fund's "distribution return"
described below.
- Dividend Yield and Distribution Return. From time to time High
Income, Bond and Strategic Bond Funds may quote a "dividend yield" or a
"distribution return." Dividend yield is based on that Fund's
dividends derived from net investment income during a stated period,
and distribution return includes dividends derived from net investment
income and from realized capital gains declared during a stated period.
Under those calculations, the Fund's dividends and/or distributions
declared during a stated period of one year or less (for example, 30
days) are added together, and the sum is divided by the Fund's maximum
offering price (equal to its net asset value) per share on the last day
of the period. The result may be annualized if the period of
measurement is less than one year. The dividend yield of High Income
Fund, Bond Fund and Strategic Bond Fund for the quarter ended December
31, 1994, was 8.99%, 7.79% and 9.13%, respectively.
Total Return. Each Fund, except Money Fund, may quote its "total
return" or "average annual total return." "Average annual total
return" ("T" in the formula below) is an average annual compounded rate
of return. It is the rate of return based on factors which include a
hypothetical initial investment of $1,000 ("P" in the formula below)
over a number of years ("n") with an Ending Redeemable Value ("ERV") of
that investment, according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
The cumulative "total return" calculation measures the change in value
of a hypothetical investment of $1,000 over a stated period. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual basis.
Cumulative total return is determined as follows:
ERV - P
- ------- = Total Return
P
Both formulas assume that all dividends and capital gains distributions
during the period are reinvested at net asset value per share, and that
the investment is redeemed at the end of the period. Set forth below
is the "average annual total return" and "total return" for each Fund
(using the method described above) other than Growth & Income Fund
(which commenced operations on May 1, 1995) during the periods
indicated:
<TABLE>
<CAPTION>
Average Annual Total Return for:
Cumulative
Total
Fiscal Year Five Year Return From
Ended Period Inception(1) Inception(1)
Fund 12/31/94 Ended 12/31/94 to 12/31/94 to 12/31/94
<S> <C> <C> <C> <C>
High Income Fund -3.18% 15.09% 12.47% 176.94%
Bond Fund -1.94% 8.43% 9.78% 148.25%
Capital Appreciation Fund -7.59% 11.81% 13.28% 184.34%
Growth Fund 0.97% 7.40% 11.44% 187.26%
Multiple Strategies Fund -1.95% 7.38% 9.85% 109.91%
Global Securities Fund -5.72% N/A 11.15% 54.83%
Strategic Bond Fund -3.78% N/A 0.19% 0.32%
<FN>
______________
(1)Inception dates are as follows: April 30, 1986 for High Income Fund; April 3, 1985 for Bond Fund and Growth Fund;
August 15, 1986 for Capital Appreciation Fund; February 9, 1987 for Multiple Strategies Fund; November 12, 1990 for
Global Securities Fund; and May 3, 1993 for Strategic Bond Fund.
</TABLE>
The total return on an investment made in shares of any one of these
Funds may be compared with performance for the same period of either
the Standard & Poor's 500 Index ("S&P 500") or the Dow Jones Industrial
Average ("Dow"). Both the S&P 500 and the Dow are widely recognized
indices of stock market performance consisting of unmanaged groups of
common stocks (the Dow consists of 30 such issues). The performance of
both indices includes a factor for the reinvestment of income dividends
but not capital gains and does not take sales charges or taxes into
consideration.
Yield and total return information may be useful to investors in
reviewing performance of the Funds. However, a number of factors
should be taken into account before using such performance information
as a basis for comparison with alternative investments. An investment
in any of these Funds is not insured. Their performance is not
guaranteed and will fluctuate over time. Yield and total return for
any Fund for any given past period is not an indication or
representation by that Fund of future yields or rates of return on its
shares. In comparing the performance of one Fund to another,
consideration should be given to each Fund's investment policy,
portfolio quality, portfolio maturity, type of instrument held and
operating expenses. When comparing yield, total return and investment
risk of an investment in any of the Funds with those of other
investment instruments, investors should understand that certain other
investment alternative such as money market instruments, certificates
of deposits ("CDs"), U.S. Government securities or bank accounts
provide yields that are fixed or that may vary above a stated minimum,
and may be insured or guaranteed. Finally, the performance quotations
do not reflect the charges deducted from an Account, as explained in
the attached Prospectus for the Policies. If these charges were
deducted, that performance would be lower than as described above.
Other Performance Comparisons. From time to time the Trust may
publish the ranking of any of the Funds by Lipper Analytical Services,
Inc. ("Lipper"), a widely-recognized independent service. Lipper
monitors the performance of regulated investment companies, including
the Funds, and ranks their performance for various periods based on
categories relating to investment objectives. The performance of the
Funds is ranked against all other funds underlying variable insurance
products. The Lipper performance analysis includes the reinvestment of
capital gains distributions and income dividends but do not take sales
charges or taxes into consideration.
From time to time, the Trust may include in its advertisements and
sales literature performance information about the Trust cited in other
newspapers and periodicals, such as The New York Times, which may
include performance quotations from other sources, including Lipper.
From time to time the Trust may publish the ranking of the
performance of any of the separate accounts that offer its Funds by
Morningstar, Inc., an independent mutual fund monitoring service, that
ranks mutual funds, including the Funds, monthly in broad investment
categories (equity, taxable bond, municipal bond and hybrid) based on
risk-adjusted investment return. Investment return measures a fund's
three, five and ten-year average annual total returns (when available)
in excess of 90-day U.S. Treasury bill returns after considering sales
charges and expenses. Risk reflects fund performance below 90-day U.S.
Treasury bill monthly returns. Risk and return are combined to produce
star rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%), four
stars is "above average" (next 22.5%), three stars is "average" (next
35%), two stars is "below average" (next 22.5%) and one star is
"lowest" (bottom 10%). Rankings are subject to change.
About Your Account
How To Buy Shares
Determination of Net Asset Value Per Share. The sale of shares of the
Funds is currently limited to Accounts as explained on the cover page
of this Statement of Additional Information and the Prospectus. Such
shares are sold at their respective offering prices (net asset values
without sales charges) and redeemed at their respective net asset
values as described in the Prospectus.
The net asset values per share of each Fund is determined as of the
close of business of The New York Stock Exchange on each day that the
Exchange is open, by dividing the value of the Fund's net assets by the
number of shares that are outstanding. The Exchange normally closes at
4:00 P.M., New York time, but may close earlier on some days (for
example, in case of weather emergencies or on days falling before a
holiday). The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It may also close on other
days. Dealers may conduct trading at times when the Exchange is closed
(including weekends and holidays). Trading may occur in debt
securities and in foreign securities at times when the NYSE is closed
(including weekends and holidays or after 4:00 P.M., New York time, on
a regular business day). Because the net asset value of the Funds will
not be calculated at such times, the net asset value per share of the
Funds may be significantly affected on such days when shareholders may
not purchase or redeem shares.
The Trust's Board of Trustees has established procedures for the
valuation of each Fund's (other than the Money Fund's) securities,
generally as follows: (i) equity securities traded on a U.S. securities
exchange or on NASDAQ for which last sale information is regularly
reported are valued at the last reported sale price on their primary
exchange or NASDAQ that day (or, in the absence of sales that day, at
values based on the last sales prices of the preceding trading day, or
closing bid and asked prices); (ii) securities actively traded on a
foreign securities exchange are valued at the last sales price
available to the pricing service approved by the Board of Trustees or
to the Manager as reported by the principal exchange on which the
security is traded; (iii) unlisted foreign securities or listed foreign
securities not actively traded are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by the Board of
Trustees or by the Manager; (iv) long-term debt securities having a
remaining maturity in excess of 60 days are valued at the mean between
the "bid" and "asked" prices determined by a portfolio pricing service
approved by the Board of Trustees or obtained from active market makers
in the security on the basis of reasonable inquiry; (v) debt
instruments having a maturity of more than one year when issued, and
non-money market type instruments having a maturity of one year or less
when issued, which have a remaining maturity of 60 days or less are
valued at the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Board of Trustees or obtained from
active market makers in the security on the basis of reasonable
inquiry; (vi) money market-type debt securities having a maturity of
less than one year when issued that having a remaining maturity of 60
days or less are valued at cost, adjusted for amortization of premiums
and accretion of discounts; and (vii) securities (including restricted
securities) not having readily-available market quotations are valued
at fair value under the Board's procedures.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of The New York
Stock Exchange. Events affecting the values of foreign securities
traded in stock markets that occur between the time their prices are
determined and the close of the Exchange will not be reflected in a
Fund's calculation of net asset value unless the Board of Trustees or
the Manager, under procedures established by the Board of Trustees,
determines that the particular event would materially affect a Fund's
net asset value, in which case an adjustment would be made, if
necessary. Foreign currency will be valued as close to the time fixed
for the valuation date as is reasonably practicable. The values of
securities denominated in foreign currency will be converted to U.S.
dollars at the prevailing rates of exchange at the time of valuation.
In the case of U.S. Government Securities, mortgage-backed
securities, foreign fixed-income securities and corporate bonds, when
last sale information is not generally available, such pricing
procedures may include "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, maturity, and
other special factors involved. The Trust's Board of Trustees has
authorized the Manager to employ a pricing service to price U.S.
Government Securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Trustees will monitor the accuracy
of such pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Puts, calls and Futures held by a Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ
as applicable, as determined by a pricing service approved by the Board
of Trustees or by the Manager, or, if there are no sales that day, in
accordance with (i), above. Forward currency contracts are valued at
the closing price in the London foreign exchange market as provided by
a reliable bank, dealer or pricing service. When a Fund writes an
option, an amount equal to the premium received by that Fund is
included in its Statement of Assets and Liabilities as an asset, and an
equivalent deferred credit is included in the liability section. The
deferred credit is adjusted ("marked-to-market") to reflect the current
market value of the option. In determining a Fund's gain on
investments, if a call written by that Fund is exercised, the proceeds
are increased by the premium received. If a call or put written by a
Fund expires, that Fund has a gain in the amount of the premium; if the
Fund enters into a closing purchase transaction, it will have a gain or
loss depending on whether the premium was more or less than the cost of
the closing transaction. If a Fund exercises a put it holds, the
amount that Fund receives on its sale of the underlying investment is
reduced by the amount of premium paid by the Fund.
Money Fund Net Asset Valuation. Money Fund will seek to maintain a net
asset value of $1.00 per share for purchases and redemptions. There
can be no assurance that it will do so. The Fund operates under SEC
Rule 2a-7, under which the Fund may use the amortized cost method of
valuing its shares. The amortized cost method values a security
initially at its cost and thereafter assumes a constant amortization of
any premium or accretion of any discount, regardless of the impact of
fluctuating interest rates on the market value of the security. The
method does not take into account unrealized capital gains or losses.
The Trust's Board of Trustees has established procedures intended to
stabilize Money Fund's net asset value at $1.00 per share. If the
Fund's net asset value per share were to deviate from $1.00 by more
than 0.5%, Rule 2a-7 requires the Board promptly to consider what
action, if any, should be taken. If the Trustees find that the extent
of any such deviation may result in material dilution or other unfair
effects on shareholders, the Board will take whatever steps it
considers appropriate to eliminate or reduce such dilution or unfair
effects, including, without limitation, selling portfolio securities
prior to maturity, shortening the average portfolio maturity,
withholding or reducing dividends, reducing the outstanding number of
Fund shares without monetary consideration, or calculating net asset
value per share by using available market quotations.
As long as it uses Rule 2a-7, Money Fund must abide by certain
conditions described above and in the prospectus. For purposes of the
Rule, the maturity of an instrument is generally considered to be its
stated maturity (or in the case of an instrument called for redemption,
the date on which the redemption payment must be made), with special
exceptions for certain variable and floating rate instruments.
Repurchase agreements and securities loan agreements are, in general,
treated as having a maturity equal to the period scheduled until
repurchase or return, or if subject to demand, equal to the notice
period.
While the amortized cost method provides certainty in valuation,
there may be periods during which the value of an instrument as
determined by amortized cost is higher or lower than the price the Fund
would receive if it sold the instrument. During periods of declining
interest rates, the daily yield on Money Fund shares may tend to be
lower than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices or estimates
of market prices for its portfolio. Conversely, during periods of
rising interest rates, the daily yield on Money Fund shares will tend
to be higher than that of a portfolio priced at market value.
Dividends, Capital Gains and Taxes
Distributions and Taxes. The Trust intends for each Fund to qualify as
a "regulated investment company" under Subchapter M of the Internal
Revenue Code. By so qualifying, the Funds will not be subject to
Federal income taxes on amounts paid by them as dividends and
distributions, as described in the Prospectus. Each Fund is treated
as a single entity for purposes of determining Federal tax treatment.
The Trust will endeavor to ensure that each Fund's assets are so
invested so that all such requirements are satisfied, but there can be
no assurance that it will be successful in doing so.
The Internal Revenue Code requires that a holder (such as a Fund) of
a zero coupon security accrue a portion of the discount at which the
security was purchased as income each year even though that Fund
receives no interest payment in cash on the security during the year.
As an investment company, each Fund must pay out substantially all of
its net investment income each year. Accordingly, when a Fund holds
zero coupon securities, it may be required to pay out as an income
distribution each year an amount which is greater than the total amount
of cash interest the Fund actually received. Such distributions will
be made from the cash assets of that Fund or by liquidation of
portfolio securities, if necessary. The Fund may realize a gain or
loss from such sales. In the event the Fund realizes net capital gains
from such transactions, its shareholders may receive a larger capital
gain distribution than they would have had in the absence of such
transactions.
Additional Information About the Funds
The Custodian and the Transfer Agent. The Bank of New York is the
custodian of the Trust's securities. The custodian's responsibilities
include safeguarding and controlling the Trust's portfolio securities,
collecting income on the portfolio securities, and handling the
delivery of portfolio securities to and from the Trust. The Manager
has represented to the Trust that its banking relationships with the
Custodian have been and will continue to be unrelated to and unaffected
by the relationship between the Trust and the Custodian. It will be
the practice of the Trust to deal with the Custodian in a manner
uninfluenced by any banking relationship the Custodian may have with
the Manager and its affiliates.
Oppenheimer Shareholder Services, as transfer agent, is responsible
for maintaining the Trust's shareholder registry and shareholder
accounting records, and for administrative functions.
Independent Auditors. The independent auditors of the Trust examine
its financial statements and perform other related audit services.
They also act as auditors for the Manager and certain other funds
advised by the Manager and its affiliates.
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of Oppenheimer Money Fund, Oppenheimer High
Income Fund, Oppenheimer Bond Fund, Oppenheimer Capital Appreciation Fund,
Oppenheimer Growth Fund, Oppenheimer Multiple Strategies Fund, Oppenheimer
Global Securities Fund and Oppenheimer Strategic Bond Fund (all of which are
series of Oppenheimer Variable Account Funds) as of December 31, 1994, the
related statements of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1994 and 1993, and the
financial highlights for the applicable periods ended December 31, 1994, 1993,
1992, 1991, 1990, 1989, 1988, 1987, and 1986, June 30, 1986 and December 31,
1985. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1994 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Money
Fund, Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund, Oppenheimer Multiple Strategies
Fund, Oppenheimer Global Securities Fund and Oppenheimer Strategic Bond Fund at
December 31, 1994, the results of their operations, the changes in their net
assets, and the financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
January 23, 1995
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Money Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Morgan Guaranty Trust Co.,
6.15%, dated 12/30/94, to be repurchased at $2,201,503 on
1/3/95, collateralized by FNMA 8.50%,
12/1/24, with a value of $2,263,118 (Cost $2,200,000)
$ 2,200,000 $ 2,200,000
- -----------------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC CERTIFICATES OF DEPOSIT - 4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Huntington National Bank, 5.82%, 1/4/95 (Cost $3,999,207) (1) 4,000,000
3,999,207
- -----------------------------------------------------------------------------------------------------------------------------------
DIRECT BANK OBLIGATIONS - 6.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Canadian Imperial Holdings, Inc., 6.03%, 2/23/95 3,000,000 2,973,368
-------------------------------------------------------------------------------------------------------------------------
FCC National Bank, 5.82%, 1/4/95 (1) 3,000,000 2,997,712
----------------
Total Direct Bank Obligations (Cost $5,971,080) 5,971,080
- -----------------------------------------------------------------------------------------------------------------------------------
LETTERS OF CREDIT - 10.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse, guaranteeing commercial paper of:
Queensland Alumina Ltd., 5.75%, 2/10/95 3,337,000 3,315,680
-------------------------------------------------------------------------------------------------------------------------
Mitsubishi Bank Ltd., guaranteeing commercial paper of: DIC
Americas, Inc., 5.85%, 1/18/95 3,000,000 2,991,713
-------------------------------------------------------------------------------------------------------------------------
Sanwa Bank Ltd., guaranteeing commercial paper of: Orix
America, Inc., 6.20%, 2/1/95 (2) 3,000,000 2,983,983
----------------
Total Letters of Credit (Cost $9,291,376) 9,291,376
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM NOTES - 73.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED - 12.6%
-------------------------------------------------------------------------------------------------------------------------
Beta Finance, Inc., 5.85%, 2/21/95 (2) 2,400,000 2,380,110
-------------------------------------------------------------------------------------------------------------------------
Cooperative Association of Tractor Dealers, Inc., 5.50%, 1/11/95 1,000,000 998,472
-------------------------------------------------------------------------------------------------------------------------
CXC, Inc., 5.75%, 2/10/95 4,000,000 3,974,444
-------------------------------------------------------------------------------------------------------------------------
WCP Funding, 6.10%, 2/13/95 4,000,000 3,970,856
----------------
11,323,882
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS - 7.8%
-------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp., 5.36%, 1/13/95 4,000,000 3,992,853
-------------------------------------------------------------------------------------------------------------------------
NationsBank Corp., 5.42%, 1/18/95 3,000,000 2,992,322
----------------
6,985,175
- -----------------------------------------------------------------------------------------------------------------------------------
BROKER/DEALERS - 13.9%
-------------------------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc., 5.79%, 1/3/95 (1) 2,000,000 2,000,000
-------------------------------------------------------------------------------------------------------------------------
Dean Witter, Discover & Co., 6.10%-6.11%, 2/10/95 3,000,000 2,979,633
-------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 5.61%, 1/12/95 2,000,000 2,000,000
-------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 6.22%, 1/3/95 (1) 1,500,000 1,500,000
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc., 5.49%, 1/3/95 (1) 4,000,000 4,000,000
----------------
12,479,633
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL FINANCE - 1.1%
-------------------------------------------------------------------------------------------------------------------------
CIT Group Holdings, Inc., 6.309%, 1/11/95 (1)(3) 1,000,000 1,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE (PERSONAL LOANS) - 3.3%
-------------------------------------------------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp., 5.10%, 1/23/95 3,000,000 2,990,650
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCE - 13.9%
-------------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 5.79%, 1/3/95 (1) 4,000,000 3,997,889
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Money Fund
FACE MARKET VALUE
SHORT-TERM NOTES (CONTINUED) AMOUNT SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED FINANCE (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
ITT Financial Corp., 5.83%, 2/15/95 $ 4,000,000 $ 3,970,850
-------------------------------------------------------------------------------------------------------------------------
Transamerica Finance Corp., 5.10%, 2/3/95 4,500,000 4,478,963
----------------
12,447,702
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS - 4.4%
-------------------------------------------------------------------------------------------------------------------------
Allergan, Inc., 6.18%, 2/10/95 4,000,000 3,972,533
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 4.4%
-------------------------------------------------------------------------------------------------------------------------
Internationale Nederlanden Verzekeringen, NV, guaranteeing
commercial paper of: Internationale Nederlanden U.S.
Insurance Holdings, Inc., 6.10%, 2/7/95 4,000,000 3,974,922
- -----------------------------------------------------------------------------------------------------------------------------------
LEASE FINANCING - 7.5%
-------------------------------------------------------------------------------------------------------------------------
International Lease Finance Corp., 5.85%, 2/24/95 3,000,000 2,973,675
-------------------------------------------------------------------------------------------------------------------------
Sanwa Business Credit Corp., 6.08%, 2/21/95 3,800,000 3,767,269
----------------
6,740,944
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 4.4%
-------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp., 5.95%, 2/15/95 4,000,000 3,970,251
----------------
Total Short-Term Notes (Cost $65,885,692) 65,885,692
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Small Business Administration, 9.375%-10.375%, 1/1/95 (Cost $2,079,755) (1) 1,969,925
2,079,755
-------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $89,427,110) 99.7%
89,427,110
-------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.3 243,807
------------------ ----------------
NET ASSETS 100.0% $ 89,670,917
------------------ ----------------
------------------ ----------------
</TABLE>
1. Variable rate security. The interest rate, which is based on
specific, or an index of, market interest rates, is subject to
change periodically and is the effective rate on December 31,
1994.
2. Security purchased in private placement transaction, without
registration under the Securities Act of 1933 (the Act). The
securities were acquired between November 22, 1994 and December
31, 1994, are carried at amortized cost, and amount to
$5,364,093, or 5.98% of the Fund's net assets.
3. Put obligation redeemable at full face value on the date reported.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer High Income Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 6.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $6,004,000 on 1/3/95, collateralized by
U.S. Treasury Nts., 3.875%-8.875%, 5/31/95-8/31/05, with a value of
$5,705,931 and U.S. Treasury Bonds, 10.75%-14.25%, 2/15/02-8/15/05,
with a value of $419,161(Cost $6,000,000) $ 6,000,000 $ 6,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
PRIVATE - 2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY - 1.4%
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-Through
Certificates, 8%, Series 1994-C2, Cl. G, 4/25/25 994,250 725,492
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-Through
Certificates, 8%, Series 1994-Cl, Cl. E, 6/25/26 789,270 598,612
----------------
1,324,104
- -----------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp. Mtg. Pass-Through Certificates,
7.97%, Series 1993-J2, Cl. B1, 6/15/23 (5) 1,198,290 850,121
----------------
Total Mortgage-Backed Obligations (Cost $2,355,538) 2,174,225
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 9.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 1/12/95 500,000 496,415
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 10/11/95 1,000,000 863,309
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 4/6/95 1,000,000 939,261
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 7/27/95 500,000 447,984
-------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, Banco Do Nordeste
Brasil, 10.375%, 11/6/95 (5) 750,000 742,500
- -----------------------------------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, 0%, 5/12/95 IDR 2,000,000,000
863,967
- -----------------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 NZD 1,000,000 684,949
- -----------------------------------------------------------------------------------------------------------------------------------
Japan Development Bank (The) Gtd. Bonds, 5%, 10/1/99 JPY 95,000,000
989,682
- -----------------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 5.938%, 1/1/09 (4) 1,000,000 663,750
- -----------------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 10%, 7/15/97 NZD 500,000
324,797
- -----------------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 8%, 11/15/95 NZD 1,500,000
948,259
- -----------------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 9%, 11/15/96 NZD 1,250,000
794,465
- -----------------------------------------------------------------------------------------------------------------------------------
Poland (Republic of) Disc. Bonds, 6.813%, 10/27/24 250,000 180,626
- -----------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., 9%, 5/27/96 500,000 471,250
----------------
Total Foreign Government Obligations (Cost $9,628,161) 9,411,214
- -----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Pinole, California Redevelopment Agency Tax Allocation
Taxable Bonds, Pinole Vista Redevelopment, Series B, 7.65%, 975,000 901,696
8/1/07
-------------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, California Transportation Corridor Agency Toll Road Capital
Appreciation Revenue Bonds, Jr. Lien, 0%, 1/1/28 12,500,000 571,400
----------------
Total Municipal Bonds and Notes (Cost $1,645,000) 1,473,096
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer High Income Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS AND NOTES - 67.8%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 7.0%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 $ 1,000,000 $ 1,007,500
-------------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 750,000 663,750
----------------
1,671,250
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 2.2%
-------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts.,
2/1/03 250,000 251,875
-------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 9.875% Sr. Nts., 2/15/02 700,000
644,000
-------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (3) 850,000 531,250
-------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 650,000 650,000
----------------
2,077,125
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - 3.1%
-------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc., 12.375% Sr. Nts., 8/15/02 (2) 100,000 50,500
-------------------------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 310,000 254,200
-------------------------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% Fst. Priority Sr. Sec. Nts.,
2/1/02 450,000 403,875
-------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.375% Sr. Sub. Nts., 6/30/04 400,000 406,000
-------------------------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04 (5) 350,000 360,500
-------------------------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 500,000 493,750
-------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 10.75% Fst. Mtg. Nts., 10/1/02 1,000,000 1,000,000
----------------
2,968,825
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 21.3%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Envirotest Systems Corp., 9.125% Sr. Nts., 3/15/01 100,000 82,500
-------------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp., Units (3) 500,000 265,000
-------------------------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 675,000 617,625
----------------
965,125
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION SUPPLIES AND DEVELOPMENT - 3.8%
-------------------------------------------------------------------------------------------------------------------------
Hillsborough Holdings Corp., 7.50% Participation Agreement,
12/30/99 (2)(5) 1,000,000 1,575,000
-------------------------------------------------------------------------------------------------------------------------
Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03 600,000 573,000
-------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A,
12/1/11 (5) 500,000 432,500
-------------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc., 14.625% Sr. Nts., Series B, 1/1/99 (2) 400,000 748,000
-------------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc., 17% Sub. Debs., 1/1/96 (2) 400,000 278,000
----------------
3,606,500
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER GOODS AND SERVICES - 5.1%
-------------------------------------------------------------------------------------------------------------------------
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 500,000 497,500
-------------------------------------------------------------------------------------------------------------------------
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 500,000 340,000
5/27/98
-------------------------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts.,
8/1/02 1,000,000 1,085,000
-------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., 12.25% Sub. Nts., 7/1/96 750,000
748,125
-------------------------------------------------------------------------------------------------------------------------
Mary Kay Corp., 12.75% Gtd. Sr. Nts., Series B, 12/6/00 (5) 1,000,000 1,045,000
-------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 12% Sr. Sub. Nts., Series B, 11/1/03 1,000,000
955,000
-------------------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., 0% Sr. Sec. Disc. Nts., 3/15/98 350,000 207,375
----------------
4,878,000
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 1.2%
-------------------------------------------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 150,000 152,250
-------------------------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02 521,305 553,887
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer High Income Fund
FACE MARKET VALUE
CORPORATE BONDS AND NOTES (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Lady Luck Gaming Finance Corp., 10.50% Fst. Mtg. Nts., 3/1/01 $ 450,000 $
200,250
-------------------------------------------------------------------------------------------------------------------------
United Gaming, Inc., 7.50% Cv. Sub. Debs., 9/15/03 320,000 251,200
----------------
1,157,587
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 7.4%
-------------------------------------------------------------------------------------------------------------------------
Ackerley Communications, Inc., 10.75% Sr. Sec. Nts.,
Series A, 10/1/03 750,000 716,250
-------------------------------------------------------------------------------------------------------------------------
Act III Broadcasting, Inc., 9.625% Sr. Sub. Nts., 12/15/03 430,000 396,675
-------------------------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04 (3) 350,000 189,000
-------------------------------------------------------------------------------------------------------------------------
Chancellor Broadcasting Co., 12.50% Sr. Sub. Nts., 10/1/04 700,000 689,500
-------------------------------------------------------------------------------------------------------------------------
Continental Broadcasting Ltd./Continental Broadcasting
Capital Corp., 10.625% Sr. Sub. Nts., 7/1/03 600,000 607,500
-------------------------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10 (5) 487,255 517,099
-------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 500,000 479,375
-------------------------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375% Sr. Sub. Nts., 11/1/03 1,500,000
1,470,000
-------------------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 990,000
-------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 345,000 324,300
-------------------------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts.,
1/15/01 700,000 731,500
----------------
7,111,199
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE DEVELOPMENT - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd., 11% Debs.,
Series 3, 11/4/49 (2)CAD 1,000,000 455,377
-------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts.,
4/1/02 650,000 546,000
----------------
1,001,377
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL - 1.8%
-------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 700,000 546,000
-------------------------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc., 0%/11.50%
Sr. Sec. Disc. Nts., 8/15/03 (3) 1,500,000 645,000
-------------------------------------------------------------------------------------------------------------------------
Zale Delaware, Inc., 11% Gtd. 2nd Priority Sr. Sec. Nts.,
7/30/00 500,000 501,250
----------------
1,692,250
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 4.1%
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.0%
-------------------------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc., 14% Sub. Debs., 2/1/01 (2) 300,000 111,000
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD AND DRUG DISTRIBUTION - 2.4%
-------------------------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 700,000 658,000
-------------------------------------------------------------------------------------------------------------------------
Duane Reade, 12% Sr. Nts., Series B, 9/15/02 250,000 211,250
-------------------------------------------------------------------------------------------------------------------------
Grand Union Co., 11.25% Sr. Nts., 7/15/00 250,000 222,500
-------------------------------------------------------------------------------------------------------------------------
Grand Union Co., 12.25% Sr. Sub. Nts., 7/15/02 1,350,000 533,250
-------------------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 750,000 626,250
----------------
2,251,250
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., Units (5) 700 689,500
-------------------------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., Units 1,200,000 906,000
----------------
1,595,500
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BP America, Inc., 10.875% Nts., 8/1/01 CAD 350,000 261,530
-------------------------------------------------------------------------------------------------------------------------
Maxus Energy Corp., 11.50% Debs., 11/15/15 800,000 758,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer High Income Fund
FACE MARKET VALUE
CORPORATE BONDS AND NOTES (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Maxus Energy Corp., 8.50% Debs., 4/1/08 $ 500,000 $ 395,000
-------------------------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 750,000 836,250
-------------------------------------------------------------------------------------------------------------------------
Presidio Oil Co., 11.50% Sr. Sec. Nts., Series B, 9/15/00 925,000 689,125
-------------------------------------------------------------------------------------------------------------------------
Presidio Oil Co., 13.675% Sr. Sub. Gas Indexed Nts.,
Series B, 7/15/02 (4) 150,000 93,000
----------------
3,032,905
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub. Nts.,
Series B, 10/1/03 1,600,000 1,672,000
-------------------------------------------------------------------------------------------------------------------------
Citibank, 15% CD, 8/28/95 (7)CLP 417,450,058 1,040,893
-------------------------------------------------------------------------------------------------------------------------
Citibank, 15.20% CD, 11/20/95 (7)CLP 431,553,156 1,076,058
-------------------------------------------------------------------------------------------------------------------------
Citibank, 15.20% CD, 9/1/95 (7)CLP 419,050,049 1,044,882
-------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 (5) 369,597 406,557
-------------------------------------------------------------------------------------------------------------------------
Nacolah Holding Corp., 9.50% Sr. Nts., 12/1/03 650,000 578,500
-------------------------------------------------------------------------------------------------------------------------
SBC Finance (C.I.) Ltd., 5.50% Swiss Bank Corp. Gtd. Nts.,
9/30/97 CHF 1,280,000 987,146
----------------
6,806,036
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
GENERAL INDUSTRIAL - 1.9%
-------------------------------------------------------------------------------------------------------------------------
EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 500,000 431,250
-------------------------------------------------------------------------------------------------------------------------
Farley, Inc., 0% Sub. Debs., 12/30/12 115,000 12,075
-------------------------------------------------------------------------------------------------------------------------
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01 640,000 720,000
-------------------------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96 (5) 688,000 651,880
----------------
1.815,205
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.1%
-------------------------------------------------------------------------------------------------------------------------
AMR Corp., 10% Nts., 4/15/21 825,000 799,105
-------------------------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 1,200,000 1,134,000
-------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr.
