Registration No. 2-93177
File No. 811-4108
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 27 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 24 / X /
OPPENHEIMER VARIABLE ACCOUNT FUNDS
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
(Address of Principal Executive Offices)
303-671-3200
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On May 1, 1995, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / On __________________, pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ______________, pursuant to paragraph (a)(2)
of Rule 485
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended December 31, 1994, was filed on February 27, 1995.
<PAGE>
FORM N-1A
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Front Cover Page
2 Overview of the Funds
3 Financial Highlights; Performance of the Funds
4 Front Cover Page; How the Funds are Managed--Organization and
History; Investment Objectives and Policies; Investment
Restrictions
5 How the Funds are Managed; Expenses; Back Cover
5A Performance of the Funds
6 How the Funds are Managed - Organization and History; The
Transfer Agent; Dividends, Capital Gains and Taxes; Investment
Objectives and Policies
8 How to Sell Shares
9 *
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objectives and Policies; Other Investment
Techniques and Strategies; Additional Investment Restrictions
14 How the Funds are Managed--Trustees and Officers of the Funds
15 How the Funds are Managed-- Major Shareholders
16 How the Funds are Managed
17 Brokerage Policies of the Funds
18 Additional Information About the Funds
19 Your Investment Account - How to Buy Shares; How to Sell
Shares
20 Dividends, Capital Gains and Taxes
21 How the Funds are Managed; Brokerage Policies of the Funds
22 Performance of the Funds
23 Financial Statements
______________
* Not applicable or negative answer.
<PAGE>
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
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
1. Financial Highlights (see Parts A and B): Filed
herewith.
2. Independent Auditors' Report (see Part B): Filed
herewith.
3. Statements of Investments (see Part B): Filed herewith.
4. Statements of Assets and Liabilities (see Part B): Filed
herewith.
5. Statements of Operations (see Part B): Filed herewith.
6. Statements of Changes in Net Assets (see Part B): Filed
herewith.
7. Notes to Financial Statements (see Part B): Filed
herewith.
8. Independent Auditors' Consent: Filed herewith.
(b) Exhibits
--------
1. Sixth Restated Declaration of Trust dated February 28,
1995: Filed herewith.
2. By-Laws, amended as of 6/26/90: Previously filed with
Registrant's Post-Effective Amendment No. 26, 2/13/95,
and incorporated herein by reference.
3. Not Applicable.
4. (i) Oppenheimer Money Fund specimen share certificate:
Filed with Registrant's Post-Effective Amendment
No. 25, 4/29/94, and incorporated herein by
reference.
(ii) Oppenheimer Bond Fund specimen share certificate:
Filed with Registrant's Post-Effective Amendment
No. 25, 4/29/94, and incorporated herein by
reference.
(iii) Oppenheimer Growth Fund specimen share certificate:
Filed with Registrant's Post-Effective Amendment
No. 25, 4/29/94, and incorporated herein by
reference.
(iv) Oppenheimer High Income Fund specimen share
certificate: Filed with Registrant's Post-Effective
Amendment No. 25, 4/29/94, and incorporated herein
by reference.
(v) Oppenheimer Capital Appreciation Fund specimen
share certificate: Filed with Registrant's Post-
Effective Amendment No. 25, 4/29/94, and
incorporated herein by reference.
(vi) Oppenheimer Multiple Strategies Fund specimen share
certificate: Filed with Registrant's Post-Effective
Amendment No. 25, 4/29/94, and incorporated herein
by reference.
(vii) Oppenheimer Global Securities Fund specimen share
certificate: Filed with Registrant's Post-Effective
Amendment No. 25, 4/29/94, and incorporated herein
by reference.
(viii) Oppenheimer Strategic Bond Fund specimen share
certificate: Filed with Registrant's Post-Effective
Amendment No. 25, 4/29/94, and incorporated herein
by reference.
(ix) Oppenheimer Growth & Income Fund specimen share
certificate: Filed herewith.
5. (i) Investment Advisory Agreement for Oppenheimer Money
Fund dated 9/1/94: Filed with Post-Effective
Amendment No. 26, 2/13/95, and incorporated herein
by reference.
(ii) Investment Advisory Agreement for Oppenheimer High
Income Fund dated 9/1/94: Filed with Post-Effective
Amendment No. 26, 2/13/95, and incorporated herein
by reference.
(iii) Investment Advisory Agreement for Oppenheimer Bond
Fund dated 9/1/94: Filed with Post-Effective
Amendment No. 26, 2/13/95, and incorporated herein
by reference.
(iv) Investment Advisory Agreement for Oppenheimer
Capital Appreciation Fund STGT 9/1/94: Filed with
Post-Effective Amendment No. 26, 2/13/95, and
incorporated herein by reference.