Disc. Nts., Series B, 12/15/03 (3) 2,000,000 1,010,000
----------------
2,943,105
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 15.9%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.0%
-------------------------------------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 300,000 231,000
-------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 9.50% Medium-Term Nts., Series A, 12/15/01 (5) 500,000
332,500
-------------------------------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 400,000 398,000
----------------
961,500
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 5.7%
-------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 0%/12.50% Sr. Disc. Nts.,
6/15/04 (3) 1,000,000 450,000
-------------------------------------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B,
4/1/08 500,000 450,000
-------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 10.75% Sr. Sub. Debs., 4/1/04 500,000 502,500
-------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 4/1/23 200,000 180,000
-------------------------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13 650,000 599,625
-------------------------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 1,100,000 574,750
-------------------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts.,
Series B, 11/1/03 (4) 1,000,000 905,000
-------------------------------------------------------------------------------------------------------------------------
Marcus Cable Operating Co. LP/Marcus Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04 (3) 1,500,000 795,000
-------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,037,500
----------------
5,494,375
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer High Income Fund
FACE MARKET VALUE
CORPORATE BONDS AND NOTES (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS - 7.2%
-------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04 (3)(5) $ 1,250,000 $ 815,775
-------------------------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (3) 2,000,000 1,310,000
-------------------------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., 0% Nts., Series B, 3/5/00 500,000 342,500
-------------------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00 (3) 1,500,000 1,050,000
-------------------------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts.,
1/15/04 (3) 1,000,000 597,500
-------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub.
Disc. Nts., 8/1/03 (3) 2,000,000 1,240,000
-------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 9.75% Sr. Sec. Nts.,
8/1/00 500,000 473,750
-------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., .50%/14% Sr. Sub. Disc. Nts.,
11/15/01 (5)(9) 1,000,000 665,000
-------------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 400,000 402,500
----------------
6,897,025
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 2.0%
-------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., 11% Sr. Nts., 8/15/00 500,000 525,000
-------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7%/10% Sr. Nts., 3/1/01 (8) 1,600,000 1,336,000
----------------
1,861,000
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Beaver Valley II Funding Corp., 9% 2nd Lease Obligation
Bonds, 6/1/17 2,070,000 1,481,778
-------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 10.375% Lease Obligation Debs.,
1/2/11 (2) 900,000 468,705
-------------------------------------------------------------------------------------------------------------------------
El Paso Funding Co., 10.75% Debs., 4/1/13 (2) 750,000 390,574
-------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16 600,000 544,088
-------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.30% Lease Obligation Bonds,
Series 1986A, 1/15/14 1,000,000 917,336
-------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A,
12/28/08 (5) 250,000 216,250
----------------
4,018,731
----------------
Total Corporate Bonds and Notes (Cost $68,797,660) 64,916,870
SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 2.2%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES - 0.1%
-------------------------------------------------------------------------------------------------------------------------
Leaseway Transportation Corp. (2) 11,142 123,955
- -----------------------------------------------------------------------------------------------------------------------------------
BROADCAST MEDIA - 0.1%
-------------------------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. A (2) 4,964 58,327
- -----------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDING - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. (2)(5) 21,111 84,444
-------------------------------------------------------------------------------------------------------------------------
Trizec, Ltd. (2) 8,410 56,959
----------------
141,403
- -----------------------------------------------------------------------------------------------------------------------------------
HOTELS/MOTELS - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Celcaribe SA (5) 203,250 234,225
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE TIME - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Capital Gaming, Inc. (2) 25,336 76,008
-------------------------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., Cl. 1 (2)(5) 10,355 203,217
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer High Income Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE TIME (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp. (2) 31,666 $ 182,078
----------------
461,303
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT STORES - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. 20,239 389,601
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT, GENERAL AND SPECIALTY - 0.0%
-------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., Cl. A (2) 2,000 30,000
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Zale Corp. (2) 56,802 681,624
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
OIL WELL SERVICES AND EQUIPMENT - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Petrolane, Inc., Cl. B 45,360 629,370
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCE - 0.2%
-------------------------------------------------------------------------------------------------------------------------
ECM Fund L.P.I. (5) 150 150,000
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: INSTRUMENTATION - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp. (2)(5) 46,220 207,990
----------------
Total Common Stocks (Cost $2,608,222) 3,107,798
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 5.3%
- -----------------------------------------------------------------------------------------------------------------------------------
AK Steel Holding Corp., 7% Cv. Stock Appreciation Income
Linked Securities 10,000 312,500
-------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 9% Exchangeable Notes for Common
Stock of Lyondell Petrochemical Co., 9/15/97 17,000 444,124
-------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp., $3.3438, Series E 12,306 313,803
-------------------------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 5,000 501,250
-------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., $7.00 Cv., Series A (5) 2,500 431,250
-------------------------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 7,500 735,000
-------------------------------------------------------------------------------------------------------------------------
Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 16,500
459,938
-------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum Corp., 8.255% Provisionally Redeemable
Income Debt Exchangeable for Stock 40,700 432,438
-------------------------------------------------------------------------------------------------------------------------
K-III Communications Corp., $11.625 Exch., Series B (6) 6,698 643,067
-------------------------------------------------------------------------------------------------------------------------
Navistar International Corp., $6.00 Cv., Series G 2,500 128,750
-------------------------------------------------------------------------------------------------------------------------
Offshore Pipelines, Inc., $2.25 Cum. Cv. Exch. 5,000 245,000
-------------------------------------------------------------------------------------------------------------------------
Pantry Pride, Inc., $14.875 Exch., Series B 2,000 192,000
-------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 14,000 266,000
----------------
Total Preferred Stocks (Cost $4,909,991) 5,105,120
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.9%
- -----------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 5,000 11,250
-------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Excess Cash Flow Payment
Certificates, Series AG-7A 12,400 124
-------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust 39,658 397
-------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 21,112 15,834
-------------------------------------------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 1,631 816
-------------------------------------------------------------------------------------------------------------------------
Digicon, Inc. Wts., Exp. 7/96 4,699 293
-------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03 700 3,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer High Income Fund
MARKET VALUE
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED) UNITS
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federated Department Stores, Inc. Wts., Cl. C, Exp. 12/99 13,481 $ 69,090
-------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. Wts., Cl. D, Exp. 12/01 13,481 75,830
-------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 7/96 71,950 521,638
-------------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/03 28,000 105,000
-------------------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc. Wts., Exp. 8/97 (5) 2,599 52
-------------------------------------------------------------------------------------------------------------------------
Southland Corp. Wts., Exp. 3/96 400 1,000
-------------------------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/96 (5) 144 108
-------------------------------------------------------------------------------------------------------------------------
UGI Corp. Wts., Exp. 3/98 6,000 10,200
----------------
Total Rights, Warrants and Certificates (Cost $514,543) 815,132
FACE
AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 1.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust, Series 1994-II,
11.30%, 4/1/00 (5) $ 956,521 815,435
-------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Standard & Poor's 500
Index-Linked Nts., 5.788%, 1/25/95 (5) 250,000 292,800
-------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co. Inc., Standard & Poor's 500 Index-Linked
Nts., 5.60%, 2/6/95 (5) 100,000 116,990
----------------
Total Structured Instruments (Cost $1,461,322) 1,225,225
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $97,920,437) 98.5%
94,228,680
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.5 1,469,629
------------------ ----------------
NET ASSETS 100.0% $ 95,698,309
------------------ ----------------
------------------ ----------------
</TABLE>
1. Face amount is reported in local currency. Foreign currency abbreviations
are as follows:
CAD - Canadian Dollar IDR - Indonesian Rupiah
CHF - Swiss Franc JPY - Japanese Yen
CLP - Chilean Peso NZD - New Zealand Dollar
2. Non-income producing security.
3. Represents a zero coupon bond that converts to a fixed rate of interest at
a designated future date.
4. Represents the current interest rate for a variable rate security.
5. Restricted security - See Note 7 of Notes to Financial Statements.
6. Interest or dividend is paid in kind.
7. Indexed instrument for which the principal amount due at maturity is
affected by the relative value of a foreign currency.
8. Represents the current interest rate for an increasing rate security.
9. Represents a bond that pays contingent supplemental interest
until it converts to a fixed rate of interest at a designated
future date.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Bond Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 11.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $15,710,467 on 1/3/95, collateralized
by U.S. Treasury Nts., 3.875%-8.875%, 5/31/95-8/31/05, with a value of
$14,930,519 and U.S. Treasury Bonds, 10.75%-14.25%, 2/15/02-8/15/05,
with a value of $1,096,803 (Cost $15,700,000) $ 15,700,000 $ 15,700,000
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 12.2%
- -----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 7.2%
- -----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 5.1%
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg.
Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 8.75%, 12/25/20 3,000,000 3,041,880
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, 10.40%, 4/25/19 2,000,000 2,100,680
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 240, Cl. 2, 7%, 9/25/23 (4) 1,694,353 631,941
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 257, Cl. 2, 7%, 2/25/24 (4) 2,797,923 1,058,839
----------------
6,833,340
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED - 2.1%
-------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 6%, 10/20/24 3,056,995 2,897,458
- -----------------------------------------------------------------------------------------------------------------------------------
PRIVATE - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL - 4.0%
-------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Series 1994-C1, Cl. 2-D, 8.70%, 9/25/25 (2) 1,500,000 1,426,875
-------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Series 1994-C1, Cl. 2-E, 8.70%, 9/25/25 (2) 1,500,000 1,374,844
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1992-CHF, Cl. C, 8.25%, 12/25/20 1,098,572 1,047,421
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1994-C1, Cl. A4, 7.25%, 6/25/26 1,536,996 1,512,020
----------------
5,361,160
- -----------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1991-M5, Cl. A, 9%, 3/25/17 1,358,728 1,347,902
----------------
Total Mortgage-Backed Obligations (Cost $16,407,096) 16,439,860
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 24.3%
- -----------------------------------------------------------------------------------------------------------------------------------
TREASURY - 24.3%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.125%, 2/15/23 3,000,000 2,729,061
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.25%, 8/15/22 6,000,000 5,536,871
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/24 3,000,000 2,868,750
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 8%, 11/15/21 5,000,000 5,017,184
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.875%, 5/15/95 3,000,000 2,994,375
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6%, 12/31/97 3,000,000 2,859,375
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6.375%, 6/30/97 1,000,000 969,062
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 7.25%, 5/15/04 1,000,000 960,625
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 7.25%, 8/15/04 6,000,000 5,760,000
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 7.875%, 6/30/96 1,000,000 1,005,312
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Bond Fund
FACE MARKET VALUE
U.S. GOVERNMENT OBLIGATIONS (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury Nts., 9.25%, 8/15/98 $ 2,000,000 $ 2,087,500
----------------
Total U.S. Government Obligations (Cost $34,170,590) 32,788,115
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 16.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 1/12/95 500,000 496,415
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 10/11/95 1,000,000 863,309
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 3/2/95 2,070,000 2,001,074
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 4/6/95 1,000,000 939,261
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 7/27/95 2,084,000 1,867,198
-------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, 0%, 8/3/95 250,000 232,300
-------------------------------------------------------------------------------------------------------------------------
Corporacion Andina de Fomento Bonds, 6.625%, 10/14/98 (2) 1,000,000
900,000
-------------------------------------------------------------------------------------------------------------------------
Corporacion Andina de Fomento Nts., 7.25%, 4/30/98 (2) 1,000,000 918,750
-------------------------------------------------------------------------------------------------------------------------
Czechoslovakia National Bank Bonds, 7%, 4/6/96 (2) 1,500,000 1,482,188
-------------------------------------------------------------------------------------------------------------------------
Financiera Energetica Nacional Nts., 6.625%, 12/13/96 2,350,000 2,235,438
-------------------------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, 0%, 5/12/95 IDR 3,000,000,000
1,295,951
-------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 NZD 1,000,000 684,949
-------------------------------------------------------------------------------------------------------------------------
Japan Development Bank (The) Gtd. Bonds, 5%, 10/1/99 JPY 195,000,000
2,031,453
-------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 10%, 7/15/97 NZD 1,250,000
811,993
-------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 8%, 11/15/95 NZD 1,500,000
948,259
-------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 9%, 11/15/96 NZD 2,250,000
1,430,037
-------------------------------------------------------------------------------------------------------------------------
South Australia Government Finance Authority Bonds, 10%,
1/15/03 AUD 2,000,000 1,497,979
-------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts. (Gilt), 12%, 11/20/98 GBP 550,000 951,362
-------------------------------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, Series 98,
12.50%, 4/1/98 AUD 200,000 164,390
----------------
Total Foreign Government Obligations (Cost $22,268,415) 21,752,306
- -----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 2.8%
- -----------------------------------------------------------------------------------------------------------------------------------
City of New York Taxable General Obligation Bonds,
Series D, 9.90%, 2/1/15 500,000 531,275
-------------------------------------------------------------------------------------------------------------------------
Connecticut State Taxable General Obligation Bonds, 6.625%,
12/15/97 650,000 624,593
-------------------------------------------------------------------------------------------------------------------------
Dade County, Florida Educational Facilities Authority
Taxable Exchange Revenue Bonds, University of Miami, MBIA 325,000
346,339
Insured, 7.65%, 4/1/10
-------------------------------------------------------------------------------------------------------------------------
Dade County, Florida Educational Facilities Authority
Taxable Exchange Revenue Bonds, University of Miami, MBIA 175,000
192,802
Insured, 9.70%, 4/1/10
-------------------------------------------------------------------------------------------------------------------------
New York State Environmental Facilities Corp. State Service
Contract Taxable Revenue Bonds, Series B, 7.30%, 3/15/97 200,000 196,945
-------------------------------------------------------------------------------------------------------------------------
New York State Environmental Facilities Corp. State Service
Contract Taxable Revenue Bonds, Series B, 8.15%, 3/15/02 800,000 772,090
-------------------------------------------------------------------------------------------------------------------------
Pinole, California Redevelopment Agency Tax Allocation 670,000 625,107
Taxable Bonds, Pinole Vista Redevelopment, Series B, 8.35%,
8/1/17
-------------------------------------------------------------------------------------------------------------------------
Port of Portland, Oregon Special Obligation Taxable Revenue
Bonds, PAMCO Project, 9.20%, 5/15/22 500,000 500,431
----------------
Total Municipal Bonds and Notes (Cost $3,803,121) 3,789,582
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Bond Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS AND NOTES - 30.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 4.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 $ 2,100,000 $
2,276,473
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - 3.0%
-------------------------------------------------------------------------------------------------------------------------
Boise Cascade Corp., 9.90% Nts., 3/15/00 750,000 774,117
-------------------------------------------------------------------------------------------------------------------------
Noranda Forest, Inc., 11% Debs., 7/15/98 CAD 1,000,000 736,088
-------------------------------------------------------------------------------------------------------------------------
R.P. Scherer International Corp., 6.75% Sr. Nts., 2/1/04 1,250,000 1,081,250
-------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collaterized Nts.,
7/20/15 1,606,437 1,492,805
----------------
4,084,260
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 5.7%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Chrysler Corp., 10.95% Debs., 8/1/17 800,000 873,248
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER GOODS AND SERVICES - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Eastman Kodak Co., 10% Nts., 6/15/01 250,000 257,327
-------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs., 3/15/11 1,097,000 893,291
-------------------------------------------------------------------------------------------------------------------------
Mattel, Inc., 6.875% Sr. Nts., 8/1/97 700,000 675,235
-------------------------------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc., 8.875% Nts., 7/1/96 500,000 504,659
----------------
2,330,512
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 1.2%
-------------------------------------------------------------------------------------------------------------------------
Circus Circus Enterprises, Inc., 6.75% Nts., 7/15/03 1,225,000 1,064,427
-------------------------------------------------------------------------------------------------------------------------
Columbia Pictures Entertainment, Inc., 9.875% Sr. Sub. Nts.,
2/1/98 500,000 515,472
----------------
1,579,899
- -----------------------------------------------------------------------------------------------------------------------------------
HOTELS/LODGING - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 10.125% Sr. Nts., Series F,
1/15/99 138,000 138,690
-------------------------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 10.625% Sr. Nts., Series B,
2/1/00 164,000 164,205
-------------------------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 11% Sr. Nts., Series L,
5/1/07 388,000 391,880
----------------
694,775
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.7%
-------------------------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10 (2) 1,169,412 1,241,039
-------------------------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Gtd. Sr. Debs., 10/15/12 500,000
532,242
-------------------------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 12% Sr. Nts., 12/15/01 500,000 556,905
----------------
2,330,186
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD AND DRUG DISTRIBUTION - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Hook-Superx Inc., 10.125% Sr. Nts., 6/1/02 600,000 610,500
-------------------------------------------------------------------------------------------------------------------------
Revco D.S., Inc., 9.125% Sr. Nts., 1/15/00 750,000 751,875
----------------
1,362,375
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 4.5%
-------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 10.375% Nts., 7/15/95 375,000 380,966
-------------------------------------------------------------------------------------------------------------------------
BP America, Inc., 10.875% Nts., 8/1/01 CAD 650,000 485,698
-------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 2,000,000 2,135,000
-------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 9.75% Sr. Debs., 8/1/03 200,000 209,452
-------------------------------------------------------------------------------------------------------------------------
Enron Corp., 9.875% Debs., 6/15/03 375,000 406,137
-------------------------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 400,000 407,163
-------------------------------------------------------------------------------------------------------------------------
Mitchell Energy & Development Corp., 9.25% Sr. Nts., 1/15/02 1,000,000
1,016,446
-------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 10% Debs., 3/15/08 400,000 432,972
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Bond Fund
FACE MARKET VALUE
CORPORATE BONDS AND NOTES (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 7.875% Nts., 10/1/02 $ 650,000 $ 621,512
----------------
6,095,346
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 7.2%
- -----------------------------------------------------------------------------------------------------------------------------------
American Car Line Co., 8.25% Equipment Trust Certificates,
Series 1993-A, 4/15/08 660,000 640,200
-------------------------------------------------------------------------------------------------------------------------
Chemical New York Corp., 9.75% Sub. Cap. Nts., 6/15/99 200,000
207,898
-------------------------------------------------------------------------------------------------------------------------
Citibank, 11.10% CD, 11/15/95 (3) CLP 649,629,998 1,619,823
-------------------------------------------------------------------------------------------------------------------------
Citibank, 15% CD, 8/28/95 (3) CLP 521,812,572 1,301,116
-------------------------------------------------------------------------------------------------------------------------
First Chicago Corp., 11.25% Sub. Nts., 2/20/01 750,000 842,527
-------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorporation, 8.50% Sub. Cap. Nts., 4/1/98 100,000 100,619
-------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.50% Nts., 12/15/01 300,000 247,797
-------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 7.75% Nts., 4/15/97 700,000 687,697
-------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 8% Nts., 10/1/96 700,000 696,821
-------------------------------------------------------------------------------------------------------------------------
Heller Financial, Inc., 7.75% Nts., 5/15/97 475,000 468,761
-------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 8.375% Nts., 2/15/99 350,000 336,445
-------------------------------------------------------------------------------------------------------------------------
NBD Bancorp, Inc., 7.25% Sub. Debs., 8/15/04 165,000 151,188
-------------------------------------------------------------------------------------------------------------------------
PaineWebber Group, Inc., 7.75% Sub. Nts., 9/1/02 450,000 411,258
-------------------------------------------------------------------------------------------------------------------------
SBC Finance (C.I.) Ltd., 5.50% Swiss Bank Corp. Gtd. Nts.,
9/30/97 CHF 2,570,000 1,982,004
----------------
9,694,154
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 1.0%
-------------------------------------------------------------------------------------------------------------------------
AMR Corp., 10% Nts., 4/15/21 975,000 944,397
-------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 400,000 420,968
----------------
1,365,365
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 4.3%
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 3.9%
-------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.15% Debs., 2/1/23 300,000 269,968
-------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 8.375% Sr.
Debs., 3/15/23 1,500,000 1,255,012
-------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 3,600,000 3,735,000
----------------
5,259,980
- -----------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS - 0.4%
-------------------------------------------------------------------------------------------------------------------------
GTE Corp., 9.375% Debs., 12/1/00 500,000 520,010
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth Edison Co., 6.40% Nts., 10/15/05 275,000 220,162
-------------------------------------------------------------------------------------------------------------------------
Commonwealth Edison Co., 6.50% Nts., 7/15/97 550,000 522,735
-------------------------------------------------------------------------------------------------------------------------
Long Island Lighting Co., 7% Nts., 3/1/04 150,000 119,856
-------------------------------------------------------------------------------------------------------------------------
Public Service Company of Colorado, 8.75% Fst. Mtg. Bonds,
3/1/22 750,000 729,657
-------------------------------------------------------------------------------------------------------------------------
Sonat, Inc., 9.50% Nts., 8/15/99 250,000 259,444
-------------------------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 500,000 521,319
----------------
2,373,173
----------------
Total Corporate Bonds and Notes (Cost $43,341,744) 40,839,756
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 9% Exchangeable Notes for Common
Stock of Lyondell Petrochemical Co., 9/15/97 (Cost $717,850) 25,000 653,125
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Bond Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STRUCTURED INSTRUMENTS - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York (Singapore Branch),
12.15% CD, 2/3/95 (Cost $600,000) (3) $ 600,000 $ 549,553
-------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $137,008,816) 98.1%
132,512,297
-------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.9 2,555,087
------------------ ----------------
NET ASSETS 100.0% $ 135,067,384
------------------ ----------------
------------------ ----------------
</TABLE>
1. Face amount is reported in local currency. Foreign currency
abbreviations are as follows:
AUD - Australian Dollar GBP - Pound Sterling
CAD - Canadian Dollar IDR - Indonesian Rupah
CHF - Swiss Franc JPY - Japanese Yen
CLP - Chilean Peso NZD - New Zealand Dollar
2. Restricted security - See Note 7 of Notes to Financial Statements.
3. Indexed instrument for which the principal amount and/or interest
due at maturity is affected by the relative value of a foreign
currency.
4. Interest - Only Strips represent the right to receive the monthly
interest payment on an underlying pool of mortgage loans. These
securities typically decline in price as interest rates decline.
Most other fixed-income securities increase in price when
interest rates decline. The principal amount of the underlying
pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more
sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs).
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 12.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $23,415,600 on 1/3/95, collateralized
by U.S. Treasury Nts., 3.875%-8.875%, 5/31/95-8/31/05, with a value of
$22,253,130 and U.S. Treasury Bonds, 10.75%-14.25%, 2/15/02-8/15/05,
with a value of $1,634,726 (Cost $23,400,000) $ 23,400,000 $ 23,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 0.9%
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Medaphis Corp., 6.50% Cv. Sub. Nts., 1/1/00 (1) 1,000,000 1,672,500
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
GENERAL INDUSTRIAL - 0.4%
-------------------------------------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc., 8.25% Cv. Sub. Debs.,
8/15/01 (1) 1,000,000 685,000
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Intelcom Group, Inc., 7% Cv. Sub. Nts., 10/30/98 (1)(3) 1,070,000 860,666
-------------------------------------------------------------------------------------------------------------------------
Sierra On-Line, Inc., 6.50% Cv. Sub. Nts., 4/1/01 (1) 1,000,000 1,275,000
-------------------------------------------------------------------------------------------------------------------------
Solectron Corp., 0% Cv. Liquid Yield Option Sub. Nts.,
5/5/12 1,700,000 971,125
----------------
3,106,791
----------------
Total Convertible Corporate Bonds and Notes (Cost $4,674,033) 5,464,291
SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 82.5%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 2.4%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.6%
-------------------------------------------------------------------------------------------------------------------------
Geon Co. (The) 30,000 821,250
-------------------------------------------------------------------------------------------------------------------------
Georgia Gulf Corp. (2) 57,000 2,215,875
----------------
3,037,125
- -----------------------------------------------------------------------------------------------------------------------------------
STEEL - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Birmingham Steel Corp. 71,000 1,420,000
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 21.7%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTO PARTS: AFTER MARKET - 1.3%
-------------------------------------------------------------------------------------------------------------------------
Breed Technologies, Inc. 54,000 1,532,250
-------------------------------------------------------------------------------------------------------------------------
Gentex Corp. (2) 40,000 970,000
----------------
2,502,250
- -----------------------------------------------------------------------------------------------------------------------------------
HOTELS/MOTELS - 1.9%
-------------------------------------------------------------------------------------------------------------------------
Carnival Corp., Inc., Cl. A 82,000 1,742,500
-------------------------------------------------------------------------------------------------------------------------
Doubletree Corp. (2) 35,000 638,750
-------------------------------------------------------------------------------------------------------------------------
Hospitality Franchise Systems, Inc. (2) 41,000 1,086,500
----------------
3,467,750
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHINGS AND APPLIANCES - 1.6%
-------------------------------------------------------------------------------------------------------------------------
Duracraft Corp. (2) 20,000 637,500
-------------------------------------------------------------------------------------------------------------------------
Sunbeam-Oster, Inc. 90,300 2,325,225
----------------
2,962,725
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE TIME - 1.1%
-------------------------------------------------------------------------------------------------------------------------
Brunswick Corp. 62,000 1,170,250
-------------------------------------------------------------------------------------------------------------------------
Cannondale Corp. (2) 40,000 410,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE TIME (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Outboard Marine Corp. 25,000 $ 490,625
----------------
2,070,875
- -----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Apple South, Inc. 67,500 885,938
-------------------------------------------------------------------------------------------------------------------------
Outback Steakhouse, Inc. (2) 30,500 716,750
----------------
1,602,688
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT STORES - 3.0%
-------------------------------------------------------------------------------------------------------------------------
Carson Pirie Scott & Co. (2) 52,000 988,000
-------------------------------------------------------------------------------------------------------------------------
Dollar General Corp. 76,000 2,280,000
-------------------------------------------------------------------------------------------------------------------------
Kohl's Corp. (2) 22,000 874,500
-------------------------------------------------------------------------------------------------------------------------
Nordstrom, Inc. 35,000 1,470,000
----------------
5,612,500
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 8.6%
-------------------------------------------------------------------------------------------------------------------------
AnnTaylor Stores, Inc. (2) 45,000 1,546,875
-------------------------------------------------------------------------------------------------------------------------
Bolle America, Inc. (2) 100,000 900,000
-------------------------------------------------------------------------------------------------------------------------
General Nutrition Cos., Inc. (2) 64,400 1,867,600
-------------------------------------------------------------------------------------------------------------------------
Gymboree Corp. (2) 45,000 1,293,750
-------------------------------------------------------------------------------------------------------------------------
Heilig-Meyers Co. 22,500 568,125
-------------------------------------------------------------------------------------------------------------------------
Insurance Auto Auctions, Inc. (2) 35,000 1,069,688
-------------------------------------------------------------------------------------------------------------------------
Micro Warehouse, Inc. (2) 65,000 2,275,000
-------------------------------------------------------------------------------------------------------------------------
Office Depot, Inc. (2) 30,000 720,000
-------------------------------------------------------------------------------------------------------------------------
OfficeMax, Inc. (2) 30,500 808,250
-------------------------------------------------------------------------------------------------------------------------
Rex Stores Corp. (2) 40,000 650,000
-------------------------------------------------------------------------------------------------------------------------
Sports & Recreation, Inc. (2) 35,000 901,250
-------------------------------------------------------------------------------------------------------------------------
Staples, Inc. (2) 45,000 1,113,750
-------------------------------------------------------------------------------------------------------------------------
Strouds, Inc. (2) 19,000 182,875
-------------------------------------------------------------------------------------------------------------------------
Viking Office Products, Inc. (2) 65,000 1,990,625
----------------
15,887,788
- -----------------------------------------------------------------------------------------------------------------------------------
SHOES - 1.9%
-------------------------------------------------------------------------------------------------------------------------
Nike, Inc., Cl. B 46,000 3,432,750
- -----------------------------------------------------------------------------------------------------------------------------------
TEXTILES: APPAREL MANUFACTURERS - 1.4%
-------------------------------------------------------------------------------------------------------------------------
Cygne Designs, Inc. (2) 50,000 687,500
-------------------------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp. (2) 42,100 1,899,763
----------------
2,587,263
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 22.4%
- -----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES: ALCOHOLIC - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Canandaigua Wine Co., Inc., Cl. A (2) 50,000 1,900,000
- -----------------------------------------------------------------------------------------------------------------------------------
DRUGS - 5.3%
-------------------------------------------------------------------------------------------------------------------------
CIMA Labs, Inc. (2) 60,000 615,000
-------------------------------------------------------------------------------------------------------------------------
Dura Pharmaceuticals, Inc. (2) 65,000 942,500
-------------------------------------------------------------------------------------------------------------------------
Elan Corp. PLC, ADR (2) 45,000 1,603,125
-------------------------------------------------------------------------------------------------------------------------
R.P. Scherer Corp. (2) 70,000 3,176,250
-------------------------------------------------------------------------------------------------------------------------
Roberts Pharmaceutical Corp. (2) 50,000 1,587,500
-------------------------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc. (2) 75,000 1,968,750
----------------
9,893,125
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD PROCESSING - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Hudson Foods, Inc., Cl. A 70,000 1,758,750
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS - 11.3%
-------------------------------------------------------------------------------------------------------------------------
American Medical Response, Inc. (2) 30,000 866,250
-------------------------------------------------------------------------------------------------------------------------
Cephalon, Inc. (2) 30,000 247,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER NON-CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Chiron Corp. (2) 25,000 $ 2,009,375
-------------------------------------------------------------------------------------------------------------------------
Coram Healthcare Corp. (2) 85,000 1,402,500
-------------------------------------------------------------------------------------------------------------------------
Ethical Holdings, Sponsored ADR (2) 50,000 325,000
-------------------------------------------------------------------------------------------------------------------------
Genesis Health Ventures, Inc. (2) 38,000 1,201,750
-------------------------------------------------------------------------------------------------------------------------
Horizon Healthcare Corp. (2) 108,700 3,043,600
-------------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc. 67,500 2,666,250
-------------------------------------------------------------------------------------------------------------------------
Lincare Holdings, Inc. (2) 70,000 2,030,000
-------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc. (2) 96,000 2,076,000
-------------------------------------------------------------------------------------------------------------------------
Martek Biosciences Corp. (2) 50,000 475,000
-------------------------------------------------------------------------------------------------------------------------
Matrix Pharmaceutical, Inc. (2) 40,400 555,500
-------------------------------------------------------------------------------------------------------------------------
Omnicare, Inc. 35,000 1,535,625
-------------------------------------------------------------------------------------------------------------------------
PacifiCare Health Systems, Inc. (2) 21,300 1,405,800
-------------------------------------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc. (2) 15,000 80,157
-------------------------------------------------------------------------------------------------------------------------
Physicians Health Services, Inc., Cl. A (2) 38,400 1,046,400
----------------
20,966,707
- -----------------------------------------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT - 1.6%
-------------------------------------------------------------------------------------------------------------------------
Community Psychiatric Centers 95,000 1,045,000
-------------------------------------------------------------------------------------------------------------------------
Ornda Healthcorp (2) 80,000 1,000,000
-------------------------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc. (2) 46,000 874,000
----------------
2,919,000
- -----------------------------------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Steris Corp. (2) 37,000 1,387,500
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DRUG STORES - 1.5%
-------------------------------------------------------------------------------------------------------------------------
Revco D.S., Inc. (2) 120,000 2,835,000
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 2.6%
- -----------------------------------------------------------------------------------------------------------------------------------
OIL AND GAS DRILLING - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Cross Timbers Oil Co. 30,800 462,000
-------------------------------------------------------------------------------------------------------------------------
St. Mary Land & Exploration Co. 50,000 662,500
-------------------------------------------------------------------------------------------------------------------------
Stone Energy Corp. (2) 35,000 673,750
----------------
1,798,250
- -----------------------------------------------------------------------------------------------------------------------------------
OIL WELL SERVICES AND EQUIPMENT - 1.4%
-------------------------------------------------------------------------------------------------------------------------
Halliburton Co. 50,000 1,656,250
-------------------------------------------------------------------------------------------------------------------------
NUMAR Corp. (2) 36,000 351,000
-------------------------------------------------------------------------------------------------------------------------
Weatherford International, Inc. (2) 60,000 585,000
----------------
2,592,250
- -----------------------------------------------------------------------------------------------------------------------------------
OIL: EXPLORATION AND PRODUCTION - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Newfield Exploration Co. (2) 20,000 395,000
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 2.0%
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: MISCELLANEOUS - 1.4%
-------------------------------------------------------------------------------------------------------------------------
Advanta Corp., Cl. B 50,000 1,262,500
-------------------------------------------------------------------------------------------------------------------------
First USA, Inc. 39,400 1,295,275
----------------
2,557,775
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: REGIONAL - 0.6%
-------------------------------------------------------------------------------------------------------------------------
First Interstate Bancorp 15,000 1,014,375
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 7.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS GROUP - 0.8%
-------------------------------------------------------------------------------------------------------------------------
BMC West Corp. (2) 60,000 840,000
-------------------------------------------------------------------------------------------------------------------------
Giant Cement Holding, Inc. (2) 60,000 712,500
----------------
1,552,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDUSTRIAL - (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 2.1%
-------------------------------------------------------------------------------------------------------------------------
Manpower, Inc. 43,000 $ 1,209,375
-------------------------------------------------------------------------------------------------------------------------
Reynolds & Reynolds Co., Cl. A 67,000 1,675,000
-------------------------------------------------------------------------------------------------------------------------
Sensormatic Electronics Corp. 30,000 1,080,000
----------------
3,964,375
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.6%
-------------------------------------------------------------------------------------------------------------------------
AER Energy Resources, Inc. (2) 52,000 234,000
-------------------------------------------------------------------------------------------------------------------------
Micrel, Inc. (2) 65,000 942,500
-------------------------------------------------------------------------------------------------------------------------
Molex, Inc., Cl. A 56,250 1,743,750
----------------
2,920,250
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING: DIVERSIFIED INDUSTRIALS - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Ultralife Batteries, Inc. (2) 50,000 800,000
- -----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL - 0.8%
-------------------------------------------------------------------------------------------------------------------------
United Waste Systems, Inc. (2) 60,000 1,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Southern Pacific Rail Corp. (2) 76,000 1,377,500
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: MISCELLANEOUS - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Covenant Transport, Inc., Cl. A (2) 75,000 1,462,500
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 24.2%
- -----------------------------------------------------------------------------------------------------------------------------------
COMMUNICATION: EQUIPMENT/MANUFACTURERS - 3.4%
-------------------------------------------------------------------------------------------------------------------------
Andrew Corp. (2) 31,500 1,645,875
-------------------------------------------------------------------------------------------------------------------------
DSC Communications Corp. (2) 30,000 1,076,250
-------------------------------------------------------------------------------------------------------------------------
Glenayre Technologies, Inc. (2) 23,000 1,328,250
-------------------------------------------------------------------------------------------------------------------------
Tellabs, Inc. (2) 42,000 2,341,500
----------------
6,391,875
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE AND SERVICES - 8.5%
-------------------------------------------------------------------------------------------------------------------------
Compuware Corp. (2) 75,000 2,700,000
-------------------------------------------------------------------------------------------------------------------------
Cornerstone Imaging, Inc. (2) 45,200 689,300
-------------------------------------------------------------------------------------------------------------------------
CUC International, Inc. (2) 36,000 1,206,000
-------------------------------------------------------------------------------------------------------------------------
Davidson & Associates, Inc. (2) 20,000 650,000
-------------------------------------------------------------------------------------------------------------------------
First Data Corp. 60,000 2,842,500
-------------------------------------------------------------------------------------------------------------------------
FTP Software, Inc. (2) 55,000 1,739,375
-------------------------------------------------------------------------------------------------------------------------
HBO & Co. 40,000 1,380,000
-------------------------------------------------------------------------------------------------------------------------
Lotus Development Corp. (2) 40,000 1,640,000
-------------------------------------------------------------------------------------------------------------------------
NETCOM On-Line Communication Services, Inc. (2) 40,000 1,135,000
-------------------------------------------------------------------------------------------------------------------------
Pyxis Corp. (2) 80,000 1,520,000
-------------------------------------------------------------------------------------------------------------------------
7th Level, Inc. (2) 70,000 367,500
----------------
15,869,675
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SYSTEMS - 2.2%
-------------------------------------------------------------------------------------------------------------------------
ADFlex Solutions, Inc. (2) 35,000 586,250
-------------------------------------------------------------------------------------------------------------------------
American Power Conversion Corp. (2) 26,000 425,750
-------------------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc. (2) 20,000 930,000
-------------------------------------------------------------------------------------------------------------------------
EMC Corp. (2) 99,000 2,140,875
----------------
4,082,875
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: INSTRUMENTATION - 3.3%
-------------------------------------------------------------------------------------------------------------------------
First Alert, Inc. (2) 24,000 351,000
-------------------------------------------------------------------------------------------------------------------------
Recoton Corp. (2) 84,000 1,575,000
-------------------------------------------------------------------------------------------------------------------------
Sanmina Corp. (2) 40,000 1,090,000
-------------------------------------------------------------------------------------------------------------------------
Symbol Technologies, Inc. (2) 47,400 1,463,475
-------------------------------------------------------------------------------------------------------------------------
Teradyne, Inc. (2) 50,000 1,693,750
----------------
6,173,225
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: SEMICONDUCTORS - 1.5%
-------------------------------------------------------------------------------------------------------------------------
Advanced Technology Materials, Inc. (2) 47,800 $ 283,813
-------------------------------------------------------------------------------------------------------------------------
Lam Research Corp. (2) 20,000 745,000
-------------------------------------------------------------------------------------------------------------------------
Novellus Systems, Inc. (2) 21,000 1,050,000
-------------------------------------------------------------------------------------------------------------------------
Tower Semiconductor Ltd. (2) 60,000 660,000
----------------
2,738,813
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 5.3%
-------------------------------------------------------------------------------------------------------------------------
ALC Communications Corp. (2) 68,000 2,116,500
-------------------------------------------------------------------------------------------------------------------------
IDB Communications Group, Inc. (2) 113,750 1,045,076
-------------------------------------------------------------------------------------------------------------------------
LCI International, Inc. (2) 83,400 2,168,400
-------------------------------------------------------------------------------------------------------------------------
LDDS Communications, Inc. (2) 76,354 1,484,131
-------------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA (2) 50,000 1,506,250
-------------------------------------------------------------------------------------------------------------------------
ProNet, Inc. (2) 100,000 1,450,000
----------------
9,770,357
----------------
Total Common Stocks (Cost $138,044,877) 153,205,391
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
AK Steel Holding Corp., 7% Cv. Stock Appreciation Income 25,000 781,250
Linked Securities (Cost $768,750)
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Tapistron International, Inc. Wts., Exp. 6/97 120,000 33,756
-------------------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B Rts., Exp. 9/95 30,000 33,750
----------------
Total Rights, Warrants and Certificates (Cost $97,860) 67,506
-------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $166,985,520) 98.5%
182,918,438
-------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.5 2,855,103
------------------ ----------------
NET ASSETS 100.0% $ 185,773,541
------------------ ----------------
------------------ ----------------
</TABLE>
1. Restricted security - See Note 7 of Notes to Financial Statements.
2. Non-income producing security.
3. Interest or dividend is paid in kind.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Growth Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 12.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $8,005,333 on 1/3/95, collateralized by
U.S. Treasury Nts., 3.875%-8.875%, 5/31/95-8/31/05, with a value of
$7,607,908 and U.S. Treasury Bonds, 10.75%-14.25%, 2/15/02-8/15/05,
with a value of $558,881 (Cost $8,000,000) $ 8,000,000 $ 8,000,000
SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 82.6%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Georgia Gulf Corp. (1) 17,000 660,875
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS: DIVERSIFIED - 1.6%
-------------------------------------------------------------------------------------------------------------------------
FMC Corp. (1) 4,000 231,000
-------------------------------------------------------------------------------------------------------------------------
Monsanto Co. 1,000 70,500
-------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc. 18,000 668,250
----------------
969,750
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Boise Cascade Corp. 10,000 267,500
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 13.4%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTO PARTS: AFTER MARKET - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 15,000 504,375
- -----------------------------------------------------------------------------------------------------------------------------------
BROADCAST MEDIA - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Multimedia, Inc. (1) 12,000 342,000
-------------------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B (1) 6,667 270,847
----------------
612,847
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 0.6%
-------------------------------------------------------------------------------------------------------------------------
King World Productions, Inc. (1) 12,000 414,000
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHINGS AND APPLIANCES - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Maytag Corp. 20,000 300,000
-------------------------------------------------------------------------------------------------------------------------
Newell Co. 5,000 105,000
----------------
405,000
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE TIME - 2.6%
-------------------------------------------------------------------------------------------------------------------------
Acclaim Entertainment, Inc. (1) 25,000 359,375
-------------------------------------------------------------------------------------------------------------------------
Brunswick Corp. 30,000 566,250
-------------------------------------------------------------------------------------------------------------------------
Harley-Davidson, Inc. 26,000 728,000
----------------
1,653,625
- -----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING - 0.1%
-------------------------------------------------------------------------------------------------------------------------
Marvel Entertainment Group, Inc. (1) 4,000 57,000
- -----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.6%
-------------------------------------------------------------------------------------------------------------------------
McDonald's Corp. 9,000 263,250
-------------------------------------------------------------------------------------------------------------------------
Shoney's, Inc. (1) 10,000 127,500
----------------
390,750
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT STORES - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Dollar General Corp. 20,000 600,000
-------------------------------------------------------------------------------------------------------------------------
May Department Stores Co. 14,000 472,500
----------------
1,072,500
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: GENERAL MERCHANDISE CHAINS - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Waban, Inc. (1) 35,000 621,250
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Growth Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: GENERAL MERCHANDISE CHAINS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 21,000 $ 446,250
----------------
1,067,500
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 2.7%
-------------------------------------------------------------------------------------------------------------------------
CML Group, Inc. 12,000 121,500
-------------------------------------------------------------------------------------------------------------------------
Home Depot, Inc. (The) 14,000 644,000
-------------------------------------------------------------------------------------------------------------------------
Michaels Stores, Inc. (1) 10,000 347,500
-------------------------------------------------------------------------------------------------------------------------
OfficeMax, Inc. (1) 10,000 265,000
-------------------------------------------------------------------------------------------------------------------------
Toys 'R' Us, Inc. (1) 10,000 305,000
----------------
1,683,000
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY APPAREL - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Gap, Inc. (The) 20,000 610,000
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 18.7%
- -----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES: SOFT DRINKS - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Coca-Cola Co. (The) 21,000 1,081,500
- -----------------------------------------------------------------------------------------------------------------------------------
DRUGS - 2.3%
-------------------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 10,000 772,500
-------------------------------------------------------------------------------------------------------------------------
Schering-Plough 9,000 666,000
----------------
1,438,500
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD PROCESSING - 0.9%
-------------------------------------------------------------------------------------------------------------------------
ConAgra, Inc. 4,000 125,000
-------------------------------------------------------------------------------------------------------------------------
General Mills, Inc. 3,000 171,000
-------------------------------------------------------------------------------------------------------------------------
IBP, Inc. 10,000 302,500
----------------
598,500
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: DIVERSIFIED - 4.1%
-------------------------------------------------------------------------------------------------------------------------
Abbott Laboratories 22,000 717,750
-------------------------------------------------------------------------------------------------------------------------
American Home Products Corp. 4,500 282,375
-------------------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 4,500 260,438
-------------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 10,000 547,500
-------------------------------------------------------------------------------------------------------------------------
Smithkline Beecham PLC, ADR Equity Unit 4,000 137,000
-------------------------------------------------------------------------------------------------------------------------
Warner-Lambert Co. 8,000 616,000
----------------
2,561,063
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS - 2.8%
-------------------------------------------------------------------------------------------------------------------------
Amgen, Inc. (1) 8,000 472,000
-------------------------------------------------------------------------------------------------------------------------
National Health Laboratories, Inc. 8,000 106,000
-------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. 14,000 577,500
-------------------------------------------------------------------------------------------------------------------------
United Healthcare Corp. 13,000 586,625
----------------
1,742,125
- -----------------------------------------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT - 1.6%
-------------------------------------------------------------------------------------------------------------------------
Columbia/HCA Healthcare Corp. 12,000 438,000
-------------------------------------------------------------------------------------------------------------------------
HealthCare COMPARE Corp. (1) 16,000 546,000
----------------
984,000
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.4%
-------------------------------------------------------------------------------------------------------------------------
Colgate-Palmolive Co. 4,000 253,500
-------------------------------------------------------------------------------------------------------------------------
Procter & Gamble Co. 10,000 620,000
----------------
873,500
- -----------------------------------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS - 2.1%
-------------------------------------------------------------------------------------------------------------------------
Cordis Corp. (1) 4,000 242,000
-------------------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 20,000 1,112,500
----------------
1,354,500
----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Growth Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER NON-CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
TOBACCO - 1.8%
-------------------------------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 16,000 $ 920,000
-------------------------------------------------------------------------------------------------------------------------
UST, Inc. 9,000 249,750
----------------
1,169,750
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.6%
- -----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED INTERNATIONAL - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 3,500 376,250
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 19.7%
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: MISCELLANEOUS - 9.1%
-------------------------------------------------------------------------------------------------------------------------
Advanta Corp., Cl. A 26,000 682,500
-------------------------------------------------------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 28,000 364,000
-------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 15,000 757,500
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. 8,700 634,012
-------------------------------------------------------------------------------------------------------------------------
First USA, Inc. 20,000 657,500
-------------------------------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 36,000 1,093,500
-------------------------------------------------------------------------------------------------------------------------
MBIA, Inc. 5,000 280,625
-------------------------------------------------------------------------------------------------------------------------
Student Loan Marketing Assn. 7,000 227,500
-------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc. 13,000 471,250
-------------------------------------------------------------------------------------------------------------------------
Travelers, Inc. 18,000 585,000
----------------
5,753,387
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: LIFE - 1.6%
-------------------------------------------------------------------------------------------------------------------------
AFLAC, Inc. 11,250 360,000
-------------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 4,000 172,500
-------------------------------------------------------------------------------------------------------------------------
Lincoln National Corp. 4,000 140,000
-------------------------------------------------------------------------------------------------------------------------
UNUM Corp. 10,000 377,500
----------------
1,050,000
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: PROPERTY AND CASUALTY - 1.5%
-------------------------------------------------------------------------------------------------------------------------
Loews Corp. 7,000 608,125
-------------------------------------------------------------------------------------------------------------------------
USF&G Corp. 22,800 310,650
----------------
918,775
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: OTHER - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Bank of Boston Corp. 21,000 543,375
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: REGIONAL - 5.8%
-------------------------------------------------------------------------------------------------------------------------
Banc One Corp. 12,787 324,470
-------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorporation 5,000 224,375
-------------------------------------------------------------------------------------------------------------------------
First Interstate Bancorp 11,000 743,875
-------------------------------------------------------------------------------------------------------------------------
Mellon Bank Corp. 7,500 229,688
-------------------------------------------------------------------------------------------------------------------------
Midlantic Corp. 19,000 503,500
-------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 9,000 406,125
-------------------------------------------------------------------------------------------------------------------------
Shawmut National Corp. 10,000 163,750
-------------------------------------------------------------------------------------------------------------------------
Signet Banking Corp. 8,000 229,000
-------------------------------------------------------------------------------------------------------------------------
SunTrust Banks, Inc. 5,000 238,750
-------------------------------------------------------------------------------------------------------------------------
UJB Financial Corp. 9,000 217,125
-------------------------------------------------------------------------------------------------------------------------
West One Bancorp 15,000 397,500
----------------
3,678,158
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY CENTER BANKS - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 15,000 515,625
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES - 1.8%
-------------------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd. 35,000 525,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Growth Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDUSTRIAL (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
ITT Corp. 7,000 $ 620,375
----------------
1,145,375
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.6%
-------------------------------------------------------------------------------------------------------------------------
Emerson Electric Co. 7,000 437,500
-------------------------------------------------------------------------------------------------------------------------
General Electric Co. 11,000 561,000
----------------
998,500
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINERY: DIVERSIFIED - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Varity Corp. (1) 11,000 398,750
- -----------------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Illinois Central Corp. 10,000 307,500
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 20.6%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Boeing Co. (The) 6,000 280,500
-------------------------------------------------------------------------------------------------------------------------
Northrop Corp. 4,000 168,000
----------------
448,500
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE AND SERVICES - 7.6%
-------------------------------------------------------------------------------------------------------------------------
Automatic Data Processing, Inc. 20,000 1,170,000
-------------------------------------------------------------------------------------------------------------------------
BMC Software, Inc. (1) 13,000 739,375
-------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 12,000 582,000
-------------------------------------------------------------------------------------------------------------------------
Informix Corp. (1) 15,000 481,875
-------------------------------------------------------------------------------------------------------------------------
Microsoft Corp. (1) 19,400 1,185,825
-------------------------------------------------------------------------------------------------------------------------
Oracle Systems Corp. (1) 11,000 485,375
-------------------------------------------------------------------------------------------------------------------------
Sybase, Inc. (1) 3,000 156,000
----------------
4,800,450
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SYSTEMS - 6.5%
-------------------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc. (1) 12,000 558,000
-------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. (1) 18,500 730,750
-------------------------------------------------------------------------------------------------------------------------
EMC Corp. (1) 21,000 454,125
-------------------------------------------------------------------------------------------------------------------------
Quantum Corp. (1) 60,000 907,500
-------------------------------------------------------------------------------------------------------------------------
Seagate Technology, Inc. (1) 8,500 204,000
-------------------------------------------------------------------------------------------------------------------------
3Com Corp. (1) 14,000 721,875
-------------------------------------------------------------------------------------------------------------------------
Western Digital Corp. (1) 34,000 569,500
----------------
4,145,750
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: INSTRUMENTATION - 1.1%
-------------------------------------------------------------------------------------------------------------------------
Belden, Inc. 30,000 667,500
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: SEMICONDUCTORS - 2.2%
-------------------------------------------------------------------------------------------------------------------------
Intel Corp. 12,000 766,500
-------------------------------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 6,000 449,250
-------------------------------------------------------------------------------------------------------------------------
VLSI Technology, Inc. (1) 15,000 180,000
----------------
1,395,750
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 2.5%
-------------------------------------------------------------------------------------------------------------------------
AT & T Corp. 25,000 1,256,250
-------------------------------------------------------------------------------------------------------------------------
Hong Kong Telecommunications Ltd., Sponsored ADR 17,000
325,125
----------------
1,581,375
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC COMPANIES - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Empresa Nacional de Electricidad SA, Sponsored ADR 15,000 607,500
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE - 1.2%
-------------------------------------------------------------------------------------------------------------------------
BellSouth Corp. 2,500 135,312
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Growth Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UTILITIES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA, Sponsored ADR 15,000 $ 615,000
----------------
750,312
----------------
Total Common Stocks (Cost $45,029,800) 52,254,992
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B Rts., Exp. 9/95 (Cost $16,500) 11,000 12,375
-------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $53,046,300) 95.2%
60,267,367
-------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 4.8 3,015,807
------------------ ----------------
NET ASSETS 100.0% $ 63,283,174
------------------ ----------------
------------------ ----------------
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 5.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $17,211,467 on 1/3/95, collateralized
by U.S. Treasury Nts., 3.875%-8.875%, 5/31/95-8/31/05, with a value of
$16,357,002 and U.S. Treasury Bonds, 10.75%-14.25%, 2/15/02-8/15/05,
with a value of $1,201,593 (Cost $17,200,000) $ 17,200,000 $ 17,200,000
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 1.9%
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED - 1.9%
-------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 8%, 4/15/23 3,968,026 3,803,472
-------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 8%, 7/15/22 1,847,061 1,782,673
----------------
5,586,145
- -----------------------------------------------------------------------------------------------------------------------------------
PRIVATE - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-Through
Certificates, Series 1994-C2, Cl. E, 8%, 4/25/25 797,138 637,212
----------------
Total Mortgage-Backed Obligations (Cost $6,729,111) 6,223,357
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 13.7%
- -----------------------------------------------------------------------------------------------------------------------------------
TREASURY - 13.7%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6.375%, 8/15/02 5,000,000 4,581,250
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6.75%, 5/31/97 10,300,000 10,071,473
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 7.625%, 5/31/96 12,500,000 12,523,438
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 9.25%, 8/15/98 9,000,000 9,393,750
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., STRIPS, 0%, 8/15/02 3,900,000 2,164,707
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., STRIPS, 0%, 8/15/03 2,500,000 1,282,297
----------------
Total U.S. Government Obligations (Cost $40,709,033) 40,016,915
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 9.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de
Deudas, Series 1, 5.625%, 4/1/01 (4)(6) 3,490,713 2,236,057
-------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 4.25%, 3/31/23 (7) 4,500,000 1,904,766
-------------------------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 8.50%, 4/1/02 CAD 1,500,000
1,037,296
-------------------------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 9.75%, 12/1/01 CAD 3,000,000
2,212,542
-------------------------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 9.75%, 6/1/01 CAD 2,000,000
1,474,315
-------------------------------------------------------------------------------------------------------------------------
Queensland (Government of) Development Authority Global
Transferable Registered Nts., 10.50%, 5/15/03 AUD 3,600,000 2,822,410
-------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Bonds, 11.45%, 8/30/98 ESP 50,000,000 377,270
-------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Bonds, 13.45%, 4/15/96 ESP 175,000,000 1,376,680
-------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del
Estado, 12.25%, 3/25/00 ESP 350,000,000 2,696,858
-------------------------------------------------------------------------------------------------------------------------
Sweden (Kingdom of) Bonds, 11%, 1/21/99 SEK 7,500,000 1,031,972
-------------------------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03 AUD 6,000,000
4,060,296
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Gtd. Cv. Bonds, Series B, 6.25%,
12/31/19 2,000,000 1,065,000
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Collateralized Fixed Rate Par Bonds, 2,000,000 1,065,000
Series A, 6.25%, 12/31/19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
FACE MARKET VALUE
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Venezuela (Republic of) Collateralized Par Bonds, Series W-A,
6.75%, 3/31/20 $ 4,500,000 $ 2,070,000
-------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Collateralized Par Bonds, Series W-B,
6.75%, 3/31/20 3,000,000 1,380,000
-------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Front-Loaded Interest Reduction 2,000,000 918,750
Bonds, Series B, 7%, 3/31/07
----------------
Total Foreign Government Obligations (Cost $32,988,359) 27,729,212
- -----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Port of Portland, Oregon Special Obligation Taxable
Revenue Bonds, PAMCO Project, 9.20%, 5/15/22
(Cost $500,000) 500,000 500,431
- -----------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 18.6%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 2.4%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 0%/10.25% Gtd. Sr. Sec.