(v) Investment Advisory Agreement for Oppenheimer
Growth Fund dated 9/1/94: Filed with Post-Effective
Amendment No. 26, 2/13/95, and incorporated herein
by reference.
(vi) Investment Advisory Agreement for Oppenheimer
Multiple Strategies Fund dated 9/1/94: Filed with
Post-Effective Amendment No. 26, 2/13/95, and
incorporated herein by reference.
(vii) Investment Advisory Agreement for Oppenheimer
Global Securities Fund dated 9/1/94: Filed with
Post-Effective Amendment No. 26, 2/13/95, and
incorporated herein by reference.
(viii) Investment Advisory Agreement for Oppenheimer
Strategic Bond Fund dated 9/1/94: Filed with Post-
Effective Amendment No. 26, 2/13/95, and
incorporated herein by reference.
(ix) Investment Advisory Agreement for Oppenheimer
Growth & Income Fund dated 5/1/95: Filed herewith.
6. Not Applicable.
7. Not Applicable.
8. Custody Agreement between Oppenheimer Variable
Account Funds and The Bank of New York, dated
11/12/92: Previously filed with Registrant's Post-
Effective Amendment No. 21, 3/12/93, and refiled
herewith pursuant to Item 102 of Regulation S-T.
9. Not Applicable.
10. (i) Opinion and Consent of Counsel, 3/14/85:
Previously filed with Registrant's Pre-Effective
Amendment No. 1, 3/20/85, and refiled herewith
pursuant to Item 102 of Regulation S-T.
(ii) Opinion and Consent of Counsel, 4/28/86:
Previously filed with Registrant's Post-Effective
Amendment No. 5, 8/12/86, and refiled herewith
pursuant to Item 102 of Regulation S-T.
(iii) Opinion and Consent of Counsel, 7/31/86:
Previously filed with Registrant's Post-Effective
Amendment No. 5, 8/12/86, and refiled herewith
pursuant to Item 102 of Regulation S-T.
(iv) Opinion and Consent of Counsel, 1/21/87:
Previously filed with Registrant's Post-Effective
Amendment No. 7, 2/6/87, and refiled herewith
pursuant to Item 102 of Regulation S-T.
(v) Opinion and Consent of Counsel, dated July 31,
1990: Previously filed with Registrant's Post-
Effective Amendment No. 15, 9/19/90, and
refiled herewith pursuant to Item 102 of
Regulation S-T.
(vi) Opinion and Consent of Counsel dated April 23,
1993: Previously filed with Registrant's Post-
Effective Amendment No. 22, 4/30/93, and
refiled herewith pursuant to Item 102 of
Regulation S-T.
(vii) Opinion and Consent of Counsel dated April 26,
1995: To be filed by amendment.
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Not Applicable.
16. Performance computation schedules: Filed
herewith.
17. Financial Data Schedules: Filed herewith.
-- Powers of Attorney (and Certified Board
Resolution): Previously filed with Registrant's
Post-Effective Amendment No. 24, 2/25/94, and
incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Registrant does not control any other person. Except that all of
Registrant's issued and outstanding shares are held by certain separate
accounts, as described in Part B of this Registration Statement,
Registrant is not under common control with any other person.
Item 26. Number of Holders of Securities
No. of Record
Holders as of
Title of Class (Series) March 31, 1995
----------------------- --------------
Oppenheimer Money Fund 5
Oppenheimer High Income Fund 5
Oppenheimer Bond Fund 6
Oppenheimer Capital Appreciation Fund 5
Oppenheimer Growth Fund 5
Oppenheimer Multiple Strategies Fund 6
Oppenheimer Global Securities Fund 4
Oppenheimer Strategic Bond Fund 3
Oppenheimer Growth & Income Fund 0
Item 27. Indemnification
---------------
Reference is made to paragraphs (c) through (g) of Section 12 of
Article SEVENTH of Registrant's Fifth Restated Declaration of Trust
previously filed as an exhibit to this Registration Statement,
incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a director, officer or
controlling person of Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
(a) Oppenheimer Management Corporation is the investment
adviser of the Registrant; it and certain subsidiaries and affiliates
act in the same capacity to other registered investment companies as
described in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial nature in
which each officer and director of Oppenheimer Management Corporation
is, or at any time during the past two fiscal years has been, engaged
for his/her own account or in the capacity of director, officer,
employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position
with Oppenheimer Other Business and Connections
Management Corporation During the Past Two Years
- ----------------------- ------------------------------
<S> <C>
Lawrence Apolito, None.
Vice President
James C. Ayer, Jr., Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Gold & Special Minerals Fund
and
Oppenheimer Global Emerging Growth Fund.