Disc. Nts., 7/15/01 (3) 600,000 496,500
-------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 500,000 542,017
-------------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 300,000 265,500
----------------
1,304,017
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Armco, Inc., 8.50% SF Debs., 9/1/01 200,000 179,000
-------------------------------------------------------------------------------------------------------------------------
Horsehead Industries, Inc., 14% Sub. Nts., 6/1/99 400,000 398,000
-------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 1,000,000
1,007,500
2/1/03
-------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 1,350,000 1,350,000
----------------
2,934,500
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01 500,000 516,250
-------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 800,000 812,000
-------------------------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 425,000 394,187
-------------------------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 250,000 246,875
-------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 1,000,000 945,000
----------------
2,914,312
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 825,000 754,875
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION SUPPLIES AND DEVELOPMENT - 1.3%
-------------------------------------------------------------------------------------------------------------------------
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 500,000 505,000
-------------------------------------------------------------------------------------------------------------------------
Baldwin Co., 10.375% Sr. Nts., Series B, 8/1/03 500,000 332,500
-------------------------------------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 500,000 420,000
-------------------------------------------------------------------------------------------------------------------------
Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03 1,000,000 955,000
-------------------------------------------------------------------------------------------------------------------------
USG Corp., 10.25% Sr. Sec. Nts., 12/15/02 500,000 511,250
-------------------------------------------------------------------------------------------------------------------------
USG Corp., 9.25% Sr. Nts., Series B, 9/15/01 600,000 555,000
-------------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc., 14.625% Sr. Nts., Series B, 1/1/99 (2) 300,000 561,000
----------------
3,839,750
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER GOODS AND SERVICES - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 800,000 796,000
-------------------------------------------------------------------------------------------------------------------------
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B,
5/27/98 1,000,000 680,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
FACE MARKET VALUE
NON-CONVERTIBLE CORPORATE BONDS AND NOTES (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER GOODS AND SERVICES (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 $ 500,000 $ 542,500
----------------
2,018,500
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Aztar Corp., 11% Sr. Sub. Nts., 10/1/02 475,000 432,250
-------------------------------------------------------------------------------------------------------------------------
GNF Corp., 10.625% Gtd. Fst. Mtg. Nts., Series B, 4/1/03 500,000 332,500
-------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 14% Sr. Sec. Nts., 4/1/98 1,000,000 990,000
-------------------------------------------------------------------------------------------------------------------------
Marvel (Parent) Holdings, Inc., 0% Sr. Sec. Disc. Nts.,
4/15/98 400,000 244,000
-------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 1,000,000 850,000
----------------
2,848,750
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 750,000 719,063
-------------------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 990,000
-------------------------------------------------------------------------------------------------------------------------
SCI Television, Inc., 11% Sr. Nts., Series 1, 6/30/05 500,000 500,000
----------------
2,209,063
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE DEVELOPMENT - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Casino Magic Finance Corp., 11.50% Fst. Mtg. Nts., 10/15/01 500,000
317,500
-------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts.,
4/1/02 950,000 798,000
----------------
1,115,500
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 1,000,000 967,500
-------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 750,000 710,625
----------------
1,678,125
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 2.6%
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 1,500,000 1,181,250
-------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 14.25% Sr. Sub. Nts., 5/15/98 500,000 517,500
-------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 9.25% Sr. Nts., 3/1/99 500,000 423,750
-------------------------------------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 8.625% Medium-Term Nts., 12/1/02 500,000 465,258
----------------
2,587,758
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD AND DRUG DISTRIBUTION - 0.9%
-------------------------------------------------------------------------------------------------------------------------
AmeriSource Corp., 11.25% Sr. Debs., 7/15/05 (6) 833,381 791,712
-------------------------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 250,000 235,000
-------------------------------------------------------------------------------------------------------------------------
Grand Union Co., 11.25% Sr. Nts., 7/15/00 750,000 667,500
-------------------------------------------------------------------------------------------------------------------------
Grand Union Co., 12.25% Sr. Sub. Nts., 7/15/02 350,000 138,250
-------------------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series 300,000 250,500
B, 8/1/99
-------------------------------------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 500,000 493,750
----------------
2,576,712
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 0.8%
-------------------------------------------------------------------------------------------------------------------------
American Medical International, Inc., 13.50% Sr. Sub. Nts.,
8/15/01 500,000 548,750
-------------------------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04 500,000 502,500
-------------------------------------------------------------------------------------------------------------------------
Farm Fresh, Inc., 12.25% Sr. Nts., 10/1/00 750,000 648,750
-------------------------------------------------------------------------------------------------------------------------
Mediq, Inc., 7.50% Exch. Sub. Debs., 7/15/03 1,000,000 808,750
----------------
2,508,750
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 500,000 533,750
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
FACE MARKET VALUE
NON-CONVERTIBLE CORPORATE BONDS AND NOTES (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs.,
1/15/04 $ 500,000 $ 453,775
-------------------------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 1,000,000 1,115,000
----------------
2,102,525
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 0.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub.
Nts., Series B, 10/1/03 1,400,000 1,463,000
-------------------------------------------------------------------------------------------------------------------------
First Chicago Corp., 11.25% Sub. Nts., 2/20/01 250,000 280,842
-------------------------------------------------------------------------------------------------------------------------
First Chicago Corp., 9% Sub. Nts., 6/15/99 250,000 254,261
-------------------------------------------------------------------------------------------------------------------------
Pioneer Finance Corp., 13.50% Gtd. Fst. Mtg.
Bonds, 12/1/98 1,000,000 685,000
----------------
2,683,103
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
CONTAINERS - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97 500,000 505,000
-------------------------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc., 10% Sr. Sub. Nts., 8/1/02 500,000 490,000
----------------
995,000
- -----------------------------------------------------------------------------------------------------------------------------------
GENERAL INDUSTRIAL - 0.6%
-------------------------------------------------------------------------------------------------------------------------
EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 1,250,000 1,078,125
-------------------------------------------------------------------------------------------------------------------------
Pace Industries, Inc., 10.625% Sr. Nts., 12/1/02 500,000 450,000
-------------------------------------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc., 8.25% Cv. Sub. Debs.,
8/15/01 (5) 500,000 342,500
----------------
1,870,625
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Sr. Nts., 10/15/99 500,000 589,082
-------------------------------------------------------------------------------------------------------------------------
Tiphook Financial Corp., 7.125% Gtd. Nts., 5/1/98 100,000 73,750
-------------------------------------------------------------------------------------------------------------------------
Tiphook Financial Corp., 8% Gtd. Nts., 3/15/00 350,000 248,500
-------------------------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 500,000 472,500
----------------
1,383,832
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.6%
-------------------------------------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 250,000 192,500
-------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 9.75% Medium-Term Nts., Series B, 6/10/96 1,000,000
940,000
-------------------------------------------------------------------------------------------------------------------------
Talley Industries, Inc., 0%/12.25% Sr. Disc.
Debs., 10/15/05 (3) 1,250,000 631,250
----------------
1,763,750
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 1.9%
-------------------------------------------------------------------------------------------------------------------------
Adelphia Communications Corp., 12.50% Sr. Nts., 5/15/02 1,000,000
960,000
-------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 0%/12.50% Sr. Disc.
Nts., 6/15/04 (3) 1,200,000 540,000
-------------------------------------------------------------------------------------------------------------------------
Auburn Hills Trust, 12.375% Gtd. Exch.
Certificates, 5/1/20 (4) 400,000 521,474
-------------------------------------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B,
4/1/08 500,000 450,000
-------------------------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13 1,100,000 1,014,750
-------------------------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 600,000 313,500
-------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/10.875% Sr. Def. Cpn. Nts.,
10/15/03 (3) 500,000 257,500
-------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 10.15% Sr.
Nts., 5/1/12 500,000 496,349
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
FACE MARKET VALUE
NON-CONVERTIBLE CORPORATE BONDS AND NOTES (CONTINUED) AMOUNT (1)
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 $ 1,000,000 $ 1,037,500
----------------
5,591,073
- -----------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS - 1.5%
-------------------------------------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc.
Nts., 12/1/04 (3) 800,000 420,000
-------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 8.875% Sr. Nts., 11/1/01 500,000 440,000
-------------------------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., 0% Nts., Series B, 3/5/00 1,000,000 685,000
-------------------------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04 (3) 1,500,000
896,250
-------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub.
Disc. Nts., 8/1/03 (3) 250,000 155,000
-------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 9.75% Sr. Sec. Nts.,
8/1/00 500,000 473,750
-------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., .50%/14% Sr. Sub. Disc. Nts.,
11/15/01 (5)(8) 750,000 498,750
-------------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc., 9.50% Sr. Nts., Series II,
2/1/04 1,000,000 815,000
----------------
4,383,750
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Bell & Howell Holdings Co., 0%/10.75% Sr. Disc. Debs.,
Series B, 3/1/05 (3) 1,000,000 495,000
-------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7%/10% Sr. Nts., 3/1/01 (7) 600,000 501,000
-------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 13.50% Credit Sensitive Nts., 7/1/97 1,250,000 1,356,250
-------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 9.75% Sr. Nts., 9/15/16 500,000 445,537
----------------
2,797,787
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Beaver Valley II Funding Corp., 9% 2nd Lease Obligation
Bonds, 6/1/17 489,000 350,043
-------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16 1,000,000 906,814
----------------
1,256,857
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER - 0.1%
- -----------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS - 0.1%
-------------------------------------------------------------------------------------------------------------------------
United States Banknote Corp., 11.625% Sr. Nts., Series B,
8/1/02 380,000 336,300
----------------
Total Non-Convertible Corporate Bonds and Notes (Cost $59,327,145) 54,455,214
SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 46.4%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.9%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.1%
-------------------------------------------------------------------------------------------------------------------------
Air Products and Chemicals, Inc. (9) 10,000 446,250
-------------------------------------------------------------------------------------------------------------------------
Dow Chemical Co. (The) (9) 8,500 571,625
-------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. (9) 19,000 821,750
-------------------------------------------------------------------------------------------------------------------------
Praxair, Inc. 41,500 850,750
-------------------------------------------------------------------------------------------------------------------------
Sybron Chemical Industries, Inc. (2) 29,500 457,250
----------------
3,147,625
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS: DIVERSIFIED - 0.9%
-------------------------------------------------------------------------------------------------------------------------
ARCO Chemical Co. 25,400 1,117,600
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC MATERIALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS: DIVERSIFIED (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Bayer AG, Sponsored ADR (2) 70,000 $ 1,621,270
----------------
2,738,870
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS: SPECIALTY - 0.1%
-------------------------------------------------------------------------------------------------------------------------
Goldschmidt (T.H.) AG 750 401,609
- -----------------------------------------------------------------------------------------------------------------------------------
METAL: MISCELLANEOUS - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Brush Wellman, Inc. 69,300 1,204,088
-------------------------------------------------------------------------------------------------------------------------
Inco Ltd. 22,700 649,787
----------------
1,853,875
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Georgia-Pacific Corp. 11,000 786,500
-------------------------------------------------------------------------------------------------------------------------
Indah Kiat Pulp & Paper Corp. 99,400 113,057
-------------------------------------------------------------------------------------------------------------------------
Louisiana-Pacific Corp. 30,400 828,400
-------------------------------------------------------------------------------------------------------------------------
MacMillan Bloedel Ltd. 57,800 715,275
-------------------------------------------------------------------------------------------------------------------------
PT Pabrik Kertas Tjiwi Kimia 40,000 74,613
----------------
2,517,845
- -----------------------------------------------------------------------------------------------------------------------------------
STEEL - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Inland Steel Industries, Inc. (2)(9) 22,000 772,750
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 8.6%
- -----------------------------------------------------------------------------------------------------------------------------------
AIRLINES - 0.3%
-------------------------------------------------------------------------------------------------------------------------
AMR Corp. (2) 14,000 745,500
- -----------------------------------------------------------------------------------------------------------------------------------
AUTO PARTS: AFTER MARKET - 0.1%
-------------------------------------------------------------------------------------------------------------------------
Excel Industries, Inc. 30,000 416,250
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Fiat SpA (2) 280,000 1,039,050
-------------------------------------------------------------------------------------------------------------------------
Mahindra & Mahindra Ltd., GDR 10,000 111,575
----------------
1,150,625
- -----------------------------------------------------------------------------------------------------------------------------------
BROADCAST MEDIA - 1.2%
-------------------------------------------------------------------------------------------------------------------------
Capital Cities/ABC, Inc. 10,000 852,500
-------------------------------------------------------------------------------------------------------------------------
Comcast Corp. Special, Cl. A 67,350 1,056,553
-------------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., Cl. A (2) 56,100 1,037,850
-------------------------------------------------------------------------------------------------------------------------
TeleCommunications, Inc., Cl. A (2) 27,000 587,250
----------------
3,534,153
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 0.7%
-------------------------------------------------------------------------------------------------------------------------
King World Productions, Inc. (2) 23,000 793,500
-------------------------------------------------------------------------------------------------------------------------
MGM Grand, Inc. (2)(9) 27,000 651,375
-------------------------------------------------------------------------------------------------------------------------
Sega Enterprises 11,500 662,774
----------------
2,107,649
- -----------------------------------------------------------------------------------------------------------------------------------
HOTELS/MOTELS - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Circus Circus Enterprises, Inc. (2) 30,800 716,100
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHINGS AND APPLIANCES - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Chromcraft Revington, Inc. (2) 50,000 1,100,000
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE TIME - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Caesar's World, Inc. (2)(9) 19,600 1,308,300
-------------------------------------------------------------------------------------------------------------------------
Eastman Kodak Co. 15,400 735,350
-------------------------------------------------------------------------------------------------------------------------
International Game Technology (9) 23,600 365,800
----------------
2,409,450
- -----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Bowne & Co., Inc 46,000 799,250
-------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc. 17,100 600,638
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 10,167 $ 752,280
----------------
2,152,168
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT STORES - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Dillard Department Stores, Inc., Cl. A 30,000 802,500
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: GENERAL MERCHANDISE CHAINS - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Price/Costco, Inc. (2) 50,000 643,750
-------------------------------------------------------------------------------------------------------------------------
Waban, Inc. (2)(9) 55,000 976,250
----------------
1,620,000
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Castorama Dubois Investissements LP 4,086 510,675
-------------------------------------------------------------------------------------------------------------------------
CML Group, Inc. (9) 66,400 672,300
-------------------------------------------------------------------------------------------------------------------------
Toys 'R' Us, Inc. (2) 27,700 844,850
-------------------------------------------------------------------------------------------------------------------------
Venture Stores, Inc. 67,000 778,875
----------------
2,806,700
- -----------------------------------------------------------------------------------------------------------------------------------
SHOES - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Justin Industries, Inc. 60,000 712,500
- -----------------------------------------------------------------------------------------------------------------------------------
TEXTILES: APPAREL MANUFACTURERS - 1.1%
-------------------------------------------------------------------------------------------------------------------------
Authentic Fitness Corp. (2) 59,400 824,175
-------------------------------------------------------------------------------------------------------------------------
Cone Mills Corp. (2) 42,200 501,125
-------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., Cl. A (2) 32,400 874,800
-------------------------------------------------------------------------------------------------------------------------
Warnaco Group, Inc. (The), Cl. A (2) 55,000 948,750
----------------
3,148,850
- -----------------------------------------------------------------------------------------------------------------------------------
TOYS - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Mattel, Inc. (9) 34,350 863,044
-------------------------------------------------------------------------------------------------------------------------
Nintendo Corp. Ltd. 12,000 648,291
-------------------------------------------------------------------------------------------------------------------------
SLM International, Inc. (2) 74,200 190,137
----------------
1,701,472
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 8.6%
- -----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES: ALCOHOLIC - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Guinness PLC 100,000 704,025
- -----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES: SOFT DRINKS - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Whitman Corp. 70,000 1,207,500
- -----------------------------------------------------------------------------------------------------------------------------------
COSMETICS - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Maybelline, Inc. 22,800 410,400
- -----------------------------------------------------------------------------------------------------------------------------------
DRUGS - 1.5%
-------------------------------------------------------------------------------------------------------------------------
Agouron Pharmaceuticals, Inc. (2) 22,000 247,500
-------------------------------------------------------------------------------------------------------------------------
Astra AB Free, Series A 15,500 400,319
-------------------------------------------------------------------------------------------------------------------------
Ciba-Geigy AG 950 566,954
-------------------------------------------------------------------------------------------------------------------------
Lilly (Eli) & Co. (9) 8,000 525,000
-------------------------------------------------------------------------------------------------------------------------
Medeva PLC 342,715 873,969
-------------------------------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. (9) 48,400 1,306,800
-------------------------------------------------------------------------------------------------------------------------
Nature's Bounty, Inc. (2) 111,000 603,563
----------------
4,524,105
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD PROCESSING - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Chiquita Brands International, Inc. 3 41
-------------------------------------------------------------------------------------------------------------------------
Nestle SA, Sponsored ADR 17,000 809,950
-------------------------------------------------------------------------------------------------------------------------
Sanfilippo (John B.) & Son, Inc. 60,000 330,000
-------------------------------------------------------------------------------------------------------------------------
Sara Lee Corp. 50,800 1,282,700
----------------
2,422,691
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER NON-CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD WHOLESALERS - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Food Lion, Inc., Cl. A 114,500 $ 586,813
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: DIVERSIFIED - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Abbott Laboratories 28,800 939,600
-------------------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 25,000 1,446,875
-------------------------------------------------------------------------------------------------------------------------
Schering AG 1,025 671,203
----------------
3,057,678
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS - 1.8%
-------------------------------------------------------------------------------------------------------------------------
Amgen, Inc. (2)(9) 13,900 820,100
-------------------------------------------------------------------------------------------------------------------------
Biosys, Inc. (2) 74,400 167,400
-------------------------------------------------------------------------------------------------------------------------
Chiron Corp. (2)(9) 8,400 675,150
-------------------------------------------------------------------------------------------------------------------------
Genzyme Corp. (2)(9) 28,900 910,350
-------------------------------------------------------------------------------------------------------------------------
Manor Care, Inc. 41,185 1,127,439
-------------------------------------------------------------------------------------------------------------------------
Matrix Pharmaceutical, Inc. (2) 18,000 247,500
-------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. (9) 28,800 1,188,000
----------------
5,135,939
- -----------------------------------------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Novacare, Inc. (2) 72,500 525,625
-------------------------------------------------------------------------------------------------------------------------
Wellpoint Health Networks, Inc., Cl. A (2) 27,000 786,375
----------------
1,312,000
- -----------------------------------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS - 1.4%
-------------------------------------------------------------------------------------------------------------------------
Biomet, Inc. (2) 52,100 729,400
-------------------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 14,400 801,000
-------------------------------------------------------------------------------------------------------------------------
Mitek Surgical Products, Inc. (2) 54,000 1,336,500
-------------------------------------------------------------------------------------------------------------------------
Nellcor, Inc. (2) 23,000 759,000
-------------------------------------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc. (2) 45,000 585,000
----------------
4,210,900
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: FOOD CHAINS - 0.1%
-------------------------------------------------------------------------------------------------------------------------
Giant Food, Inc., Cl. A 17,900 389,325
- -----------------------------------------------------------------------------------------------------------------------------------
TOBACCO - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 20,000 1,150,000
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 2.0%
- -----------------------------------------------------------------------------------------------------------------------------------
COAL - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Ashland Coal, Inc. 24,200 689,700
- -----------------------------------------------------------------------------------------------------------------------------------
OIL WELL SERVICES AND EQUIPMENT - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Landmark Graphics Corp. (2) 36,900 664,200
- -----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED DOMESTIC - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Ashland Oil, Inc. 17,000 586,500
-------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 8,900 905,575
-------------------------------------------------------------------------------------------------------------------------
Unocal Corp. 22,000 599,500
----------------
2,091,575
- -----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED INTERNATIONAL - 0.8%
-------------------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 10,000 1,075,000
-------------------------------------------------------------------------------------------------------------------------
Saga Petroleum AS, Cl. A 12,000 130,396
-------------------------------------------------------------------------------------------------------------------------
Saga Petroleum AS, Cl. B 19,000 196,629
-------------------------------------------------------------------------------------------------------------------------
Total SA, Sponsored ADR 15,701 463,180
-------------------------------------------------------------------------------------------------------------------------
YuKong Ltd., GDR (2)(5) 18,500 291,374
-------------------------------------------------------------------------------------------------------------------------
YuKong Ltd., GDR (2)(5) 9,000 135,000
----------------
2,291,579
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL - 5.1%
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL FINANCE - 0.3%
-------------------------------------------------------------------------------------------------------------------------
SG Warburg & Co., Inc. Ords. 76,500 $ 827,018
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: MISCELLANEOUS - 1.3%
-------------------------------------------------------------------------------------------------------------------------
American Express Co. (9) 31,500 929,250
-------------------------------------------------------------------------------------------------------------------------
CMAC Investment Corp. 33,600 970,200
-------------------------------------------------------------------------------------------------------------------------
H & R Block, Inc. 15,400 571,725
-------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 26,300 940,225
-------------------------------------------------------------------------------------------------------------------------
Santa Anita Realty Enterprises, Inc., Units (5) 30,000 412,500
----------------
3,823,900
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: LIFE - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Bankers Life Holding Corp. 39,500 750,500
-------------------------------------------------------------------------------------------------------------------------
National Mutual Asia Ltd. (2) 150,000 98,875
-------------------------------------------------------------------------------------------------------------------------
UNUM Corp. 13,100 494,525
----------------
1,343,900
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: MULTI-LINE - 1.1%
-------------------------------------------------------------------------------------------------------------------------
Aetna Life & Casualty Co. 16,800 791,700
-------------------------------------------------------------------------------------------------------------------------
American International Group, Inc. 12,000 1,176,000
-------------------------------------------------------------------------------------------------------------------------
American Re Corp. (2) 36,000 1,161,000
----------------
3,128,700
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: PROPERTY AND CASUALTY - 0.3%
-------------------------------------------------------------------------------------------------------------------------
W.R. Berkley Corp. 21,000 787,500
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: OTHER - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Banco Frances del Rio Plata 11,000 78,375
-------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, ADR 1,325 615,478
-------------------------------------------------------------------------------------------------------------------------
Korea First Bank (2) 4,942 68,944
-------------------------------------------------------------------------------------------------------------------------
Turkiye Garanti Bankasi AS, Sponsored ADR (5) 10,000 25,321
----------------
788,118
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: REGIONAL - 0.5%
-------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 35,400 1,597,425
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY CENTER BANKS - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Bankers Trust New York Corp. (9) 15,700 869,388
-------------------------------------------------------------------------------------------------------------------------
Chemical Banking Corp. 29,000 1,040,375
----------------
1,909,763
- -----------------------------------------------------------------------------------------------------------------------------------
SAVINGS AND LOANS/HOLDING COS. - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp. 20,000 705,000
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 7.4%
- -----------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS GROUP - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Masco Corp. 23,000 520,375
-------------------------------------------------------------------------------------------------------------------------
Owens-Corning Fiberglass Corp. (2) 30,000 960,000
----------------
1,480,375
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Borg-Warner Corp. (2) 35,000 341,250
-------------------------------------------------------------------------------------------------------------------------
Sylvan Learning Systems, Inc. (2) 26,100 515,475
----------------
856,725
- -----------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Jardine Matheson Holdings Ltd. 50,468 360,391
-------------------------------------------------------------------------------------------------------------------------
Kinnevik Investments AB Free, Series B 24,500 810,727
-------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc. 20,400 867,000
-------------------------------------------------------------------------------------------------------------------------
Wharf Holdings 175,000 590,342
----------------
2,628,460
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDUSTRIAL (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CONTAINERS: METAL AND GLASS - 0.6%
-------------------------------------------------------------------------------------------------------------------------
Corning, Inc. 27,200 $ 812,600
-------------------------------------------------------------------------------------------------------------------------
Interpool, Inc. (2) 50,000 743,750
----------------
1,556,350
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.1%
-------------------------------------------------------------------------------------------------------------------------
ASEA AB, Sponsored ADR 10,000 721,250
-------------------------------------------------------------------------------------------------------------------------
C-Cube Microsystems, Inc. (2) 30,000 570,000
-------------------------------------------------------------------------------------------------------------------------
General Electric Co. 20,000 1,020,000
-------------------------------------------------------------------------------------------------------------------------
Methode Electronics, Inc., Cl. A 50,000 850,000
----------------
3,161,250
- -----------------------------------------------------------------------------------------------------------------------------------
ENGINEERING AND CONSTRUCTION - 0.7%
-------------------------------------------------------------------------------------------------------------------------
Empresas ICA Sociedad Controladora SA de C.V. (9) 33,600 520,800
-------------------------------------------------------------------------------------------------------------------------
Foster Wheeler Corp. 17,000 505,750
-------------------------------------------------------------------------------------------------------------------------
Huarte SA 50,150 468,620
-------------------------------------------------------------------------------------------------------------------------
Insituform Mid-America, Inc., Cl. A 60,000 540,000
----------------
2,035,170
- -----------------------------------------------------------------------------------------------------------------------------------
HEAVY DUTY TRUCKS AND PARTS - 0.1%
-------------------------------------------------------------------------------------------------------------------------
Spartan Motors, Inc. 24,000 321,000
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINERY: DIVERSIFIED - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Harnischfeger Industries, Inc. 26,000 731,250
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING: DIVERSIFIED INDUSTRIALS - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Instrument Systems Corp. (2) 48,750 408,281
-------------------------------------------------------------------------------------------------------------------------
Johnstown America Industries, Inc. 20,000 327,500
-------------------------------------------------------------------------------------------------------------------------
Mannesmann AG 3,287 890,662
-------------------------------------------------------------------------------------------------------------------------
Olin Corp. 11,000 566,500
-------------------------------------------------------------------------------------------------------------------------
Siemens AG, ADR 10,000 837,411
----------------
3,030,354
- -----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Waste Management International PLC, Sponsored ADR (2) 55,000
625,625
- -----------------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Burlington Northern, Inc. 17,000 818,125
-------------------------------------------------------------------------------------------------------------------------
Chicago & North Western Holdings Corp. (2) 40,400 777,700
----------------
1,595,825
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: MISCELLANEOUS - 1.2%
-------------------------------------------------------------------------------------------------------------------------
Airborne Freight Corp. 38,000 779,000
-------------------------------------------------------------------------------------------------------------------------
Consolidated Freightways, Inc. 61,000 1,364,875
-------------------------------------------------------------------------------------------------------------------------
DS Svendborg, Cl. B 10 273,600
-------------------------------------------------------------------------------------------------------------------------
Lisnave-Estaleiros Navais de Lisbona SA (2) 19,000 93,090
-------------------------------------------------------------------------------------------------------------------------
OMI Corp. 22,400 148,400
-------------------------------------------------------------------------------------------------------------------------
Stolt-Nielsen SA 40,000 825,000
-------------------------------------------------------------------------------------------------------------------------
Westmont Berhad Ord. 14,000 87,173
----------------
3,571,138
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 9.3%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.6%
-------------------------------------------------------------------------------------------------------------------------
General Dynamics Corp. (9) 9,900 430,650
-------------------------------------------------------------------------------------------------------------------------
McDonnell Douglas Corp. (9) 4,000 568,000
-------------------------------------------------------------------------------------------------------------------------
Rockwell International Corp. 17,000 607,750
----------------
1,606,400
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE AND SERVICES - 3.9%
-------------------------------------------------------------------------------------------------------------------------
Bay Networks, Inc. (2)(9) 33,205 979,548
-------------------------------------------------------------------------------------------------------------------------
BMC Software, Inc. (2)(9) 22,600 1,285,375
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE AND SERVICES (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. (9) 23,100 $ 1,120,350
-------------------------------------------------------------------------------------------------------------------------
Delrina Corp. (2) 62,000 767,250
-------------------------------------------------------------------------------------------------------------------------
Electronic Arts, Inc. (2) 54,000 1,039,500
-------------------------------------------------------------------------------------------------------------------------
Informix Corp. (2) 20,000 642,500
-------------------------------------------------------------------------------------------------------------------------
Legent Corp. (2)(9) 23,000 661,250
-------------------------------------------------------------------------------------------------------------------------
Lotus Development Corp. (2)(9) 10,100 414,100
-------------------------------------------------------------------------------------------------------------------------
Marcam Corp. (2) 48,300 489,038
-------------------------------------------------------------------------------------------------------------------------
Microsoft Corp. (9) 10,200 623,474
-------------------------------------------------------------------------------------------------------------------------
Novell, Inc. (2) 69,100 1,183,338
-------------------------------------------------------------------------------------------------------------------------
Pyxis Corp. (2)(9) 48,000 912,000
-------------------------------------------------------------------------------------------------------------------------
Symantec Corp. (2) 51,000 892,500
-------------------------------------------------------------------------------------------------------------------------
Trinzic Corp. (2) 80,000 440,000
----------------
11,450,223
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SYSTEMS - 1.3%
-------------------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc. (2)(9) 12,500 581,250
-------------------------------------------------------------------------------------------------------------------------
Norand Corp. (2) 18,500 656,750
-------------------------------------------------------------------------------------------------------------------------
Seagate Technology, Inc. (2) 16,000 384,000
-------------------------------------------------------------------------------------------------------------------------
Sun Microsystems, Inc. (2)(9) 33,000 1,171,500
-------------------------------------------------------------------------------------------------------------------------
Tandem Computers, Inc. (2)(9) 66,000 1,130,250
----------------
3,923,750
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: DEFENSE - 0.2%
-------------------------------------------------------------------------------------------------------------------------
CAE, Inc. 115,000 614,892
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: INSTRUMENTATION - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. (9) 11,500 1,148,563
-------------------------------------------------------------------------------------------------------------------------
Molecular Dynamics, Inc. (2) 25,000 168,750
----------------
1,317,313
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: SEMICONDUCTORS - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Intel Corp. 34,500 2,203,688
-------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Co., GDR (2)(5) 476 22,134
-------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Co., Sponsored GDS (2) 8,500 395,250
----------------
2,621,072
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT AND SUPPLIES - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Xerox Corp. 8,500 841,500
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.6%
-------------------------------------------------------------------------------------------------------------------------
Airtouch Communications, Inc. (2)(9) 46,000 1,339,750
-------------------------------------------------------------------------------------------------------------------------
AT & T Corp. 16,000 804,000
-------------------------------------------------------------------------------------------------------------------------
ECI Telecommunications Ltd. 51,000 694,875
-------------------------------------------------------------------------------------------------------------------------
MCI Communications Corp. 46,300 850,763
-------------------------------------------------------------------------------------------------------------------------
Rogers Cantel Mobile Communications, Inc., Sub. Cl. B (2) 30,500 889,267
-------------------------------------------------------------------------------------------------------------------------
Technology Resources Industries 25,000 79,790
----------------
4,658,445
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC COMPANIES - 0.5%
-------------------------------------------------------------------------------------------------------------------------
Central Puerto SA, ADR (5) 3,000 74,245
-------------------------------------------------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 35,000 927,500
-------------------------------------------------------------------------------------------------------------------------
Verbund Oest Electriz 9,400 542,929
----------------
1,544,674
- -----------------------------------------------------------------------------------------------------------------------------------
NATURAL GAS - 0.3%
-------------------------------------------------------------------------------------------------------------------------
Hong Kong & China Gas 244,800 395,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UTILITIES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
NATURAL GAS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Southwestern Energy Co. 40,000 $ 595,000
----------------
990,500
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE - 0.7%
-------------------------------------------------------------------------------------------------------------------------
BCE, Inc. 22,000 706,750
-------------------------------------------------------------------------------------------------------------------------
US West, Inc. 35,000 1,246,875
----------------
1,953,625
----------------
Total Common Stocks (Cost $122,460,917) 135,432,161
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 2.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Advanced Micro Devices, Inc., Depositary Cv. Exchangeable
Preferred Shares Each Representing 1/10th Share of $30 Cv.
Exchangeable Preferred Shares 16,200 850,500
-------------------------------------------------------------------------------------------------------------------------
Alumax, Inc., $4.00 Cv., Series A 3,000 362,250
-------------------------------------------------------------------------------------------------------------------------
Chiquita Brands International, Inc., $1.32 Depositary Shares 26,000 357,500
-------------------------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 12,000 700,500
-------------------------------------------------------------------------------------------------------------------------
Delta Airlines, Inc., $3.50 Cv. Depositary Shares, Series C 13,200 577,500
-------------------------------------------------------------------------------------------------------------------------
FHP International Corp., Series A 45,900 1,124,550
-------------------------------------------------------------------------------------------------------------------------
First Chicago Corp., Debt Exchangeable for Common Stock of
Nextel Communications, Inc., 5.50%, 2/15/97 25,000 437,500
-------------------------------------------------------------------------------------------------------------------------
K-III Communications Corp., Sr. Exch., Series A 20,000 505,000
-------------------------------------------------------------------------------------------------------------------------
Pantry Pride, Inc., $14.875 Exch., Series B 8,000 768,000
-------------------------------------------------------------------------------------------------------------------------
Sap AG 1,050 598,833
----------------
Total Preferred Stocks (Cost $5,959,788) 6,282,133
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 6,000 13,500
-------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 7/96 16,412 118,987
----------------
Total Rights, Warrants and Certificates (Cost $36,927) 132,487
-------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $285,911,280) 98.6%
287,971,910
-------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.4 4,095,294
------------------ ----------------
NET ASSETS 100.0% $ 292,067,204
------------------ ----------------
------------------ ----------------
</TABLE>
1. Face amount is reported in local currency. Foreign currency abbreviations
are as follows:
AUD - Australian Dollar ESP - Spanish Peseta
CAD - Canadian Dollar SEK - Swedish Krona
2. Non-income producing security.
3. Represents a zero coupon bond that converts to a fixed rate of interest at a
designated future date.
4. Represents the current interest rate for a variable rate security.
5. Restricted security - See Note 7 of Notes to Financial Statements.
6. Interest or dividend is paid in kind.
7. Represents the current interest rate for an increasing rate security.
8. Represents a bond that pays contingent supplemental interest
until it converts to a fixed rate of interest at a designated
future date.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Multiple Strategies Fund
- -----------------------------------------------------------------------------------------------------------------------------------
9. Securities with an aggregate market value of $7,904,988 are held in escrow to
cover outstanding call options, as follows:
SHARES
SUBJECT EXPIRATION EXERCISE PREMIUM
MARKET VALUE
TO CALL DATE PRICE RECEIVED SEE NOTE
1
------- ----------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Air Products and Chemicals, Inc. 3,000 3/95 50.00 $ 11,159 $ 1,312
Airtouch Communications, Inc. 7,500 1/95 30.00 7,743 2,812
American Express Co. 7,000 4/95 35.00 11,165 1,750
Amgen, Inc. 4,000 4/95 60.00 19,880 16,000
Bankers Trust New York Corp. 3,000 1/95 70.00 13,410 187
Bay Networks, Inc. 6,600 3/95 30.00 14,652 18,562
BMC Software, Inc. 6,600 5/95 60.00 25,409 33,000
Cabletron Systems, Inc. 2,500 1/95 48.00 4,845 2,344
Cabletron Systems, Inc. 1,000 4/95 50.00 4,220 2,687
Caesar's World, Inc. 4,600 2/95 50.00 15,941 80,500
Chiron Corp. 2,000 1/95 75.00 7,690 10,500
Chiron Corp. 3,000 4/95 80.00 20,159 3,375
CML Group, Inc. 13,200 1/95 12.50 14,454 1,650
Computer Associates International, Inc. 6,500 4/95 50.00 32,466 23,562
DowChemical Co. (The) 1,600 3/95 85.00 2,352 200
Empresas ICA Sociedad Controladora SA de C.V. 12,000 1/95 35 00 27,389 750
General Dynamics Corp. 1,800 2/95 45.00 4,333 2,250
General Dynamics Corp. 1,800 5/95 50.00 3,134 1,913
Genzyme Corp. 5,200 1/95 40.00 7,503 325
Hewlett-Packard Co. 2,000 5/95 5.00 12,440 10,000
Hewlett-Packard Co. 2,000 5/95 95.00 15,689 22,750
IMC Global, Inc. 3,800 4/95 45.00 11,286 10,450
Inland Steel Industries, Inc. 4,000 3/95 45.00 5,880 750
International Game Technology 3,800 1/95 25.00 7,248 238
Legent Corp. 10,000 1/95 25.00 35,949 43,750
Legent Corp. 6,000 1/95 30.00 10,695 5,250
Legent Corp. 7,000 7/95 35.00 32,164 14,875
Lilly (Eli) & Co. 4,000 4/95 60.00 17,379 31,000
Lotus Development Corp. 2,600 1/95 50.00 9,347 813
Lotus Development Corp. 4,000 1/95 50.00 12,880 250
Lotus Development Corp. 3,500 4/95 50.00 15,644 6,125
Mattel, Inc. 7,600 1/95 30.00 13,547 950
McDonnell Douglas Corp. 1,000 5/95 40.00 10,470 11,375
MGM Grand, Inc. 5,400 3/95 35.00 9,625 1,013
Microsoft Corp. 100 4/95 65.00 2,964 2,850
Mylan Laboratories, Inc. 9,600 4/95 30.00 17,711 12,600
Pyxis Corp. 6,800 4/95 30.00 24,445 6,375
Sun Microsystems, Inc. 6,600 1/95 30.00 10,114 38,775
Sun Microsystems, Inc. 6,600 4/95 35.00 11,352 23,100
Sun Microsystems, Inc. 3,800 7/95 40.00 7,248 9,025
Tandem Computers, Inc. 11,800 4/95 17.50 14,396 17,700
U.S. Healthcare, Inc. 5,000 1/95 45.00 14,537 1,250
U.S. Healthcare, Inc. 5,000 4/95 50.00 19,224 4,375
Waban, Inc. 11,000 3/95 20.00 17,544 2,063
-------- ---------
$607,682 $ 481,381
-------- ---------
-------- ---------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 11.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $33,822,533 on 1/3/95, collateralized
by U.S. Treasury Nts., 3.875%-8.875%, 5/31/95-8/31/05, with a value of
$32,143,410 and U.S. Treasury Bonds, 10.75%-14.25%, 2/15/02-8/15/05,
with a value of $2,361,271 (Cost $33,800,000) $ 33,800,000 $ 33,800,000
- ----------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Mediobanca, 4.25% Debs., 1/1/00 (Cost $306,880) ITL 497,120,000
229,216
- ----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 1.2%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
METALS - 0.1%
------------------------------------------------------------------------------------------------------------------------
Jindal Strips Ltd., 4.25% Cv. Debs., 3/31/99 300,000 309,000
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.5%
------------------------------------------------------------------------------------------------------------------------
Global Mark International Ltd., 3.50% Cv. Debs., 2/9/95 (4) 1,500,000 1,533,750
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Industrial Credit and Investment Corp. India Ltd., 2.50% Cv.
Debs., 4/30/00 (3) 1,375,000 1,026,094
------------------------------------------------------------------------------------------------------------------------
Scici Ltd., 3.50% Cv. Bonds, 4/1/04 (3) 660,000 583,275
------------
1,609,369
------------
Total Convertible Corporate Bonds and Notes (Cost $4,177,000) 3,452,119
SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 85.6%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 12.5%
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.0%
------------------------------------------------------------------------------------------------------------------------
PT Tri Polyta Indonesia, ADR (2) 30,000 727,500
------------------------------------------------------------------------------------------------------------------------
Reliance Industries Ltd., GDS (2)(3) 75,000 1,485,000
------------------------------------------------------------------------------------------------------------------------
Tianjin Bohai Chemical Industry Co. (2) 7,000,000 841,407
------------
3,053,907
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS: SPECIALTY - 0.8%
------------------------------------------------------------------------------------------------------------------------
Indo Gulf Fertilizer, GDR (2)(3) 147,000 439,324
------------------------------------------------------------------------------------------------------------------------
Minerals Technologies, Inc. 40,000 1,170,000
------------------------------------------------------------------------------------------------------------------------
PT Argha Karya Prima Industry 700,000 732,484
------------
2,341,808
- ----------------------------------------------------------------------------------------------------------------------------------
METAL: MISCELLANEOUS - 2.1%
------------------------------------------------------------------------------------------------------------------------
Asturiana de Zinc SA (2) 64,000 695,282
------------------------------------------------------------------------------------------------------------------------
Capex SA-GDR (2)(3) 124,000 2,030,500
------------------------------------------------------------------------------------------------------------------------
Plettac AG 2,778 1,317,296
------------------------------------------------------------------------------------------------------------------------
Swissreal Schweiz Liegenscha 2,800 2,139,592
------------
6,182,670
- ----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - 5.4%
------------------------------------------------------------------------------------------------------------------------
Attisholz Holding AG 5,000 3,018,352
------------------------------------------------------------------------------------------------------------------------
Corticeira Amorim SA 129,700 2,159,765
------------------------------------------------------------------------------------------------------------------------
Forsheda B Free (5) 100,000 2,185,883
------------------------------------------------------------------------------------------------------------------------
Hansol Paper 29,687 1,600,124
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC MATERIALS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------
Indah Kiat Pulp & Paper Corp. 240,000 $ 272,975
------------------------------------------------------------------------------------------------------------------------
Mo och Domsjo AB Free, Series B (2) 50,000 2,327,124
------------------------------------------------------------------------------------------------------------------------
PT Pabrik Kertas Tjiwi Kimia 1,000,000 1,865,332
------------------------------------------------------------------------------------------------------------------------
Rottneros Bruks AB Free (2) 2,000,000 2,515,446
------------
15,945,001
- ----------------------------------------------------------------------------------------------------------------------------------
STEEL - 3.2%
------------------------------------------------------------------------------------------------------------------------
Dofasco, Inc. 160,000 2,153,014
------------------------------------------------------------------------------------------------------------------------
Korea Iron & Steel Works (2) 67,761 1,787,481
------------------------------------------------------------------------------------------------------------------------
Pohang Iron & Steel Co. Ltd. 5,000 505,945
------------------------------------------------------------------------------------------------------------------------
Pohang Iron & Steel Co. Ltd., ADR 20,000 585,000
------------------------------------------------------------------------------------------------------------------------
Sahaviriya Steel Industries PLC (2) 233,000 593,985
------------------------------------------------------------------------------------------------------------------------
Tung Ho Steel Enterprise Corp., GDR (2)(3) 70,000 1,085,000
------------------------------------------------------------------------------------------------------------------------
Ugine SA 41,600 2,923,108
------------
9,633,533
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 12.0%
- ----------------------------------------------------------------------------------------------------------------------------------
AUTO PARTS: AFTER MARKET - 0.9%
------------------------------------------------------------------------------------------------------------------------
Epeda-Bertrand Faure SA 14,199 2,413,156
------------------------------------------------------------------------------------------------------------------------
Epeda-Bertrand Faure SA, Units (2) 2,028 344,664
------------
2,757,820
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES - 3.9%
------------------------------------------------------------------------------------------------------------------------
CIADEA SA (2) 201,620 1,764,066
------------------------------------------------------------------------------------------------------------------------
Consorcio Grupo Dina SA, Sponsored ADR (2) 45,000 427,500
------------------------------------------------------------------------------------------------------------------------
Consorcio Grupo Dina SA, Sponsored ADR, Series L (2) 7,100 53,250
------------------------------------------------------------------------------------------------------------------------
Fiat SpA di Risp. 1,068,000 2,373,333
------------------------------------------------------------------------------------------------------------------------
Mahindra & Mahindra Ltd., GDR 120,000 1,338,900
------------------------------------------------------------------------------------------------------------------------
Mayne Nickless Ltd. 200,000 1,023,867
------------------------------------------------------------------------------------------------------------------------
Nissan Motor Co. (2) 250,000 2,062,243
------------------------------------------------------------------------------------------------------------------------
Volvo AB, Series B Free 142,500 2,683,591
------------
11,726,750
- ----------------------------------------------------------------------------------------------------------------------------------
BROADCAST MEDIA - 0.7%
------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Cl. A (2) 112,000 1,960,000
- ----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 1.3%
------------------------------------------------------------------------------------------------------------------------
Euro Disney SCA 480,000 1,002,851
------------------------------------------------------------------------------------------------------------------------
Filmes Lusomundo SA (2) 205,200 2,861,456
------------
3,864,307
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHINGS AND APPLIANCES - 1.5%
------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV 150,000 4,442,997
- ----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING - 0.4%
------------------------------------------------------------------------------------------------------------------------
Roto Smeets de Boer 60,000 1,310,425
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT STORES - 1.0%
------------------------------------------------------------------------------------------------------------------------
Sonae Industria E. Investimentos (2) 125,000 2,874,528
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: GENERAL MERCHANDISE CHAINS - 0.3%
------------------------------------------------------------------------------------------------------------------------
PT Matahari Putra Prima 400,000 746,133
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 1.8%
------------------------------------------------------------------------------------------------------------------------
Dickson Concepts International Ltd. 1,984,500 1,295,292
------------------------------------------------------------------------------------------------------------------------
Vereinigte Baubeschlag 14,000 3,965,120
------------
5,260,412
- ----------------------------------------------------------------------------------------------------------------------------------
TEXTILES: APPAREL MANUFACTURERS - 0.2%
------------------------------------------------------------------------------------------------------------------------
Indian Rayon and Industries Ltd., GDR (2)(3) 30,000 583,380
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER NON-CYCLICALS - 7.1%
- ----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES: ALCOHOLIC - 1.9%
------------------------------------------------------------------------------------------------------------------------
Jinro Ltd. 19,000 $ 554,217
------------------------------------------------------------------------------------------------------------------------
LVMH Moet Hennessy Louis Vuitton 15,000 2,369,404
------------------------------------------------------------------------------------------------------------------------
Vina Concha y Toro SA, ADR 148,600 2,451,900
------------
5,375,521
- ----------------------------------------------------------------------------------------------------------------------------------
DRUGS - 1.2%
------------------------------------------------------------------------------------------------------------------------
Astra AB Free, Series A 50,000 1,291,352
------------------------------------------------------------------------------------------------------------------------
Pharmavit GDS (2)(5) 100,000 1,125,000
------------------------------------------------------------------------------------------------------------------------
WPP Group PLC 630,000 1,079,270
------------
3,495,622
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD PROCESSING - 0.8%
------------------------------------------------------------------------------------------------------------------------
Grupo Herdez SA 400,000 190,050
------------------------------------------------------------------------------------------------------------------------
Grupo Herdez SA, Series A 300,000 146,192
------------------------------------------------------------------------------------------------------------------------
Mavesa, ADR (3) 105,000 519,225
------------------------------------------------------------------------------------------------------------------------
Molinos Rio de la Plata SA (2) 301,343 1,673,853
------------
2,529,320
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD WHOLESALERS - 0.3%
------------------------------------------------------------------------------------------------------------------------
Prodega AG 920 1,012,332
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS - 1.4%
------------------------------------------------------------------------------------------------------------------------
Genzyme Corp. (2) 60,000 1,890,000
------------------------------------------------------------------------------------------------------------------------
Genzyme Corp. Tissue Repair (2) 8,100 30,375
------------------------------------------------------------------------------------------------------------------------
Plant Genetics Systems International NV (2) 9,104 68,714
------------------------------------------------------------------------------------------------------------------------
Takare PLC 650,000 2,237,234
------------
4,226,323
- ----------------------------------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS - 1.0%
------------------------------------------------------------------------------------------------------------------------
Elekta Instrument AB Free, Series B (2) 135,000 2,905,542
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: FOOD CHAINS - 0.5%
------------------------------------------------------------------------------------------------------------------------
Carulla SA (2)(3) 107,000 1,235,208
------------------------------------------------------------------------------------------------------------------------
President Enterprises Corp. (2)(3) 7,414 150,134
------------
1,385,342
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 7.9%
- ----------------------------------------------------------------------------------------------------------------------------------
OIL AND GAS DRILLING - 2.4%
------------------------------------------------------------------------------------------------------------------------
Naviera Perez Companc SA, CIA Cl. B 250,000 1,029,934
------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services AS (2) 172,000 3,127,729
------------------------------------------------------------------------------------------------------------------------
Transocean Drilling AS (2) 354,960 2,938,752
------------
7,096,415
- ----------------------------------------------------------------------------------------------------------------------------------
OIL WELL SERVICES AND EQUIPMENT - 1.7%
------------------------------------------------------------------------------------------------------------------------
Baker Hughes, Inc. 150,000 2,737,500
------------------------------------------------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR 102,440 2,381,730
------------
5,119,230
- ----------------------------------------------------------------------------------------------------------------------------------
OIL: EXPLORATION AND PRODUCTION - 0.4%
------------------------------------------------------------------------------------------------------------------------
ASTRA Compania Argentina de Petroleo SA 750,000 1,237,421
- ----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED INTERNATIONAL - 3.4%
------------------------------------------------------------------------------------------------------------------------
Elf Gabon SA 11,000 2,133,307
------------------------------------------------------------------------------------------------------------------------
OeMV AG (2) 50,500 4,277,970
------------------------------------------------------------------------------------------------------------------------
YPF Sociedad Anonima, Sponsored ADR 47,300 1,011,038
------------------------------------------------------------------------------------------------------------------------
YuKong Ltd. 11,605 538,672
------------------------------------------------------------------------------------------------------------------------
YuKong Ltd., GDR (2)(3) 100,000 1,500,000
------------------------------------------------------------------------------------------------------------------------
Yukong Ltd., New 16,340 758,458
------------
10,219,445
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL - 11.3%
- ----------------------------------------------------------------------------------------------------------------------------------
BANKS - 0.9%
------------------------------------------------------------------------------------------------------------------------
Banco Portugues de Investimento 113,000 $ 1,686,482
------------------------------------------------------------------------------------------------------------------------
Banco Wiese, Sponsored ADR (2) 59,700 1,119,375
------------
2,805,857
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCE - 0.4%
------------------------------------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc. 187,000 1,192,125
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: MISCELLANEOUS - 2.9%
------------------------------------------------------------------------------------------------------------------------
First NIS Regional Fund (3)(6) 180,000 765,000
------------------------------------------------------------------------------------------------------------------------
Industrial Finance Corp. 720,000 1,534,355
------------------------------------------------------------------------------------------------------------------------
Marschollek, Lautenschlaeger und Partner AG 9,587 5,133,631
------------------------------------------------------------------------------------------------------------------------
Sturge Holdings PLC 680,000 691,509
------------------------------------------------------------------------------------------------------------------------
Taipei Fund, Cl. B, IDR (2)(3) 6 575,400
------------
8,699,895
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: LIFE - 2.1%
------------------------------------------------------------------------------------------------------------------------
National Mutual Asia Ltd. (2) 2,700,000 1,779,750
------------------------------------------------------------------------------------------------------------------------
Swiss Reinsurance 7,500 4,521,797
------------
6,301,547
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: PROPERTY AND CASUALTY - 1.8%
------------------------------------------------------------------------------------------------------------------------
Reinsurance Australia Corp. (2) 3,300,000 5,375,302
- ----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: OTHER - 3.2%
------------------------------------------------------------------------------------------------------------------------
Akbank T.A.S. 6,448,440 1,749,574
------------------------------------------------------------------------------------------------------------------------
Banco de Galicia, Series B 152,375 609,461
------------------------------------------------------------------------------------------------------------------------
Banco Frances del Rio Plata 109,326 778,948
------------------------------------------------------------------------------------------------------------------------
Grupo Financiero Banamex Accival SA, Cl. C 160,000 464,566
------------------------------------------------------------------------------------------------------------------------
Korea First Bank 98,857 1,379,108
------------------------------------------------------------------------------------------------------------------------
Kwangju Bank (2) 100,000 1,318,960
------------------------------------------------------------------------------------------------------------------------
PT Panin Bank (3) 1,200,000 1,665,150
------------------------------------------------------------------------------------------------------------------------
Standard Chartered Bank PLC 43 189
------------------------------------------------------------------------------------------------------------------------
Turkiye Garanti Bankasi AS, Sponsored ADR (3) 660,000 1,671,252
------------
9,637,208
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 23.1%
- ----------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS GROUP - 1.0%
------------------------------------------------------------------------------------------------------------------------
Ceramicas Carabobo CA, Series B 25,000 88,832
------------------------------------------------------------------------------------------------------------------------
Ceramicas Carabobo CA, Sponsored ADR, Cl. B 120,000 139,164
------------------------------------------------------------------------------------------------------------------------
Cimentos de Portugal SA 80,000 1,412,060
------------------------------------------------------------------------------------------------------------------------
Internacional de Ceramica SA, Series B, ADR (2)(3) 10,000 177,664
------------------------------------------------------------------------------------------------------------------------
Sung Shin Cement (2) 28,000 1,278,377
------------
3,096,097
- ----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 1.8%
------------------------------------------------------------------------------------------------------------------------
BIS SA (2) 28,425 1,720,376
------------------------------------------------------------------------------------------------------------------------
Eurotunnel SA, ESA-Unites (2) 234,090 1,050,531
------------------------------------------------------------------------------------------------------------------------
Measurex Corp. 110,000 2,598,750
------------
5,369,657
- ----------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES - 4.5%
------------------------------------------------------------------------------------------------------------------------
Catena AB Free, Series A (2) 425,000 3,630,247
------------------------------------------------------------------------------------------------------------------------
Commercial del Plata 75,400 192,258
------------------------------------------------------------------------------------------------------------------------
Internatio-Muller NV 50,000 2,650,816
------------------------------------------------------------------------------------------------------------------------
Jardine Matheson Holdings Ltd. 197,551 1,410,706
------------------------------------------------------------------------------------------------------------------------
JK Corp. Ltd., GDR (2)(3) 562,000 3,779,450
------------------------------------------------------------------------------------------------------------------------
Kinnevik Investments AB Free, Series B 52,000 1,720,727
------------
13,384,204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDUSTRIAL (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------
CONTAINERS: METAL AND GLASS - 0.3%
------------------------------------------------------------------------------------------------------------------------
M C Packaging Corp Ltd. 2,662,000 $ 1,032,178
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.4%
------------------------------------------------------------------------------------------------------------------------
PT Kabelmetal Indonesia 800,000 1,091,902
- ----------------------------------------------------------------------------------------------------------------------------------
ENGINEERING AND CONSTRUCTION - 4.2%
------------------------------------------------------------------------------------------------------------------------
Babcock International Group PLC (2) 5,400,000 2,513,369
------------------------------------------------------------------------------------------------------------------------
Cristaleria Espanola SA 40,000 2,130,213
------------------------------------------------------------------------------------------------------------------------
SNC Lavalin Group 219,800 3,564,913
------------------------------------------------------------------------------------------------------------------------
Trafalgar House PLC 1,500,000 1,783,530
------------------------------------------------------------------------------------------------------------------------
VA Technologie AG (2)(3) 25,000 2,516,615
------------
12,508,640
- ----------------------------------------------------------------------------------------------------------------------------------
MACHINERY: DIVERSIFIED - 3.4%
------------------------------------------------------------------------------------------------------------------------
Buderus AG 4,500 1,929,174
------------------------------------------------------------------------------------------------------------------------
Maschinenfabrik Berthold Hermle AG 5,101 543,004
------------------------------------------------------------------------------------------------------------------------
Powerscreen International PLC 580,000 2,150,561
------------------------------------------------------------------------------------------------------------------------
Tampella AB (2) 838,333 2,476,333
------------------------------------------------------------------------------------------------------------------------
Traub AG (2) 22,000 2,980,614
------------
10,079,686
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING: DIVERSIFIED INDUSTRIALS - 3.3%
------------------------------------------------------------------------------------------------------------------------
Autoliv AB (2) 125,000 4,808,942
------------------------------------------------------------------------------------------------------------------------
Bollore Technologies SA (2) 10,000 828,776
------------------------------------------------------------------------------------------------------------------------
Hindustan Development Corp. Ltd., Units (2)(3) 370,000 786,250
------------------------------------------------------------------------------------------------------------------------
Valmet Corp., Cl. A (2) 150,000 2,851,547
------------------------------------------------------------------------------------------------------------------------
Vitro Sociedad Anonima, ADR 30,000 420,000
------------
9,695,515
- ----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL - 0.8%
------------------------------------------------------------------------------------------------------------------------
Elco Looser Holdings Inhaber 6,000 2,292,420
- ----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: MISCELLANEOUS - 2.8%
------------------------------------------------------------------------------------------------------------------------
Kvaerner Industrier AS, Series A Free 3,900 182,200
------------------------------------------------------------------------------------------------------------------------
Kvaerner Industrier AS, Series B 21,232 960,523
------------------------------------------------------------------------------------------------------------------------
Lisnave-Estaleiros Navais de Lisbona SA (2) 501,250 2,455,872
------------------------------------------------------------------------------------------------------------------------
Malaysian International Shipping Corp. 400,333 1,144,467
------------------------------------------------------------------------------------------------------------------------
Singmarine Industries Ltd. 437,500 1,104,272
------------------------------------------------------------------------------------------------------------------------
Unitor Ships Service AS 33,100 557,864
------------------------------------------------------------------------------------------------------------------------
Vard AS (2) 356,000 784,209
------------------------------------------------------------------------------------------------------------------------
Westmont Berhad Ord. 200,000 1,245,334
------------
8,434,741
- ----------------------------------------------------------------------------------------------------------------------------------
TRUCKERS - 0.6%
------------------------------------------------------------------------------------------------------------------------
Koninklijke Frans Maas Groep NV 61,300 1,907,550
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 8.5%
- ----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.5%
------------------------------------------------------------------------------------------------------------------------
Celsius Industrier AB, Cl. B 64,900 1,440,463
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 0.4%
------------------------------------------------------------------------------------------------------------------------
Cray Electronics Holdings 500,000 1,263,333
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: SEMICONDUCTORS - 2.2%
------------------------------------------------------------------------------------------------------------------------
Austria Mikro Systeme International AG 70,000 5,275,264
------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Co., GDR (2)(3) 745 34,643
------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Co., Sponsored GDS (2) 25,000 1,162,500
------------
6,472,407
- ----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 5.4%
------------------------------------------------------------------------------------------------------------------------
Airtouch Communications, Inc. (2) 85,000 2,475,625
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund
MARKET VALUE
COMMON STOCKS (CONTINUED) SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partners Ltd. (2) 49,000 $ 784,000
------------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA (2) 121,678 3,665,550
------------------------------------------------------------------------------------------------------------------------
Netas Telekomunik 2,970,000 940,115
------------------------------------------------------------------------------------------------------------------------
Pakistan Telecommunications, GDR (2)(3) 10,000 1,355,000
------------------------------------------------------------------------------------------------------------------------
PT Indosat, ADR (2) 28,000 1,001,000
------------------------------------------------------------------------------------------------------------------------
Shinawatra Computer & Communication PLC 50,000 1,091,415
------------------------------------------------------------------------------------------------------------------------
Technology Resources Industries 500,000 1,595,829
------------------------------------------------------------------------------------------------------------------------
USHA Beltron Ltd. (2) 160,000 1,500,000
------------------------------------------------------------------------------------------------------------------------
Vodafone Group 500,000 1,658,370
------------
16,066,904
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.2%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC COMPANIES - 1.9%
------------------------------------------------------------------------------------------------------------------------
Calcutta Electric Supply (2) 15,000 570,000
------------------------------------------------------------------------------------------------------------------------
Central Puerto SA, ADR (3) 20,000 494,968
------------------------------------------------------------------------------------------------------------------------
Korea Electric Power Co. 25,000 862,397
------------------------------------------------------------------------------------------------------------------------
Tata Electric Cos. (2)(3) 500 218,750
------------------------------------------------------------------------------------------------------------------------
Veba AG 10,000 3,463,190
------------
5,609,305
- ----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE - 1.3%
------------------------------------------------------------------------------------------------------------------------
Telecom Italia SpA 900,000 2,341,191
------------------------------------------------------------------------------------------------------------------------
Telecommunication de Argentina, Cl. B 300,000 1,469,900
------------------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA, Sponsored ADR 3,000 123,000
------------
3,934,091
------------
Total Common Stocks (Cost $261,335,260) 254,977,211
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.7%
------------------------------------------------------------------------------------------------------------------------
Moebel Walther AG (2) 3,500 1,585,145
------------------------------------------------------------------------------------------------------------------------
Rhoen Klinikum AG 660 400,254
------------------------------------------------------------------------------------------------------------------------
Telecom Brasileiras SA 600,000 26,848
------------
Total Preferred Stocks (Cost $1,857,274) 2,012,247
UNITS
- ----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.1%
------------------------------------------------------------------------------------------------------------------------
Ciba-Geigy AG Wts., Exp. 6/95 100 309
------------------------------------------------------------------------------------------------------------------------
Eurotunnel SA Wts., Exp. 10/95 30,000 3,373
------------------------------------------------------------------------------------------------------------------------
Rottneros Bruks AB Rts., Exp. 1/95 2,000,000 322,838
------------
Total Rights, Warrants and Certificates (Cost $0) 326,520
FACE
AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF DEPOSIT - 0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Cayman Time Deposit, 5.125%, 2/27/95 (Cost $2,300,000) 2,300,000
2,300,000
------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $303,776,414) 99.7%
297,097,313
------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.3 744,608
--------- ------------
NET ASSETS 100.0% $297,841,921
--------- ------------
--------- ------------
</TABLE>
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund
- --------------------------------------------------------------------------------
1. Face amount is reported in local currency. Foreign currency
abbreviation is as follows:
ITL - Italian Lira
2. Non-income producing security.
3. Restricted security - See Note 7 of Notes to Financial
Statements.
4. Represents the current interest rate for an increasing rate
security.
5. Affiliated company. Represents ownership of at least 5% of the
voting securities of the issuer and is or was an affiliate, as
defined in the Investment Company Act of 1940, at or during the
period ended December 31, 1994. The aggregate fair value of all
securities of affiliated companies as December 31, amounted to
$3,310,883. Transactions during the period in which the issuer
was an affiliate are as follows:
<TABLE>
<CAPTION>
Balance Balance
December 31, 1993 Gross Additions Gross Reductions December 31, 1994
----------------- ------------------ ---------------- -----------------
Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Forsheda B Free - $ - 100,000 $1,200,236 - $ - 100,000 $1,200,236 $10,808
Pharmavit GDS - - 100,000 1,300,000 - - 100,000 1,300,000 -
---- ---------- ---- ---------- -------
- $ - $2,500,236 - $ - $2,500,236 $10,808
---- ---------- ---- ---------- -------
---- ---------- ---- ---------- -------
</TABLE>
6. First NIS Regional Fund, a closed end fund listed on the
Luxembourg Stock Exchange, is offered in installments. The Fund
entered into the first installment (40% of the total commitment)
on November 29, 1994. The second and third installments (30%
each of the total commitment) are provisional and may be
postponed indefinitely at the discretion of the Board of NIS
Fund.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Strategic Bond Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 16.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $3,402,267 on 1/3/95, 1/3/95
collateralized by U.S. Treasury Nts., 3.875%-8.875%, 5/31/95-8/31/05,
with a value of $3,233,361 and U.S. Treasury Bonds, 10.75%-14.25%,
2/15/02-8/15/05, with a value of $237,524 (Cost $3,400,000) $ 3,400,000 $ 3,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 6.2%
- -----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 5.2%
- -----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 1.6%
-------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Series 176, Cl. F, 8.95%,
3/15/20 58,000 58,436
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, 10.50%,
11-25-20 130,000 143,450
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Series 1994-83, Cl. Z,
7.50%, 6/25/24 166,094 124,890
----------------
326,776
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED - 3.6%
-------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 7%, 1/1/95 750,000 737,109
- -----------------------------------------------------------------------------------------------------------------------------------
PRIVATE - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY - 1.0%
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-Through
Certificates, Series 1994-C2, Cl. E, 8%, 4/25/25 249,105 199,129
----------------
Total Mortgage-Backed Obligations (Cost $1,263,157) 1,263,014
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 13.6%
- -----------------------------------------------------------------------------------------------------------------------------------
TREASURY - 13.6%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.875%, 2/15/21 470,000 463,831
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 4.25%, 5/15/96 (10)(11) 2,289,000 2,194,579
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.125%, 4/30/98 120,000 110,662
----------------
Total U.S. Government Obligations (Cost $2,959,676) 2,769,072
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 22.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de
Deudas, Series 1, 5.625%, 4/1/01 (4)(6) 639,964 409,944
-------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Interest Due and Unpaid Bonds,
6.063%, 1/1/01 (4) 98,000 81,861
-------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Nts., Banco Estado Minas
Gerais, 10%, 1/15/96 240,000 231,000
-------------------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Bonds, 0%, 12/29/49 (5)(9) 250,000 135,938
-------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 NZD 325,000 222,608
-------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement, Tranche
A, 5.938%, 1/1/09 (4) 300,000 199,125
-------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement, Tranche
B, 5.938%, 1/1/04 (4) 50,000 35,453
-------------------------------------------------------------------------------------------------------------------------
New South Wales State Bank Bonds, 9.25%, 2/18/03 AUD 100,000
72,863
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Strategic Bond Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd. Bonds, 12%, 12/1/01 AUD $ 148,000 $
123,766
-------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 10%, 7/15/97 NZD 155,000 100,687
-------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 8%, 11/15/95 NZD 400,000 252,869
-------------------------------------------------------------------------------------------------------------------------
Petroquimica do Nordeste Sr. Unsec. Unsub. Nts., 9.50%, 10/19/01 50,000
43,938
-------------------------------------------------------------------------------------------------------------------------
Poland (Republic of) Disc. Bonds, 6.813%, 10/27/24 500,000 361,250
-------------------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 270,000 186,275
-------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del
Estado, 10.25%, 11/30/98 ESP 26,000,000 188,931
-------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del
Estado, 12.25%, 3/25/00 ESP 22,000,000 169,517
-------------------------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Nts., 12.50%, 7/15/00 AUD 190,000 160,086
-------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts. (Gilt), 12%, 11/20/98 GBP 185,000 320,004
-------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts. (Gilt), 12.25%, 3/26/99 GBP 30,000 52,597
-------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts. (Gilt), 13%, 7/14/00 GBP 92,000 169,887
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Treasury Bills, 0%, 1/19/95 MXP 176,940 35,378
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Treasury Bills, 0%, 4/6/95 MXP 363,930 69,047
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Treasury Bills, 0%, 5/4/95 MXP 184,250 34,798
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Combined Facility 3 Loan Participation
Agreement, 7.625%, 3/20/00 (4)(5) 200,000 172,000
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Myra Old Money Loan Participation
Agreements, 7.625%, 3/20/05 (4)(5) 200,000 139,000
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Petacalco Topolobampo Trust Sr. Sec.
Unsub. Nts., 8.125%, 12/15/03 300,000 222,000
-------------------------------------------------------------------------------------------------------------------------
United Mexican States Petroleos Mexicanos Gtd. Medium-Term
Nts., 7.60%, 6/15/00 100,000 84,720
-------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., 6.75%, 9/20/95 200,000 192,000
-------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., 9%, 5/27/96 50,000 47,124
----------------
Total Foreign Government Obligations (Cost $4,778,402) 4,514,666
- -----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 34.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.3%
-------------------------------------------------------------------------------------------------------------------------
Borg-Warner Security Corp., 9.125% Sr. Sub. Nts., 5/1/03 100,000 85,250
-------------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 200,000 177,000
----------------
262,250
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 0.5%
-------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 100,000 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - 1.9%
-------------------------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 75,000 61,500
-------------------------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% Fst. Priority Sr. Sec. Nts.,
2/1/02 100,000 89,750
-------------------------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04 (5) 50,000 51,500
-------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 10.75% Fst. Mtg. Nts., 10/1/02 190,000 190,000
----------------
392,750
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 10.5%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES - 0.9%
-------------------------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 200,000 183,000
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION SUPPLIES AND DEVELOPMENT - 1.7%
-------------------------------------------------------------------------------------------------------------------------
Atlantis Group, Inc., 11% Sr. Nts., 2/15/03 130,000 129,350
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Strategic Bond Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION SUPPLIES AND DEVELOPMENT (CONTINUED)
-------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., 12/1/11 Series 1993-A,
12/1/11 (5) $ 250,000 $ 216,250
----------------
345,600
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER GOODS AND SERVICES - 3.3%
-------------------------------------------------------------------------------------------------------------------------
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 200,000 199,000
-------------------------------------------------------------------------------------------------------------------------
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 5/27/98 50,000 34,000
-------------------------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts.,
8/1/02 150,000 162,750
-------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99 175,000
174,125
-------------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 0% Promissory Nts., 10/23/96 IDR 300,000,000
97,589
----------------
667,464
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 3.3%
-------------------------------------------------------------------------------------------------------------------------
Ackerley Communications, Inc., 10.75% Sr. Sec.
Nts., Series A, 10/1/0 200,000 191,000
-------------------------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04 (3) 100,000 54,000
-------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 150,000 143,813
-------------------------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375% Sr. Sub. Nts., 11/1/03 200,000
196,000
-------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 100,000 94,000
----------------
678,813
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE DEVELOPMENT - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts.,
4/1/02 100,000 84,000
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL - 0.9%
-------------------------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc., 0%/11.50% (3)
Sr. Sec. Disc. Nts., 8/15/03 400,000 172,000
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 4.2%
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD AND DRUG DISTRIBUTION - 2.1%
-------------------------------------------------------------------------------------------------------------------------
AmeriSource Corp., 11.25% Sr. Debs., 7/15/05 (6) 165,831 157,539
-------------------------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 150,000 141,000
-------------------------------------------------------------------------------------------------------------------------
Grand Union Co., 12.25% Sr. Sub. Nts., 7/15/02 200,000 79,000
-------------------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 50,000 41,750
----------------
419,289
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 2.1%
-------------------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., Units (5) 200,000 197,000
-------------------------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., Units 300,000 226,500
----------------
423,500
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 3.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub.
Nts., Series B, 10/1/03 300,000 313,500
-------------------------------------------------------------------------------------------------------------------------
Citibank, 10.50% CD, 7/14/95 (7)ARA 100,000 99,994
-------------------------------------------------------------------------------------------------------------------------
Citibank, 16% CD, 3/17/95 (7)CLP 20,711,846 51,644
-------------------------------------------------------------------------------------------------------------------------
Citibank, 16% CD, 5/3/95 (7)CLP 64,500,000 160,828
----------------
625,966
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
GENERAL INDUSTRIAL - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96 (5) 90,000 85,275
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Strategic Bond Fund
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 9.4%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.6%
-------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 8.625% Medium-Term Nts., Series C, 1/15/99 (5) $ 250,000 $
178,750
-------------------------------------------------------------------------------------------------------------------------
Talley Industries, Inc., 0%/12.25% Sr. Disc. Debs., 10/15/05 (3) 300,000 151,500
----------------
330,250
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 3.8%
-------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 0%/12.50% Sr. Disc. Nts., 6/15/04 (3) 200,000 90,000
-------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 10.75% Sr. Sub. Debs., 4/1/04 100,000 100,500
-------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 100,000 90,000
-------------------------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 11% Sr. Sub. Debs., 6/1/07 300,000 306,000
-------------------------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 80,000 41,800
-------------------------------------------------------------------------------------------------------------------------
Marcus Cable Operating Co. LP/Marcus Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04 (3) 100,000 53,000
-------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 50,000 45,856
-------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 8.375% Sr.
Debs., 3/15/23 50,000 41,834
----------------
768,990
- -----------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS - 2.9%
-------------------------------------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc.
Nts., 12/1/04 (3) 200,000 105,000
-------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04 (3)(5) 150,000 97,893
-------------------------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (3) 50,000 32,750
-------------------------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04 (3) 50,000
29,875
-------------------------------------------------------------------------------------------------------------------------
Mobile Telecommunications Technologies Corp., 13.50% Sr.
Nts., 12/15/02 50,000 50,875
-------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 9.75% Sr. Sec.
Nts., 8/1/00 150,000 142,125
-------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., .50%/14% Sr. Sub. Disc.
Nts., 11/15/01 (5)(12) 200,000 133,000
----------------
591,518
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 1.1%
-------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7%/10% Sr. Nts., 3/1/01 (8) 200,000 167,000
-------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 13.50% Credit Sensitive Nts., 7/1/97 50,000 54,250
----------------
221,250
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Beaver Valley II Funding Corp., 9% 2nd Lease Obligation
Bonds, 6/1/17 199,000 142,451
-------------------------------------------------------------------------------------------------------------------------
El Paso Funding Co., 10.75% Debs., 4/1/13 (2) 100,000 52,077
-------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.30% Lease Obligation Bonds,
Series 1986A, 1/15/14 200,000 183,467
-------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A,
12/28/08 (5) 250,000 216,250
----------------
594,245
----------------
Total Corporate Bonds and Notes (Cost $7,408,174) 6,946,160
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Strategic Bond Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS - 0.6%
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 0.6%
- -----------------------------------------------------------------------------------------------------------------------------------
HOTELS/MOTELS - 0.2%
-------------------------------------------------------------------------------------------------------------------------
Celcaribe SA (5) 24,390 $ 28,106
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT STORES - 0.4%
-------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. 4,498 86,587
----------------
Total Common Stocks (Cost $113,924) 114,693
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 4.2%
- -----------------------------------------------------------------------------------------------------------------------------------
AK Steel Holding Corp., 7% Cv. Stock Appreciation Income
Linked Securities 5,000 156,250
-------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 9% Exchangeable Notes for Common
Stock of Lyondell Petrochemical Co., 9/15/97 5,000 130,625
-------------------------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 2,000 200,500
-------------------------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 2,000 196,000
-------------------------------------------------------------------------------------------------------------------------
Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 1,000 27,875
-------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum Corp., 8.255% Provisionally Redeemable
Income Debt Exchangeable for Stock 3,200 34,000
-------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 6,000 114,000
----------------
Total Preferred Stocks (Cost $916,622) 859,250
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 1,000 2,250
-------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. Wts., Cl. C, Exp. 12/99 2,996 15,355
-------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. Wts., Cl. D, Exp. 12/01 2,996 16,853
-------------------------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/96 (5) 36 27
----------------
Total Rights, Warrants and Certificates (Cost $35,293) 34,485
FACE
AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 3.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust, Series 1994-II,
11.30%, 4/1/00 (5) $286,956 $244,630
-------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank, N.Y. Branch, Italian Lira/Deutsche
Mark Linked Confidence Nt., Girozentrale Branch, 10%, 8/7/95 (7) 90,000 76,455
-------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 5.788% Standard & Poor's 500
Index-Linked Nts., 1/25/95 (5) 50,000 58,560
-------------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York (Singapore Branch),
12.15% CD, 2/3/95 (7) 100,000 91,592
-------------------------------------------------------------------------------------------------------------------------
Swiss Bank Corporation Investment Banking, Inc., 10% CD
Sterling Rate Linked Nts., 7/3/95 (7) 160,000 154,880
----------------
Total Structured Instruments (Cost $709,157) 626,117
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $21,584,405) 101.0%
20,527,457
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.0)
(207,142)
------ ----------------
NET ASSETS 100.0% $ 20,320,315
------ ----------------
------ ----------------
</TABLE>
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994
Oppenheimer Variable Account Funds - Oppenheimer Strategic Bond Fund
- --------------------------------------------------------------------------------
1. Face amount is reported in local currency. Foreign currency
abbreviations are as follows:
ARA - Argentine Austral GBP - Pound Sterling
AUD - Australian Dollar IDR - Indonesian Rupiah
CLP - Chilean Peso MXP - Mexican Peso
ESP - Spanish Peseta NZD - New Zealand Dollar
2. Non-income producing security.
3. Represents a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
4. Represents the current interest for a variable rate security.
5. Restricted security - See Note 7 of Notes to Financial
Statements.
6. Interest or dividend is paid in kind.
7. Indexed instrument for which the principal amount due at
maturity is affected by the relative value of a foreign
currency.
8. Represents the current interest rate for an increasing rate
security.
9. When-issued security to be delivered and settled after December
31, 1994.
10. Securities with an aggregate market value of $402,675 are held
in escrow to cover initial margin requirements on open interest
rate futures sales contracts. See Note 6 of Notes to Financial
Statements.
11. Securities with an aggregate market value of $1,150,500 are held
in escrow to cover outstanding call options, as follows:
<TABLE>
<CAPTION>
SHARES
SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE
TO CALL DATE PRICE RECEIVED SEE NOTE 1
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
European OTC Australian Dollar/U.S. Dollar 307,425 3/6/95 79.00AUD $1,600 $1,548
</TABLE>
12. Represents a bond that pays contingent supplemental interest
until it converts to a fixed rate of interest at a designated
future date.
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1994
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER
CAPITAL
MONEY HIGH INCOME BOND
APPRECIATION
FUND FUND FUND FUND
----------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost * ) (including repurchase agreements**)
- see accompanying statements $89,427,110 $94,228,680 $132,512,297 $182,918,438
Unrealized appreciation on futures contracts - Note 6 -- -- -- --
Cash 32,522 426,475 170,380 23,807
Receivables:
Dividends and interest 221,806 1,814,941 2,314,374 142,370
Shares of beneficial interest sold 55,012 29,436 386,737 3,813,210
Investments sold 185,438 1,834,980 -- 2,987,756
Other 5,623 1,251 7,049 8,710
----------------------------------------------------------
Total assets 89,927,511 98,335,763 135,390,837 189,894,291
----------------------------------------------------------
LIABILITIES:
Options written, at value (premiums received ***) - see
accompanying statements - Note 4 -- -- -- --
Unrealized depreciation on forward foreign currency exchange
contracts - Note 5 -- -- -- --
Payables and other liabilities:
Dividends 231,446 -- -- --
Investments purchased -- 1,190,212 280,624 --
Shares of beneficial interest redeemed 8,469 1,419,562 19,613 4,077,624
Other 16,679 27,680 23,216 43,126
----------------------------------------------------------
Total liabilities 256,594 2,637,454 323,453 4,120,750
----------------------------------------------------------
NET ASSETS $89,670,917 $95,698,309 $135,067,384 $185,773,541
==========================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $89,694,620 $101,247,704 $140,125,237 $170,177,063
Undistributed (distributions in excess of) net investment income -- 1,981,784 1,832,232 711,671
Accumulated net realized gain (loss) from investment, written
option and foreign currency transactions (23,703) (3,843,420) (2,398,141) (1,048,111)
Net unrealized appreciation (depreciation) on investments,
options written and translation of assets and liabilities
denominated in foreign currencies -- (3,687,759) (4,491,944) 15,932,918
----------------------------------------------------------
NET ASSETS $89,670,917 $95,698,309 $135,067,384 $185,773,541
==========================================================
SHARES OF BENEFICIAL INTEREST OUTSTANDING 89,694,620 9,779,151 12,527,081
7,157,574
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE $1.00 $9.79 $10.78 $25.95
*Cost $89,427,110 $97,920,437 $137,008,816 $166,985,520
**Repurchase Agreements $2,200,000 $6,000,000 $15,700,000 $23,400,000
***Premiums received -- -- -- --
</TABLE>
See accompanying Notes to Financial Statements.
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
OPPENHEIMER MULTIPLE GLOBAL STRATEGIC
GROWTH STRATEGIES SECURITIES BOND
FUND FUND FUND FUND
----------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost * ) (including repurchase agreements**)
- see accompanying statements $60,267,367 $287,971,910 $297,097,313 $20,527,457
Unrealized appreciation on futures contracts - Note 6 -- -- -- 19,136
Cash 298,128 93,979 436,640 179,286
Receivables:
Dividends and interest 87,998 3,351,382 405,375 355,898
Shares of beneficial interest sold 2,330,643 174,490 1,469,588 87,118
Investments sold 790,262 1,870,537 663,125 96,758
Other -- 2,303 9,748 15,259
-------------------------------------------------------
Total assets 63,774,398 293,464,601 300,081,789 21,280,912
-------------------------------------------------------
LIABILITIES:
Options written, at value (premiums received ***) - see
accompanying statements - Note 4 -- 481,381 -- 1,548
Unrealized depreciation on forward foreign currency exchange
contracts - Note 5 -- -- 1,151,806 --
Payables and other liabilities:
Dividends -- -- -- --
Investments purchased 469,945 841,544 919,245 937,797
Shares of beneficial interest redeemed 2,871 45,585 7,926 --
Other 18,408 28,887 160,891 21,252
-------------------------------------------------------
Total liabilities 491,224 1,397,397 2,239,868 960,597
-------------------------------------------------------
NET ASSETS $63,283,174 $292,067,204 $297,841,921 $20,320,315
=======================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $54,399,542 $280,209,466 $304,182,420 $22,014,634
Undistributed (distributions in excess of) net investment income 814,551 1,038,677 (1,069) 111,729
Accumulated net realized gain (loss) from investment, written
option and foreign currency transactions 848,014 8,636,344 1,503,327 (769,757)
Net unrealized appreciation (depreciation) on investments,
options written and translation of assets and liabilities
denominated in foreign currencies 7,221,067 2,182,717 (7,842,757) (1,036,291)
-------------------------------------------------------
NET ASSETS $63,283,174 $292,067,204 $297,841,921 $20,320,315
=======================================================
SHARES OF BENEFICIAL INTEREST OUTSTANDING 3,579,510 22,619,777 19,743,343
4,418,161
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE $17.68 $12.91 $15.09 $4.60
*Cost $53,046,300 $285,911,280 $303,776,414 $21,584,405
**Repurchase Agreements $8,000,000 $17,200,000 $33,800,000 $3,400,000
***Premiums received -- $607,682 -- $1,600
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS For the Year Ended December 31, 1994
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER CAPITAL
MONEY HIGH INCOME BOND APPRECIATION
FUND FUND FUND FUND
--------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $4,161,100 $9,509,093 $9,585,487 $1,275,631
Dividends:
Unaffiliated companies -- 418,776 14,021 376,542
Affiliated companies -- -- -- --
--------------------------------------------------------
Total income (net of withholding taxes of *) 4,161,100 9,927,869 9,599,508 1,652,173
--------------------------------------------------------
EXPENSES:
Management fees - Note 8 341,324 617,198 630,514 803,231
Custodian fees and expenses 22,150 21,386 27,333 17,171
Legal and auditing fees 14,929 17,125 14,932 21,982
Trustees' fees and expenses 2,730 4,160 2,460 5,062
Registration and filing fees -- 2,422 9,189 20,451
Other 5,503 11,590 14,158 15,242
--------------------------------------------------------
Total expenses 386,636 673,881 698,586 883,139
--------------------------------------------------------
NET INVESTMENT INCOME 3,774,464 9,253,988 8,900,922 769,034
--------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
OPTIONS WRITTEN AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments (5,168) (3,006,191) (914,480) (1,045,951)
Expiration and closing of option contracts written - Note 4 -- -- -- --
Foreign currency transactions -- (683,194) (1,455,675) --
Net change in unrealized appreciation or depreciation on:
Investments and options written -- (8,762,313) (8,925,071) (10,016,034)
Translation of assets and liabilities denominated in foreign
currencies -- 132,937 100,340 --
--------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions (5,168) (12,318,761) (11,194,886) (11,061,985)
--------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $3,769,296 ($3,064,773) ($2,293,964)
($10,292,951)
========================================================
*Withholding -- $15,178 $18,617 --
</TABLE>
See accompanying Notes to Financial Statements.