Victor Babin, None.
Senior Vice President
Robert J. Bishop Assistant Treasurer of the
OppenheimerFunds
Assistant Vice President (listed below); previously a Fund
Controller
for Oppenheimer Management Corporation
(the
"Manager").
George Bowen Treasurer of the New York-based
Senior Vice President OppenheimerFunds; Vice President,
Secretary
and Treasurer and Treasurer of the Denver-based
OppenheimerFunds. Vice President and
Treasurer of Oppenheimer Funds
Distributor,
Inc. (the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of OMC; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Manager; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of
OMC; President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main Street
Advisers; formerly Senior Vice President/
Comptroller and Secretary of Oppenheimer
Asset Management Corporation ("OAMC"), an
investment adviser which was a subsidiary
of
the OMC.
Michael A. Carbuto, Vice President and Portfolio Manager of
Vice President Oppenheimer Tax-Exempt Cash Reserves,
Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice
President
of Centennial.
William Colbourne, Formerly, Director of Alternative Staffing
Assistant Vice President Resources, and Vice President of Human
Resources, American Cancer Society.
Lynn Coluccy, Vice President Formerly Vice President/Director of
Internal
Audit of the Manager.
O. Leonard Darling, Formerly Co-Director of Fixed Income for
Executive Vice President State Street Research & Management Co.
Robert A. Densen, None.
Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund and Oppenheimer
Target Fund; Senior Vice President and
Portfolio Manager of Strategic Income &
Growth Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue, Secretary of the New York-based
Executive Vice President OppenheimerFunds; Vice President of the
& General Counsel Denver-based OppenheimerFunds; Executive
Vice President, Director and General
Counsel
of the Distributor; formerly Senior Vice
President and Associate General Counsel of
the Manager and the Distributor.
Kenneth C. Eich, Treasurer of Oppenheimer Acquisition
Executive Vice President/ Corporation
Chief Financial Officer
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Global Securities Fund.
Scott Farrar, Assistant Treasurer of the
OppenheimerFunds;
Assistant Vice President previously a Fund Controller for the
Manager.
Katherine P.Feld Vice President and Secretary of
Oppenheimer
Vice President and Funds Distributor, Inc.; Secretary of
Secretary HarbourView, Main Street Advisers, Inc.
and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corp.
Jon S. Fossel, President and director of Oppenheimer
Chairman of the Board, Acquisition Corp. ("OAC"), the Manager's
Chief Executive Officer parent holding company; President, CEO and
and Director a director of HarbourView; a director of
SSI
and SFSI; President, Director, Trustee,
and
Managing General Partner of the Denver-
based
OppenheimerFunds; formerly President of
the
Manager. President and Chairman of the
Board
of Main Street Advisers, Inc.
Robert G. Galli, Trustee of the New York-based
Vice Chairman OppenheimerFunds; Vice President and
Counsel
of OAC; formerly he held the following
positions: a director of the Distributor,
Vice President and a director of
HarbourView
and Centennial, a director of SFSI and
SSI,
an officer of other OppenheimerFunds and
Executive Vice President & General
Counsel
of the Manager and the Distributor.
Linda Gardner, None.
Assistant Vice President
Ginger Gonzalez, Formerly 1st Vice President/Director of
Vice President Creative Services for Shearson Lehman
Brothers.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Bond Fund
and
Oppenheimer Intermediate Tax Exempt Bond
Fund; an officer of other
OppenheimerFunds;
formerly Vice President of Fixed Income
Portfolio Management at Bankers Trust.
Barbara Hennigar, President and Director of Shareholder
President and Chief Financial Service, Inc.
Executive Officer of
Oppenheimer Shareholder
Services, a division of OMC.
Alan Hoden, Vice President None.
Merryl Hoffman, None.
Vice President
Scott T. Huebl, None.
Assistant Vice President
Jane Ingalls, Formerly a Senior Associate with Robinson,
Assistant Vice President Lake/Sawyer Miller.
Stephen Jobe, None.
Vice President
Avram Kornberg, Formerly a Vice President with Bankers
Vice President Trust.
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund; Associate Portfolio
Manager of Oppenheimer Discovery Fund and
Oppenheimer Time Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director of HarbourView; Director of Main
President and Director Street Advisers, Inc.; and Chairman of
Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Denis R. Molleur, None.
Vice President
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund,
Oppenheimer
Multiple Strategies Fund, Oppenheimer
Strategic Investment Grade Bond Fund,
Oppenheimer Asset Allocation Fund,
Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth
Fund,
Oppenheimer Strategic Short-Term Income
Fund, Oppenheimer High Income Fund and
Oppenheimer Bond Fund; an officer of other
OppenheimerFunds.