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
OPPENHEIMER MULTIPLE GLOBAL STRATEGIC
GROWTH STRATEGIES SECURITIES BOND
FUND FUND FUND FUND
--------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $334,611 $13,042,562 $658,349 $1,387,029
Dividends:
Unaffiliated companies 835,252 2,252,337 2,445,315 32,822
Affiliated companies -- -- 10,808 --
-------------------------------------------------------
Total income (net of withholding taxes of *) 1,169,863 15,294,899 3,114,472 1,419,851
-------------------------------------------------------
EXPENSES:
Management fees - Note 8 307,904 1,433,107 1,517,234 105,760
Custodian fees and expenses 11,043 60,309 280,616 4,959
Legal and auditing fees 12,605 23,706 12,597 10,666
Trustees' fees and expenses 1,962 7,454 1,890 1,419
Registration and filing fees 1,295 18,049 98,664 7,241
Other 10,078 25,155 41,397 3,649
-------------------------------------------------------
Total expenses 344,887 1,567,780 1,952,398 133,694
-------------------------------------------------------
NET INVESTMENT INCOME 824,976 13,727,119 1,162,074 1,286,157
-------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
OPTIONS WRITTEN AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments 1,441,127 7,828,434 (558,527,187) (879,244)
Expiration and closing of option contracts written - Note 4 -- 741,274 -- --
Foreign currency transactions -- 233,398 558,913,024 83,129
Net change in unrealized appreciation or depreciation on:
Investments and options written (1,915,053) (27,789,525) (26,402,301) (1,105,520)
Translation of assets and liabilities denominated in foreign
currencies -- (400,208) 2,386,926 (15,352)
-------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions (473,926) (19,386,627) (23,629,538) (1,916,987)
-------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $351,050 ($5,659,508) ($22,467,464) ($630,830)
=======================================================
*Withholding -- $45,100 $141,142 $12,168
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
MONEY HIGH INCOME
FUND FUND
----------------------------------------------------------
1994(1) 1993(1) 1994(1) 1993(1)
----------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $3,774,464 $1,795,672 $9,253,988 $7,032,421
Net realized gain (loss) on investments, options written and
foreign currency transactions (5,168) 972 (3,689,385) 2,870,765
Net change in unrealized appreciation or depreciation on
investments, options written and translation of assets and
liabilities denominated in foreign currencies -- -- (8,629,376) 4,936,980
----------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 3,769,296 1,796,644 (3,064,773) 14,840,166
NET CHANGE IN EQUALIZATION -- -- -- 1,194,413
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (3,793,971) (1,795,672) (6,580,907) (7,933,113)
Distributions from net realized gain on investments, options
written and foreign currency transactions -- -- (2,106,023) --
Distributions in excess of net realized gain on investments,
options written and foreign currency transactions -- -- -- --
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from beneficial
interest transactions - Note 2 28,473,973 2,954,149 14,438,679 44,092,559
----------------------------------------------------------
NET ASSETS:
Total increase (decrease) 28,449,298 2,955,121 2,686,976 52,194,025
Beginning of period 61,221,619 58,266,498 93,011,333 40,817,308
----------------------------------------------------------
End of period $89,670,917 $61,221,619 $95,698,309 $93,011,333
==========================================================
</TABLE>
1. For the year ended December 31.
See accompanying Notes to Financial Statements.
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER CAPITAL
BOND APPRECIATION
FUND FUND
----------------------------------------------------------
1994(1) 1993(1) 1994(1) 1993(1)
----------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $8,900,922 $6,281,918 $769,034 $221,843
Net realized gain (loss) on investments, options written and
foreign currency transactions (2,370,155) 431,623 (1,045,951) 17,171,028
Net change in unrealized appreciation or depreciation on
investments, options written and translation of assets and
liabilities denominated in foreign currencies (8,824,731) 3,179,352 (10,016,034) 8,012,743
-----------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,293,964) 9,892,893 (10,292,951) 25,405,614
NET CHANGE IN EQUALIZATION -- 747,196 -- --
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (7,101,380) (6,021,196) (218,275) (173,608)
Distributions from net realized gain on investments, options
written and foreign currency transactions (283,274) -- (17,112,748) (3,478,465)
Distributions in excess of net realized gain on investments,
options written and foreign currency transactions -- -- -- --
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from beneficial
interest transactions - Note 2 32,899,881 43,872,915 76,512,412 31,796,464
-----------------------------------------------------------
NET ASSETS:
Total increase (decrease) 23,221,263 48,491,808 48,888,438 53,550,005
Beginning of period 111,846,121 63,354,313 136,885,103 83,335,098
-----------------------------------------------------------
End of period $135,067,384 $111,846,121 $185,773,541 $136,885,103
==========================================================
=
</TABLE>
1. For the year ended December 31.
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER MULTIPLE
GROWTH STRATEGIES
FUND FUND
----------------------------------------------------------
1994(1) 1993(1) 1994(1) 1993(1)
----------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $824,976 $521,913 $13,727,119 $8,871,280
Net realized gain (loss) on investments, options written and
foreign currency transactions 1,441,127 (416,658) 8,803,106 3,175,446
Net change in unrealized appreciation or depreciation on
investments, options written and translation of assets and
liabilities denominated in foreign currencies (1,915,053) 3,377,578 (28,189,733) 17,718,371
----------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 351,050 3,482,833 (5,659,508) 29,765,097
NET CHANGE IN EQUALIZATION -- -- -- --
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (516,871) (339,216) (13,056,112) (8,601,104)
Distributions from net realized gain on investments, options
written and foreign currency transactions (127,540) (768,083) (1,925,053) --
Distributions in excess of net realized gain on investments,
options written and foreign currency transactions -- -- -- --
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from beneficial
interest transactions - Note 2 6,875,487 17,831,569 62,417,829 69,662,484
-----------------------------------------------------------
NET ASSETS:
Total increase (decrease) 6,582,126 20,207,103 41,777,156 90,826,477
Beginning of period 56,701,048 36,493,945 250,290,048 159,463,571
-----------------------------------------------------------
End of period $63,283,174 $56,701,048 $292,067,204 $250,290,048
==========================================================
=
</TABLE>
1. For the year ended December 31.
2. For the period from May 3, 1993 (commencement of operations) to December 31,
1993.
See accompanying Notes to Financial Statements.
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
GLOBAL STRATEGIC
SECURITIES BOND
FUND FUND
----------------------------------------------------------
1994(1) 1993(1) 1994(1) 1993(2)
----------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $1,162,074 $228,462 $1,286,157 $161,471
Net realized gain (loss) on investments, options written and
foreign currency transactions 385,837 2,546,181 (796,115) 23,918
Net change in unrealized appreciation or depreciation on
investments, options written and translation of assets and
liabilities denominated in foreign currencies (24,015,375) 16,954,257 (1,120,872) 84,581
----------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (22,467,464) 19,728,900 (630,830) 269,970
NET CHANGE IN EQUALIZATION -- -- -- --
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (359,955) -- (1,161,570) (155,087)
Distributions from net realized gain on investments, options
written and foreign currency transactions (2,441,859) -- -- --
Distributions in excess of net realized gain on investments,
options written and foreign currency transactions -- -- (16,802) --
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from beneficial
interest transactions - Note 2 226,686,688 63,158,438 12,242,999 9,771,635
----------------------------------------------------------
NET ASSETS:
Total increase (decrease) 201,417,410 82,887,338 10,433,797 9,886,518
Beginning of period 96,424,511 13,537,173 9,886,518 --
----------------------------------------------------------
End of period $297,841,921 $96,424,511 $20,320,315 $9,886,518
==========================================================
</TABLE>
1. For the year ended December 31.
2. For the period from May 3, 1993 (commencement of operations) to December 31,
1993.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
MONEY
FUND
---------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations - net
investment income and net realized gain
on investments .04 .03 .04 .06 .08
Dividends and distributions to shareholders (.04) (.03) (.04) (.06) (.08)
---------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================
===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $89,671 $61,221 $58,266 $58,709 $89,143
Average net assets (in thousands) $90,264 $57,654 $61,317 $75,747 $82,966
Number of shares outstanding at end of year
(in thousands) 89,695 61,221 58,266 58,703 89,141
Ratios to average net assets:
Net investment income 4.18% 3.12% 3.76% 5.97% 7.80%
Expenses .43% .43% .50% .49% .51%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
MONEY
FUND
---------------------------------------------------------------------
1989 1988 1987 1986 1985(1)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations - net
investment income and net realized gain
on investments .09 .07 .06 .06 .05
Dividends and distributions to shareholders (.09) (.07) (.06) (.06) (.05)
---------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================
===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $68,440 $69,468 $42,538 $28,218 $2,506
Average net assets (in thousands) $67,586 $60,241 $35,138 $12,914 $2,080
Number of shares outstanding at end of year
(in thousands) 68,439 69,468 42,538 28,218 2,506
Ratios to average net assets:
Net investment income 8.82% 7.31% 6.33% 5.68% 7.25%(2)
Expenses .53% .55% .59% .75% .75%(2)
</TABLE>
1. For the period from April 3, 1985 (commencement of operations) to December
31, 1985.
2. Annualized.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
HIGH INCOME
FUND
--------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 11.02 $ 9.74 $ 9.40 $ 7.90 $ 8.59
Income (loss) from investment operations:
Net investment income .94 .82 1.19 1.28 1.21
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (1.27) 1.65 .43 1.30 (.82)
--------------------------------------------------------------------
Total income (loss) from investment operations (.33) 2.47 1.62 2.58 .39
--------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.66) (1.19) (1.28) (1.08) (1.08)
Distributions from net realized gain on investments,
options written and foreign currency transactions (.24) -- -- -- --
--------------------------------------------------------------------
Total dividends and distributions to shareholders (.90) (1.19) (1.28) (1.08) (1.08)
--------------------------------------------------------------------
Net asset value, end of period $ 9.79 $ 11.02 $ 9.74 $ 9.40 $ 7.90
==========================================================
==========
TOTAL RETURN, AT NET ASSET VALUE(2) (3.18)% 26.34% 17.92% 33.91%
4.65%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 95,698 $93,011 $40,817 $27,308 $19,172
Average net assets (in thousands) $101,096 $67,000 $36,861 $23,663 $21,493
Number of shares outstanding at end of period
(in thousands) 9,779 8,443 4,189 2,905 2,427
Ratios to average net assets:
Net investment income 9.15% 10.50% 12.08% 14.26% 14.32%
Expenses .67% .68% .73% .75% .75%
Portfolio turnover rate(4) 110.1% 135.7% 144.2% 108.0% 95.1%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
HIGH INCOME
FUND
-----------------------------------------------------
1989 1988 1987 1986(1)
-----------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 9.30 $ 9.14 $ 10.04 $ 10.00
Income (loss) from investment operations:
Net investment income 1.09 1.12 1.30 .72
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (.65) .23 (.51) (.24)
-----------------------------------------------------
Total income (loss) from investment operations .44 1.35 .79 .48
-----------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.08) (1.07) (1.55) (.44)
Distributions from net realized gain on investments,
options written and foreign currency transactions (.07) (.12) (.14) --
-----------------------------------------------------
Total dividends and distributions to shareholders (1.15) (1.19) (1.69) (.44)
-----------------------------------------------------
Net asset value, end of period $ 8.59 $ 9.30 $ 9.14 $ 10.04
=====================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 4.84% 15.58% 8.07% 4.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $23,698 $25,551 $21,768 $14,833
Average net assets (in thousands) $26,040 $24,530 $20,637 $ 8,036
Number of shares outstanding at end of period
(in thousands) 2,760 2,746 2,382 1,478
Ratios to average net assets:
Net investment income 11.52% 11.94% 13.13% 11.18%(3)
Expenses .75% .75% .75% .75%(3)
Portfolio turnover rate(4) 78.7% 57.9% 42.1% 18.3%
</TABLE>
1. For the period from April 30, 1986 (commencement of operations) to December
31, 1986.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
BOND
FUND
--------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 11.65 $ 10.99 $ 11.15 $ 10.33 $ 10.49
Income (loss) from investment operations:
Net investment income .76 .65 .87 .95 .97
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions (.98) .76 (.17) .80 (.18)
--------------------------------------------------------------------
Total income (loss) from investment
operations (.22) 1.41 .70 1.75 .79
--------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.62) (.75) (.86) (.93) (.95)
Distributions from net realized gain on
investments and foreign currency
transactions (.03) -- -- -- --
--------------------------------------------------------------------
Total dividends and distributions to
shareholders (.65) (.75) (.86) (.93) (.95)
--------------------------------------------------------------------
Net asset value, end of period $ 10.78 $ 11.65 $ 10.99 $ 11.15 $ 10.33
==========================================================
==========
TOTAL RETURN, AT NET ASSET VALUE(2) (1.94)% 13.04% 6.50% 17.63%
7.92%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $135,067 $111,846 $63,354 $32,762 $16,576
Average net assets (in thousands) $121,884 $ 87,215 $45,687 $22,169 $15,088
Number of shares outstanding at end of period
(in thousands) 12,527 9,602 5,766 2,939 1,604
Ratios to average net assets:
Net investment income 7.30% 7.20% 7.81% 8.73% 9.30%
Expenses .57% .46% .56% .64% .61%
Portfolio turnover rate(4) 35.1% 36.3% 41.3% 7.6% 7.4%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
BOND
FUND
--------------------------------------------------------------------
1989 1988 1987 1986 1985(1)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.15 $ 10.19 $ 11.15 $ 11.27 $ 10.00
Income (loss) from investment operations:
Net investment income .98 .94 .97 .97 .86
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .32 (.05) (.71) .09 .99
--------------------------------------------------------------------
Total income (loss) from investment
operations 1.30 .89 .26 1.06 1.85
--------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.96) (.93) (1.17) (1.03) (.58)
Distributions from net realized gain on
investments and foreign currency
transactions -- -- (.05) (.15) --
--------------------------------------------------------------------
Total dividends and distributions to
shareholders (.96) (.93) (1.22) (1.18) (.58)
--------------------------------------------------------------------
Net asset value, end of period $ 10.49 $ 10.15 $ 10.19 $ 11.15 $ 11.27
==========================================================
==========
TOTAL RETURN, AT NET ASSET VALUE(2) 13.32% 8.97% 2.53% 10.12%
18.82%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $13,422 $ 9,989 $10,415 $7,377 $2,725
Average net assets (in thousands) $11,167 $11,028 $ 8,748 $4,647 $1,614
Number of shares outstanding at end of period
(in thousands) 1,280 984 1,022 662 242
Ratios to average net assets:
Net investment income 9.34% 9.08% 9.17% 8.71% 10.52%(3)
Expenses .64% .70% .75% .75% .75%(3)
Portfolio turnover rate(4) 5.4% 36.3% 5.9% 27.7% 101.3%
</TABLE>
1. For the period from April 3, 1985 (commencement of operations) to December
31, 1985.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
CAPITAL APPRECIATION
FUND
----------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 31.64 $ 26.04 $ 23.24 $ 15.24 $ 20.40
Income (loss) from investment operations:
Net investment income .10 .05 .06 .08 .32
Net realized and unrealized gain (loss) on
investments and options written (2.22) 6.71 3.43 8.18 (3.54)
----------------------------------------------------------------------
Total income (loss) from investment operations (2.12) 6.76 3.49 8.26 (3.22)
----------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) (.06) (.14) (.26) (.53)
Distributions from net realized gain on
investments and options written (3.53) (1.10) (.55) -- (1.41)
----------------------------------------------------------------------
Total dividends and distributions to
shareholders (3.57) (1.16) (.69) (.26) (1.94)
----------------------------------------------------------------------
Net asset value, end of period $ 25.95 $ 31.64 $ 26.04 $ 23.24 $ 15.24
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(3) (7.59)% 27.32% 15.42% 54.72%
(16.82)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $185,774 $136,885 $83,335 $49,371 $23,295
Average net assets (in thousands) $153,832 $98,228 $56,371 $34,887 $24,774
Number of shares outstanding at end of period
(in thousands) 7,158 4,326 3,201 2,125 1,528
Ratios to average net assets:
Net investment income .50% .23% .30% .81% 1.93%
Expenses .57% .47% .54% .63% .71%
Portfolio turnover rate(5) 96.5% 122.8% 78.9% 122.3% 222.0%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
CAPITAL APPRECIATION
FUND
----------------------------------------------------------------------
1989 1988 1987 1986(2) 1986(1)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 16.31 $ 14.39 $ 13.12 $ 16.21 $ 13.71
Income (loss) from investment operations:
Net investment income .50 .33 .21 .12 .09
Net realized and unrealized gain (loss) on
investments and options written 3.93 1.60 1.67 (1.24) 3.40
----------------------------------------------------------------------
Total income (loss) from investment operations 4.43 1.93 1.88 (1.12) 3.49
----------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.34) -- (.34) (.21) (.20)
Distributions from net realized gain on
investments and options written -- (.01) (.27) (1.76) (.79)
----------------------------------------------------------------------
Total dividends and distributions to
shareholders (.34) (.01) (.61) (1.97) (.99)
----------------------------------------------------------------------
Net asset value, end of period $ 20.40 $ 16.31 $ 14.39 $ 13.12 $ 16.21
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(3) 27.57% 13.41% 14.34% (1.65)%
N/A
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $27,523 $13,667 $9,692 $4,549 $3,852
Average net assets (in thousands) $21,307 $13,239 $8,598 $3,099 $2,292
Number of shares outstanding at end of period
(in thousands) 1,349 838 674 347 238
Ratios to average net assets:
Net investment income 3.27% 2.13% 1.68% 2.36%(4) 2.27%
Expenses .68% .73% .75% 1.01%(4) 2.17%
Portfolio turnover rate(5) 130.5% 128.7% 138.7% 100.1% 464.8%
</TABLE>
1. For the year ended June 30, 1986. Operating results were achieved by
Centennial Capital Appreciation Fund, a separate investment company
acquired by OCAP on August 14, 1986.
2. For the six months ended December 31, 1986. Operating results prior to
August 15, 1986 were achieved by Centennial Capital Appreciation Fund, a
separate investment company acquired by OCAP on August 14, 1986.
3. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
GROWTH
FUND
---------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 17.70 $ 16.96 $ 15.17 $ 12.54 $ 16.38
Income (loss) from investment operations:
Net investment income .22 .46 .16 .30 .56
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions (.05) .74 1.99 2.82 (1.79)
---------------------------------------------------------------------
Total income from investment operations .17 1.20 2.15 3.12 (1.23)
---------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.15) (.14) (.36) (.49) (.62)
Distributions from net realized gain on
investments and foreign currency
transactions (.04) (.32) -- -- (1.99)
---------------------------------------------------------------------
Total dividends and distributions to (.19) (.46) (.36) (.49) (2.61)
shareholders
---------------------------------------------------------------------
Net asset value, end of period $ 17.68 $ 17.70 $ 16.96 $ 15.17 $ 12.54
==========================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(2) .97% 7.25% 14.53% 25.54%
(8.21)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $63,283 $56,701 $36,494 $22,032 $15,895
Average net assets (in thousands) $59,953 $46,389 $25,750 $18,810 $17,235
Number of shares outstanding at end of period
(in thousands) 3,580 3,203 2,152 1,453 1,267
Ratios to average net assets:
Net investment income 1.38% 1.13% 1.36% 2.82% 4.09%
Expenses .58% .50% .61% .70% .71%
Portfolio turnover rate(4) 53.8% 12.6% 48.7% 133.9% 267.9%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
GROWTH
FUND
---------------------------------------------------------------------
1989 1988 1987 1986 1985(1)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 13.64 $ 11.21 $ 12.53 $ 10.95 $ 10.00
Income (loss) from investment operations:
Net investment income .66 .29 .20 .13 .16
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 2.50 2.19 .24 1.76 .79
---------------------------------------------------------------------
Total income from investment operations 3.16 2.48 .44 1.89 .95
---------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.35) -- (.34) (.15) --
Distributions from net realized gain on
investments and foreign currency
transactions (.07) (.05) (1.42) (.16) --
---------------------------------------------------------------------
Total dividends and distributions to
shareholders (.42) (.05) (1.76) (.31) --
---------------------------------------------------------------------
Net asset value, end of period $ 16.38 $ 13.64 $ 11.21 $ 12.53 $ 10.95
==========================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(2) 23.59% 22.09% 3.32% 17.76%
9.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $19,301 $17,746 $14,692 $8,287 $ 820
Average net assets (in thousands) $18,596 $15,585 $15,121 $3,744 $ 388
Number of shares outstanding at end of period
(in thousands) 1,179 1,301 1,311 661 75
Ratios to average net assets:
Net investment income 3.72% 2.39% 1.56% 2.62% 4.25%(3)
Expenses .70% .70% .75% .75% .75%(3)
Portfolio turnover rate(4) 148.0% 132.5% 191.0% 100.9% 132.9%
</TABLE>
1. For the period from April 3, 1985 (commencement) to December 31, 1985.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
MULTIPLE STRATEGIES
FUND
------------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 13.88 $ 12.47 $ 11.96 $ 10.90 $ 12.30
Income (loss) from investment operations:
Net investment income .63 .55 .55 .69 .73
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (.90) 1.41 .50 1.15 (.97)
------------------------------------------------------------------------
Total income (loss) from investment operations (.27) 1.96 1.05 1.84 (.24)
------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.60) (.55) (.54) (.78) (.70)
Distributions from net realized gain on
investments, options written and foreign
currency transactions (.10) -- -- -- (.46)
------------------------------------------------------------------------
Total dividends and distributions to shareholders (.70) (.55) (.54) (.78) (1.16)
------------------------------------------------------------------------
Net asset value, end of period $ 12.91 $ 13.88 $ 12.47 $ 11.96 $ 10.90
==========================================================
==============
TOTAL RETURN, AT NET ASSET VALUE(2) (1.95)% 15.95% 8.99% 17.48%
(1.91)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $292,067 $250,290 $159,464 $124,634 $118,888
Average net assets (in thousands) $279,949 $199,954 $139,011 $117,000 $123,231
Number of shares outstanding at end of period (in
thousands) 22,620 18,026 12,792 10,421 10,908
Ratios to average net assets:
Net investment income 4.90% 4.44% 4.63% 5.95% 6.53%
Expenses .56% .48% .55% .54% .55%
Portfolio turnover rate(4) 31.4% 32.4% 57.8% 80.3% 99.2%
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
MULTIPLE STRATEGIES
FUND
---------------------------------------
1989 1988 1987(1)
---------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 11.58 $ 10.04 $ 10.00
Income (loss) from investment operations:
Net investment income .73 .66 .44
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions 1.04 1.53 .07
---------------------------------------
Total income (loss) from investment operations 1.77 2.19 .51
---------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.68) (.65) (.43)
Distributions from net realized gain on
investments, options written and foreign
currency transactions (.37) -- (.04)
---------------------------------------
Total dividends and distributions to shareholders (1.05) (.65) (.47)
=======================================
Net asset value, end of period $ 12.30 $ 11.58 $ 10.04
TOTAL RETURN, AT NET ASSET VALUE(2) 15.76% 22.15% 3.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $121,286 $78,386 $53,291
Average net assets (in thousands) $101,057 $64,298 $34,256
Number of shares outstanding at end of period (in
thousands) 9,860 6,766 5,306
Ratios to average net assets:
Net investment income 6.36% 6.18% 6.12%(3)
Expenses .57% .58% .65%(3)
Portfolio turnover rate(4) 66.9% 110.0% 46.9%
</TABLE>
1. For the period from February 9, 1987 (commencement of operations) to
December 31, 1987.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
GLOBAL SECURITIES
FUND
---------------------------------------------------------------------
Year Ended
December 31,
1994 1993 1992 1991 1990(1)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 16.30 $ 9.57 $ 10.38 $ 10.04 $ 10.00
Income (loss) from investment operations:
Net investment income .04 (.02) .07 .04 --
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (.96) 6.75 (.80) .30 .04
---------------------------------------------------------------------
Total income (loss) from investment operations (.92) 6.73 (.73) .34 .04
---------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) -- (.04) -- --
Distributions from net realized gain on
investments and foreign currency transactions (.25) -- (.04) -- --
---------------------------------------------------------------------
Total dividends and distributions to shareholders (.29) -- (.08) -- --
---------------------------------------------------------------------
Net asset value, end of period $ 15.09 $ 16.30 $ 9.57 $ 10.38 $ 10.04
==========================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(2) (5.72)% 70.32% (7.11)% 3.39%
.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $297,842 $96,425 $13,537 $7,339 $ 432
Average net assets (in thousands) $214,545 $31,696 $11,181 $3,990 $ 263
Number of shares outstanding at end of period (in
thousands) 19,743 5,917 1,415 707 43
Ratios to average net assets:
Net investment income .54% .72% 1.04% .75% .08%(3)
Expenses .91% .92% 1.06% 1.32% 6.84%(3)
Portfolio turnover rate(4) 70.4% 65.1% 34.1% 29.5% 0.0%
</TABLE>
1. For the period from November 12, 1990 (commencement of operations) to
December 31, 1990.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Variable Account Funds
<TABLE>
<CAPTION>
OPPENHEIMER
STRATEGIC BOND
FUND
--------------------------------
Year Ended
December 31, 1994 1993(1)
--------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 5.12 $ 5.00
Income (loss) from investment operations:
Net investment income .35 .10
Net realized and unrealized gain (loss) on
investments, options written and foreign
currency transactions (.54) .11
--------------------------------
Total income (loss) from investment operations (.19) .21
--------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.32) (.09)
Distributions from net realized gain on
investments, options written and foreign
currency transactions -- --
Distributions in excess of net realized gain on investments (.01) --
--------------------------------
Total dividends and distributions to shareholders (.33) (.09)
--------------------------------
Net asset value, end of period $ 4.60 $ 5.12
================================
TOTAL RETURN, AT NET ASSET VALUE(2) (3.78)% 4.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $20,320 $9,887
Average net assets (in thousands) $15,389 $4,259
Number of shares outstanding at end of period (in thousands) 4,418 1,930
Ratios to average net assets:
Net investment income 8.36% 5.67%(3)
Expenses .87% .96%(3)
Portfolio turnover rate(4) 136.6% 10.9%
</TABLE>
1. For the period from May 3, 1993 (commencement of operations) to December
31, 1993.
2. Assumes a 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 return information does not reflect expenses that apply at
the separate account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Oppenheimer Variable Account Funds
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Money Fund (OMF), Oppenheimer High Income Fund (OHIF), Oppenheimer
Bond Fund (OBF), Oppenheimer Capital Appreciation Fund (OCAP), Oppenheimer
Growth Fund (OGF), Oppenheimer Multiple Strategies Fund (OMSF), Oppenheimer
Global Securities Fund (OGSF) and Oppenheimer Strategic Bond Fund (OSBF)
(collectively, the Funds) are separate series of Oppenheimer Variable Account
Funds (the Trust), a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Trust's
investment advisor is Oppenheimer Management Corporation (the Manager). The
following is a summary of significant accounting policies consistently followed
by the Funds.
INVESTMENT VALUATION. Portfolio securities of OMF are valued on the basis of
amortized cost, which approximates market value. Portfolio securities of OHIF,
OBF, OCAP, OGF, OMSF, OGSF and OSBF are valued at 4:00 p.m. (New York time) on
each trading day. Listed and unlisted securities for which such information is
regularly reported are valued at the last sale price of the day or, in the
absence of sales, at values based on the closing bid or asked price or the last
sale price on the prior trading day. Long-term debt securities are valued by a
portfolio pricing service approved by the Board of Trustees. Long-term debt
securities which cannot be valued by the approved portfolio pricing service are
valued using dealer-supplied valuations provided the Manager is satisfied that
the firm rendering the quotes is reliable and that the quotes reflect current
market value, or under consistently applied procedures established by the Board
of Trustees to determine fair value in good faith. Short-term debt securities
having a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any premium or
discount. Options are valued based upon the last sale price on the principal
exchange on which the option is traded or, in the absence of any transactions
that day, the value is based upon the last sale on the prior trading date if it
is within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid or asked price closest to the last
reported sale price is used. Forward foreign currency exchange contracts
(forward contracts) are valued at the closing price on the London foreign
exchange market on a daily basis.
SECURITY CREDIT RISK. OHIF, OMSF and OSBF invest in high yield securities, which
may be subject to a greater degree of credit risk, greater market fluctuations
and risk of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Funds
may acquire securities in default, and are not obligated to dispose of
securities whose issuers subsequently default. At December 31, 1994, securities
with an aggregate market value of $4,260,529 for OHIF, $561,000 for OMSF and
$52,077 for OSBF, representing 4.45%, 1.92% and .25% respectively, of the Funds'
total assets, were in default.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are maintained
in U.S. dollars. Prices of securities purchased by OHIF, OBF, OGF, OMSF, OGSF
and OSBF that are denominated in foreign currencies are translated into U.S.
dollars at the closing rates of exchange. Amounts related to the purchase and
sale of securities and investment income are translated at the rates of exchange
prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from fluctuations arising from changes in market values of
securities held and reported with all other foreign currency gains and losses in
the Funds' results of operations.
REPURCHASE AGREEMENTS. The Funds require 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 Funds may be delayed or limited.
FEDERAL INCOME TAXES. The Trust intends for each Fund 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.
Therefore, no federal income tax provision is required. At December 31, 1994,
the following Funds had available for federal income tax purposes unused capital
loss carryovers expiring in 2002:
<TABLE>
<S> <C>
OMF -- $5,000
OHIF -- $1,231,000
OBF -- $275,000
OSBF -- $596,000
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
EQUALIZATION. Prior to September 25, 1993, OHIF and OBF followed the accounting
practice of equalization, by which a portion of the proceeds from sales and
costs of redemptions of Fund shares equivalent on a per share basis to the
amount of undistributed net investment income were credited or charged to
undistributed income. The cumulative effect of the change in accounting practice
resulted in a reclassification for OHIF and OBF of $2,119,310 and $1,577,200,
respectively, from undistributed net investment income to paid-in capital.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders of
OHIF, OBF, OCAP, OGF, OMSF, OGSF and OSBF are recorded on the ex-dividend date.
OMF intends to declare dividends from net investment income each day the New
York Stock Exchange is open for business and pay such dividends monthly. To
effect its policy of maintaining a net asset value of $1.00 per share, OMF may
withhold dividends or make distributions of net realized gains.
CHANGE IN ACCOUNTING CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss) may differ for financial
statement and tax purposes primarily because of premium amortization, paydown
gains and losses and the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also, due
to timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss)
were recorded by the Funds. Effective January 1, 1994, the Funds adopted
Statement of Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. As a result, the Funds changed the classification of
distributions to shareholders to better disclose the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. These changes, as well as similar changes in
classification made during the fiscal year ending December 31, 1994 are shown
below:
<TABLE>
<CAPTION>
Cumulative Adjustments as of Adjustments for the Fiscal Year Ended
December 31, 1993 December 31, 1994
- -----------------------------------------------------------------------------------------------------------------------
Undistributed Undistributed Undistributed Undistributed
Net Net Net Net
Investment Realized Paid-in Investment Realized Paid-in
Income Gains/(Losses) Capital Income Gains/(Losses) Capital
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Oppenheimer High
Income Fund $203,008 $(293,507) $ 90,499 $(368,824) $368,824 --
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer Bond
Fund (39,100) 474,282 (435,182) 10,134 (10,134) --
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer
Capital
Appreciation
Fund (20,604) 14,186 6,418 (52,642) 52,642 --
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer
Growth Fund (15,808) 15,808 -- (2,011) 2,011 --
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer
Multiple
Strategies Fund (203,319) 247,718 (44,399) (27,187) 27,187 --
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer
Global
Securities Fund 10,825 80,207 (91,032) (1,153,447) 1,153,447 --
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer
Strategic Bond
Fund 7,021 (7,021) -- (26,263) 26,263 --
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased by OHIF, OBF, OCAP, OGF,
OMSF, OGSF and OSBF is amortized over the life of the respective securities, in
accordance with federal income tax requirements. Realized gains and losses on
investments 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 on the ex-date.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
2. SHARES OF BENEFICIAL INTEREST
The Funds have authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
OPPENHEIMER MONEY FUND
------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 175,917,558 $175,917,558 102,985,240 $102,985,240
Dividends and distributions
reinvested 3,640,684 3,640,684 1,805,107 1,805,107
Redeemed (151,084,269) (151,084,269) (101,836,198) (101,836,198)
------------------------------------------------------------------
Net increase 28,473,973 $ 28,473,973 2,954,149 $ 2,954,149
==========================================================
========
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER HIGH INCOME FUND
------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 9,936,582 $81,477,904 10,942,819 $113,254,844
Dividends and distributions
reinvested 841,101 8,686,931 743,446 7,814,552
Redeemed (9,441,490) (75,726,156) (7,432,492) (76,976,837)
--------------------------------------------------------------------
Net increase 1,336,193 $14,438,679 4,253,773 $ 44,092,559
==========================================================
==========
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER BOND FUND
------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 5,002,623 $ 56,466,171 4,694,025 $ 53,668,794
Dividends and distributions
reinvested 666,678 7,384,654 518,084 5,957,407
Redeemed (2,744,016) (30,950,944) (1,375,924) (15,753,286)
--------------------------------------------------------------------
Net increase 2,925,285 $ 32,899,881 3,836,185 $ 43,872,915
==========================================================
==========
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER CAPITAL APPRECIATION FUND
------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 7,912,557 $ 173,453,586 4,925,361 $ 134,864,285
Dividends and distributions
reinvested 614,575 17,331,023 151,099 3,652,073
Redeemed (5,695,411) (114,272,197) (3,951,312) (106,719,894)
--------------------------------------------------------------------
Net increase 2,831,721 $ 76,512,412 1,125,148 $ 31,796,464
==========================================================
==========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
2. SHARES OF BENEFICIAL INTEREST (Continued)
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
-----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 2,577,268 $ 45,230,951 3,164,464 $ 53,547,991
Dividends and distributions
reinvested 36,305 644,411 66,987 1,107,299
Redeemed (2,236,767) (38,999,875) (2,180,502) (36,823,721)
----------------------------------------------------------
Net increase 376,806 $ 6,875,487 1,050,949 $ 17,831,569
==========================================================
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
-----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 9,807,084 $ 84,443,396 6,332,739 $ 84,477,261
Dividends and distributions
reinvested 1,140,244 14,981,165 644,161 8,601,104
Redeemed (6,353,523) (37,006,732) (1,742,975) (23,415,881)
-------------------------------------------------------------
Net increase 4,593,805 $ 62,417,829 5,233,925 $ 69,662,484
==========================================================
===
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL SECURITIES FUND
--------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
--------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 22,151,454 $ 336,310,887 4,921,273 $ 68,947,505
Dividends and distributions
reinvested 178,687 2,801,813 -- --
Redeemed (8,503,911) (112,426,012) (419,042) (5,789,067)
--------------------------------------------------------------
Net increase 13,826,230 $ 226,686,688 4,502,231 $ 63,158,438
==========================================================
====
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
--------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
--------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 3,749,500 $18,415,292 2,316,566 $ 11,749,598
Dividends and distributions
reinvested 247,485 1,178,372 30,366 155,087
Redeemed (1,508,782) (7,350,665) (416,974) (2,133,050)
--------------------------------------------------------------
Net increase 2,488,203 $12,242,999 1,929,958 $ 9,771,635
==========================================================
====
</TABLE>
1. For the period from May 3, 1993 (commencement of operations) to December 31,
1993.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS AND OPTIONS WRITTEN
At December 31, 1994, net unrealized appreciation or depreciation on investments
and options written consisted of the following:
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
OPPENHEIMER OPPENHEIMER CAPITAL OPPENHEIMER
MULTIPLE
HIGH INCOME BOND APPRECIATION GROWTH
STRATEGIES
FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross appreciation $ 2,552,277 $ 998,839 $23,149,613 $ 9,180,511 $
24,352,704
Gross depreciation (6,244,151) (5,495,358) (7,216,695) (1,959,444) (22,166,686)
-------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) $(3,691,874) $(4,496,519) $15,932,918 $ 7,221,067 $
2,186,018
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Purchases and sales of investment securities (excluding short-term securities)
for the year ended December 31, 1994 were as follows:
Purchases $112,258,989 $66,764,507 $179,543,692 $31,787,923
$144,299,360
==========================================================
==========================
Sales $100,322,621 $34,324,730 $127,358,246 $28,013,126 $ 82,139,044
==========================================================
==========================
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
GLOBAL SECURITIES STRATEGIC BOND
FUND FUND
-------------------------------------------------------------------------------------
<S> <C> <C>
Gross appreciation $ 19,078,105 $ 124,895
Gross depreciation (26,920,862) (1,162,656)
---------------------------------
Net unrealized appreciation (depreciation) $ (7,842,757) $ (1,037,761)
=================================
Purchases and sales of investment securities (excluding short-term securities)
for the year ended December 31, 1994 were as follows:
Purchases $342,349,671 $29,385,446
================================
Sales $141,562,451 $19,880,751
================================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
4. OPTION ACTIVITY
OHIF, OCAP, OGF, OMSF, OGSF and OSBF may buy and sell put and call options, or
write covered call options on portfolio securities in order to produce
incremental earnings or protect against changes in the value of portfolio
securities.
The Funds generally purchase put options or write covered call options to hedge
against adverse movements in the value of portfolio holdings. When an option is
written, the Funds receive a premium and become obligated to sell or purchase
the underlying security at a fixed price, upon exercise of the option. The Funds
segregate assets to cover their obligations under option contracts.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Funds will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
In this report, securities segregated to cover outstanding call options are
noted in the Statement of Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are detailed in a footnote to
the Statement of Investments where applicable. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Funds give up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Funds may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Funds pay a premium whether or not the
option is exercised. The Funds also have the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not exist.
OHIF option activity for the period ended December 31, 1994 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
----------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
----------------------
<S> <C> <C>
Options outstanding at December 31, 1993 -- --
Options written 39,741 $ 50,381
Options cancelled in closing purchase
transactions (39,741) (50,381)
Options expired prior to exercise -- --
Options exercised -- --
----------------------
Options outstanding at December 31, 1994 -- $ --
======================
</TABLE>
OCAP option activity for the period ended December 31, 1994 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
----------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
----------------------
<S> <C> <C>
Options outstanding at December 31, 1993 -- --
Options written 250 $ 200,618
Options cancelled in closing purchase
transactions (250) (200,618)
Options expired prior to exercise -- --
Options exercised -- --
----------------------
Options outstanding at December 31, 1994 -- $ --
======================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
OMSF option activity for the year ended December 31, 1994 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
-------------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
-------------------------
<S> <C> <C>
Options outstanding at December 31, 1993 2,385 $ 654,848
Options written 4,394 1,285,996
Options cancelled in closing purchase
transactions (1,425) (487,059)
Options expired prior to exercise (1,932) (495,481)
Options exercised (1,167) (350,622)
-------------------------
Options outstanding at December 31, 1994 2,255 $ 607,682
-------------------------
-------------------------
</TABLE>
OSBF option activity for the year ended December 31, 1994 was as follows:
<TABLE>
<CAPTION>
PUT OPTIONS
-------------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
-------------------------
<S> <C> <C>
Options outstanding at December 31, 1993 -- $ --
Options written 279,064 4,348
Options cancelled in closing transactions -- --
Options expired prior to exercise (279,064) (4,348)
Options exercised -- --
-------------------------
Options outstanding at December 31, 1994 -- $ --
-------------------------
-------------------------
</TABLE>
<TABLE>
<CAPTION>
CALL OPTIONS
-------------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
-------------------------
<S> <C> <C>
Options outstanding at December 31, 1993 -- $ --
Options written 1,288,535 26,046
Options cancelled in closing transactions (1,288,223) (16,321)
Options expired prior to exercise (5) (8,125)
Options exercised -- --
-------------------------
Options outstanding at December 31, 1994 307 $ 1,600
-------------------------
-------------------------
</TABLE>
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
OHIF, OGSF and OSBF use forward contracts to seek to manage foreign currency
risks. They may also be used to tactically shift portfolio currency risk. The
Funds generally enter into forward contracts as a hedge upon the purchase or
sale of a security denominated in a foreign currency. In addition, the Funds may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued at the closing price on the London foreign exchange
market on a daily basis. The Funds will realize a gain or loss upon the closing
or settlement of the forward transaction.
In this report, securities segregated to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Gains and losses on outstanding contracts (unrealized appreciation or
depreciation on forward contracts) are reported in the Statement of Assets and
Liabilities. Realized gains and losses are reported with all other foreign
currency gains and losses in the Funds' results of operations.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
Risks include the potential inability of the counterparty to meet the terms of
the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
At December 31, 1994, outstanding forward contracts to sell foreign currencies
were as follows:
OPPENHEIMER GLOBAL SECURITIES FUND
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION CONTRACT VALUATION AS OF APPRECIATION
CONTRACTS TO SELL DATE AMOUNT DECEMBER 31, (DEPRECIATION)
1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Austrian Schilling 1/30/95 $ 6,000,000 $ 6,104,867 $ (104,867)
British Pound 1/30/95 7,800,000 7,895,404 (95,404)
Deutsche Mark 1/30/95 11,000,000 11,190,341 (190,341)
Finnish Markka 1/30/95 3,000,000 3,012,855 (12,855)
French Franc 1/30/95 8,400,000 8,564,740 (164,740)
Italian Lira 1/30/95 2,500,000 2,527,596 (27,596)
Netherlands Guilder 1/30/95 6,000,000 6,104,844 (104,844)
Norwegian Krone 1/30/95 6,800,000 6,916,652 (116,652)
Portuguese Escudo 1/30/95 7,000,000 7,130,583 (130,583)
Spanish Peseta 1/30/95 2,500,000 2,530,139 (30,139)
Swedish Krona 1/30/95 13,783,574 13,879,376 (95,802)
Swiss Franc 1/30/95 4,307,443 4,385,426 (77,983)
--------------------------------------------
$79,091,017 $80,242,823 $(1,151,806)
============================================
</TABLE>
6. FUTURES CONTRACTS
OHIF, OGSF and OSBF may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Funds may
also buy or write put or call options on these futures contracts.
The Funds generally sell futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Funds 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. The Funds will segregate
assets to cover their commitments under futures contracts.
Upon entering into a futures contract, the Funds are required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Funds 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 Funds recognize a realized gain or loss when the contract is closed
or expires.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
In this report, the number of open futures contracts, face amount, market value
and unrealized gain or loss are reported in a footnote to the Statement of
Investments. In addition, securities segregated to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. Gains and losses (unrealized appreciation or depreciation on
futures contracts) are reported in the Statement of Assets and Liabilities.
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.
At December 31, 1994, outstanding futures contracts to purchase and sell debt
securities were as follows:
OPPENHEIMER STRATEGIC BOND FUND
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACTS TO PURCHASE DATE CONTRACTS DECEMBER 31, 1994 (DEPRECIATION)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
German 10 Year Bond 3/95 25 $3,592,705 $(21,919)
--------------------------------------------------
CONTRACTS TO SELL
- -----------------------
French 10 Year Bond 3/95 38 3,912,655 41,055
--------------------------------------------------
(13) $ (319,950) $ 19,136
==================================================
</TABLE>
7. RESTRICTED SECURITIES
The following Funds own securities purchased in private placement transactions,
without registration under the Securities Act of 1933 (the Act). The securities
are valued under methods approved by the Board of Trustees as reflecting fair
value. Each Fund intends to invest no more than 10% of its net assets
(determined at the time of purchase) in restricted and illiquid securities,
excluding securities eligible for resale pursuant to Rule 144A of the Act that
are determined to be liquid by the Board of Trustees or by the Manager under
Board-approved guidelines. Illiquid and/or restricted securities, including
those restricted securities that are transferable under Rule 144A of the Act are
listed below.
Oppenheimer High Income Fund
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST AS OF
SECURITY DATE PER UNIT DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Argentina Local Market Securities Trust, Series 1994-II,
11.30%, 4/1/00(1) 8/24/94 $ 100.00 $ 85.25
Berg Electronics Holdings Corp.(1) 4/28/93-8/11/93 $ 1.19 $ 4.50
Brazil (Federal Republic of) Bonds, 10.375%, 11/6/95(1) 4/26/93 $ 99.80 $ 99.00
Celcaribe SA(1) 5/17/94 $ 1.19 $ 1.15
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 03/15/04(1) 5/17/94 $ 60.78 $ 65.26
Dell Computer Corp., $7.00 Cv., Series A(1) 8/19/93-1/24/94 $ 103.11 $ 172.50
ECM Fund L.P.I. 4/14/92 $1,000.00 $1,000.00
ECM Fund L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 $ 100.00 $ 110.00
GPA Holland, 9.50% Medium-Term Nts., Series A, 12/15/01 1/27/94 $ 79.96 $ 66.50
Gillett Holdings, Inc., Cl. 1 12/1/92 $ 10.50 $ 19.63
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10(1) 1/29/93 $ 102.40 $ 106.13
Hillsborough Holding Corp., 7.50% Participation
Agreement, 12/30/99 1/6/94 $ 128.50 $ 157.50
Icon Health & Fitness, Units(1) 11/4/94 $ 98.77 $ 98.50
Lehman Brothers Holdings, Inc., Standard &
Poor's 500 Index-Linked Nts., 5.788%, 1/25/95 11/22/94 $ 144.40 $ 117.12
Merrill Lynch & Co., Inc., Standard &
Poor's 500 Index-Linked Nts., 5.60%, 2/6/95 11/28/94 $ 143.80 $ 116.99
Mary Kay Corp., 12.75% Gtd. Sr. Nts., Series B, 12/6/00 12/11/92-3/22/93 $ 106.50 $ 104.50
PriCellular Wireless Corp., .50%/14% Sr. Sub. Disc. Nts.,
11/15/01(1) 11/17/94 $ 66.83 $ 66.50
Purity Supreme, Inc. Wts., Exp. 8/97 7/29/92 $ 0.00 $ .02
Residential Funding Corp. Mtg. Pass-Through Certificates,
7.97%, Series 1993-J2, Cl. B1, 6/15/23(1) 6/29/93 $ 83.97 $ 70.95
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04(1) 12/13/94 $ 100.00 $ 103.00
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A,
12/28/08(1) 12/20/93 $ 99.93 $ 86.50
Terex Corp. Rts., Exp. 7/96(1) 6/29/94 $ 4.00 $ 0.75
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
Oppenheimer High Income Fund (Continued)
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST AS OF
SECURITY DATE PER UNIT DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Terex Corp., 13% Nts., 8/1/96(1) 10/19/94-11/15/94 $ 97.18 $91.74
Triangle Wire & Cable, Inc. 5/2/94 $ 9.50 $ 4.00
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A,
12/1/11(1) 11/8/93 $100.00 $86.50
</TABLE>
Restricted and illiquid securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act amount to $4,206,558 or 4.4% of the Fund's net
assets, at December 31, 1994.
1. Transferable under Rule 144A of the Act.
Oppenheimer Bond Fund
<TABLE>
<CAPTION>
VALUATION PER UNIT
ACQUISITION COST AS OF
SECURITY DATE PER UNIT DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporacion Andina de Fomento Bonds, 6.625%, 10/14/98(1) 9/24/93 $ 99.95 $ 90.00
Corporacion Andina de Fomento Nts., 7.25%, 4/30/98(1) 4/16/93 $ 99.38 $ 91.88
Czechoslovakia National Bank Bonds, 7%, 4/6/96(1) 3/11/93 $ 99.93 $ 98.81
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10(1) 1/29/93 $102.38 $106.13
FDIC Trust, Series 1994-C1, Cl. 2-D, 8.70%, 9/25/25 8/11/94 $ 98.00 $ 95.13
FDIC Trust, Series 1994-C1, Cl. 2-E, 8.70%, 9/25/25 8/11/94 $ 94.88 $ 91.66
</TABLE>
Restricted and illiquid securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act amount to $2,801,719 or 2.1% of the Fund's net
assets, at December 31, 1994.
1. Transferable under Rule 144A of the Act.
Oppenheimer Capital Appreciation Fund
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST AS OF
SECURITY DATE PER UNIT DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intelcom Group, Inc., 7% Cv. Sub. Nts., 10/30/98 11/2/93-10/28/94 $ 99.04 $ 80.44
Medaphis Corp., 6.50% Cv. Sub. Nts., 1/1/00(1) 12/22/92 $100.00 $167.25
PerSeptive Biosystems, Inc., 8.25% Cv. Sub. Debs., 8/15/01 8/19/94 $100.00 $ 68.50
Sierra On-Line, Inc., 6.50% Cv. Sub. Nts., 4/1/01(1) 11/16/94 $106.00 $127.50
</TABLE>
Restricted and illiquid securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act amount to $1,545,666 or .83% of the Fund's net
assets, at December 31, 1994.
1. Transferable under Rule 144A of the Act.
Oppenheimer Multiple Strategies Fund
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST AS OF
SECURITY DATE PER UNIT DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Central Puerto SA, ADR(1) 7/20/94-7/22/94 $ 31.81 $24.75
PerSeptive Biosystems, Inc., 8.25% Cv. Sub. Debs., 8/15/01 8/19/94 $100.00 $68.50
PriCellular Wireless Corp., .50%/14% Sr. Sub. Disc. Nts.,
11/15/01(1) 11/17/94 $ 67.00 $66.50
Samsung Electronics Co, GDR(1) 8/18/94 $ 38.28 $46.50
Santa Anita Realty Enterprises, Inc., Units 5/28/93-11/29/93 $ 17.96 $13.75
Turkiye Garanti Bankasi AS, Sponsored ADR(1) 7/20/94-7/22/94 $ 2.20 $ 2.53
YuKong Ltd., GDR(1) 9/29/94 $ 24.95 $15.75
YuKong Ltd., GDR(1) 10/18/94-12/22/94 $ 16.75 $15.00
</TABLE>
Restricted and illiquid securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act amount to $755,000 or .26% of the Fund's net
assets, at December 31, 1994.
1. Transferable under Rule 144A of the Act.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST AS OF
SECURITY DATE PER UNIT DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capex SA, GDR(1) 6/13/94 $ 20.00 $ 16.38
Carulla SA(1) 6/23/94 $ 11.33 $ 11.54
Central Puerto SA, ADR(1) 11/23/93 $ 26.50 $ 24.75
First NIS Regional Fund(1) 11/23/94 $ 4.00 $ 4.25
Hindustan Development Corp. Ltd., Units(1) 9/19/94 $ 4.10 $ 2.13
Indian Rayon and Industries Ltd., GDR(1) 1/28/94 $ 22.51 $ 19.45
Indo Gulf Fertilizer, GDR(1) 1/17/94 $ 4.51 $ 2.99
Industrial Credit and Investment Corp. India Ltd., 2.50%
Cv. Debs., 4/30/00(1) 2/3/94 $ 108.40 $ 75.00
Internacional de Ceramica SA, Series B, ADR(1) 2/10/93-2/11/93 $ 25.40 $ 17.77
JK Corp. Ltd., GDR(1) 10/17/94 $ 8.00 $ 6.73
Mavesa, ADR(1) 8/25/94 $ 5.88 $ 4.95
Pakistan Telecommunications, GDR(1) 9/19/94-10/4/94 $ 186.07 $ 135.50
Plant Genetics Systems International NV 5/27/92 $ 11.18 $ 7.55
President Enterprises Corp.(1) 10/11/94 $ 15.83 $ 20.25
PT Panin Bank(1) 7/2/93-9/22/94 $ 1.52 $ 1.39
Reliance Industries Ltd., GDS(1) 10/4/94-10/20/94 $ 28.57 $ 19.80
Samsung Electronics Co, GDR(1) 8/18/94 $ 38.28 $ 46.50
Scici Ltd., 3.50% Cv. Bonds, 4/1/04(1) 10/19/93-1/20/94 $ 117.00 $ 88.00
Taipei Fund, Cl. B, IDR 12/26/93 $80,000.00 $95,900.00
Tata Electric Cos.(1) 2/22/94 $ 710.00 $ 437.50
Tung Ho Steel Enterprise Corp., GDR(1) 9/9/94 $ 17.20 $ 15.50
Turkiye Garanti Bankasi AS, Sponsored ADR(1) 10/29/93-10/4/94 $ 2.24 $ 2.53
VA Technoligie AG(1) 5/19/94-9/13/94 $ 96.82 $ 100.66
YuKong Ltd., GDR(1) 9/9/94-10/18/94 $ 26.05 $ 15.00
</TABLE>
Restricted and illiquid securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act amount to $644,114, or .22% of the Fund's net
assets, at December 31, 1994.
1. Transferable under Rule 144A of the Act.
Oppenheimer Strategic Bond Fund
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST AS OF
SECURITY DATE PER UNIT DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Argentina Local Market Securities Trust, Series 1994-II,
11.30%, 4/1/00(1) 8/24/94 $100.00 $ 85.25
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(1) 5/17/94 $ 60.78 $ 65.26
Celcaribe SA(1) 5/17/94 $ 1.19 $ 1.15
Ecuador (Republic of) Bonds, 12/29/49(1) 10/7/94 $ 60.50 $ 54.38
GPA Holland BV, 8.625% Medium-Term Nts., Series C, 1/15/99 1/10/94 $ 78.13 $ 71.50
Icon Health & Fitness, Inc., Units(1) 1/4/94 $ 98.79 $ 98.50
Lehman Brothers Holdings, Inc., Standard & Poor's Index-
Linked Nts., 5.788%, 1/25/95 11/22/94 $144.40 $117.12
PriCellular Wireless Corp., .50%/14% Sr. Sub. Disc. Nts.,
11/15/01(1) 11/17/94 $ 66.83 $ 66.50
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04(1) 12/13/94 $100.00 $103.00
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A,
12/28/08(1) 12/20/93 $ 99.93 $ 86.50
Terex Corp., 13% Sr. Nts., 8/1/96(1) 10/21/94 $ 97.25 $ 94.75
Terex Corp. Rts., Exp. 7/96(1) 6/29/94 $ 1.49 $ 0.75
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A,
12/1/11(1) 11/8/93 $100.00 $ 86.50
United Mexican States, Combined Facility 3, Loan
Participation Agreement, 7.625%, 3/20/00 10/25/94 $ 89.00 $ 86.00
United Mexican States, Myra Old Money Loan Participation
Agreement, 7.625%, 3/20/05 10/12/94 $ 82.88 $ 69.50
</TABLE>
Restricted and illiquid securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act amount to $548,310 or 2.7% of the Fund's net
assets, at December 31, 1994.
1. Transferable under Rule 144A of the Act.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Variable Account Funds
8. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreements with the Trust. For OBF, OCAP, OGF, OMSF, OHIF, OGSF and
OSBF, the annual fees are .75% of the first $200 million of net assets, .72% of
the next $200 million, .69% of the next $200 million, .66% of the next $200
million and .60% of net assets in excess of $800 million. In addition,
management fees for OHIF, OBF and OSBF are .50% of net assets in excess of $1
billion. Management fees for OMF are .45% of the first $500 million, .425% of
the next $500 million, .40% of the next $500 million and .375% of net assets in
excess of $1.5 billion. The Manager has agreed to reimburse any Fund if
aggregate Fund expenses (with specified exceptions) exceed 2.5% of the first $30
million of the Fund's net assets, plus 2.0% of the next $70 million, plus 1.5%
of net assets in excess of $100 million. For OSBF, the Manager has agreed to
limit the management fee charged so that the ordinary operating expenses of
the Fund will not exceed 1.0% of its average net assets in any fiscal year.
Prior to September 1, 1994, management fees were as follows: except as stated
below, the annual fees were .50% of the first $250 million of aggregate Trust
net assets, .45% of the next $50 million, .40% of the next $100 million, .35% of
the next $400 million and .30% of net assets in excess of $800 million. OMF fees
were reduced by .05% of the first $250 million of Fund net assets, as well as on
Fund net assets in excess of $4 billion. OHIF paid an additional management fee
of .15% of its net assets annually. OGSF fees were .75% of the first $200
million of aggregate Trust net assets with a reduction of .03% of each $200
million thereafter to $800 million, and .60% of net assets in excess of $800
million. OSBF fees were .65% of net assets annually. Fees were allocated ratably
to each Fund based on the relative value of Fund net assets to total Trust net
assets as of the close of business each day. The Manager agreed to reimburse
OMF, OHIF, OBF, OCAP, OGF, OMSF and OSBF if aggregate Fund expenses (with
specified exceptions) exceeded 2% of the first $10 million of average annual net
assets, 1.50% of the next $20 million and 1% of average annual net assets in
excess of $30 million. Prior to September 1, 1994, the Manager and Monarch Life
Insurance Company, Bankers Security Life Insurance Society (Bankers),
Confederation Life Insurance and Annuity Company and Massachusetts Mutual
Life Insurance Company had also voluntarily undertaken to limit the expenses of
OMF, OHIF, OBF, OCAP, OGF and OMSF to .75% of average annual net assets, after
any other reimbursement by the Manager. The reimbursement was based on the
proportionate number of shares in the accounts of the respective insurance
companies. The undertaking by Bankers extended to OMSF only.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202-4918