Barbara Niederbrach, None.
Assistant Vice President
Stuart Novek, Formerly a Director Account Supervisor for
Vice President J. Walter Thompson.
Robert A. Nowaczyk, None.
Vice President
Julia O'Neal, None.
Assistant Vice President
Robert E. Patterson, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Main Street California Tax-
Exempt Fund, Oppenheimer Insured Tax-
Exempt
Bond Fund, Oppenheimer Intermediate Tax-
Exempt Bond Fund, Oppenheimer Florida Tax-
Exempt Fund, Oppenheimer New Jersey Tax-
Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer California Tax-
Exempt Fund, Oppenheimer New York Tax-
Exempt
Fund and Oppenheimer Tax-Free Bond Fund;
Vice President of the New York Tax-Exempt
Income Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust.
Tilghman G. Pitts III, Chairman and Director of the Distributor.
Executive Vice President
and Director
Jane Putnam, Associate Portfolio Manager of Oppenheimer
Assistant Vice President Growth Fund and Oppenheimer Target Fund
and
Portfolio Manager for Oppenheimer Variable
Account Funds-Growth Fund; Senior
Investment
Officer and Portfolio Manager with
Chemical
Bank.
Russell Read, Formerly an International Finance
Consultant
Assistant Vice President for Dow Chemical.
Thomas Reedy, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust; an officer of other
OppenheimerFunds; formerly a Securities
Analyst for the Manager.
David Rosenberg, Vice President and Portfolio Manager of
Vice President Oppenheimer Limited-Term Government Fund
and
Oppenheimer U.S. Government Trust.
Formerly
Vice President and Senior Portfolio
Manager
for Delaware Investment Advisors.
Richard H. Rubinstein, Vice President and Portfolio Manager of
Vice President Oppenheimer Asset Allocation Fund,
Oppenheimer Fund and Oppenheimer Multiple
Strategies Fund; an officer of other
OppenheimerFunds; formerly Vice President
and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment
adviser.
Lawrence Rudnick, Formerly Vice President of Dollar Dry Dock
Assistant Vice President Bank.
Ellen Schoenfeld, None.
Assistant Vice President
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-
based
Chairman Emeritus OppenheimerFunds; formerly Chairman of the
and Director Manager and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth
Fund,
Oppenheimer Strategic Investment Grade
Bond
Fund, Oppenheimer Strategic Short-Term
Income Fund; an officer of other
OppenheimerFunds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion High Yield Fund and
Oppenheimer High Yield Fund; an officer of
other OppenheimerFunds.
John Stoma, Vice President Formerly Vice President of Pension
Marketing
with Manulife Financial.
James C. Swain, Chairman, CEO and Trustee, Director or
Vice Chairman of the Managing Partner of the Denver-based
Board of Directors OppenheimerFunds; President and a Director
and Director of Centennial; formerly President and
Director of OAMC, and Chairman of the
Board
of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Time Fund and Oppenheimer
Discovery Fund. Formerly Managing
Director
of Buckingham Capital Management.
Gary Tyc, Vice President, Assistant Treasurer of the Distributor and
Assistant Secretary SFSI.
and Assistant Treasurer
Ashwin Vasan, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust: an officer of other
OppenheimerFunds.
Valerie Victorson, None.
Vice President
John Wallace, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, and
Oppenheimer Main Street Income and Growth
Fund; an officer of other
OppenheimerFunds;
formerly a Securities Analyst and
Assistant
Portfolio Manager for the Manager.
Dorothy Warmack, Vice President and Portfolio Manager of
Vice President Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves, Centennial
America Fund, L.P., Centennial Government
Trust and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells, None.
Vice President
William L. Wilby, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Global Fund and Oppenheimer
Global Growth & Income Fund; Vice
President
of HarbourView; an officer of other
OppenheimerFunds.
Carol Wolf, Vice President and Portfolio Manager of
Vice President Oppenheimer Money Market Fund, Inc.,
Centennial America Fund, L.P., Centennial
Government Trust, Centennial Money Market
Trust and Daily Cash Accumulation Fund,
Inc.; Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President of
Centennial.
Robert G. Zack, Associate General Counsel of the Manager;
Senior Vice President Assistant Secretary of the
OppenheimerFunds;
and Assistant Secretary Assistant Secretary of SSI, SFSI; an
officer
of other OppenheimerFunds.
Eva A. Zeff, Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Mortgage Income Fund; an
officer
of other OppenheimerFunds; formerly a
Securities Analyst for the Manager.
Arthur J. Zimmer, Vice President and Portfolio Manager of
Vice President Centennial America Fund, L.P., Oppenheimer
Money Fund, Centennial Government Trust,
Centennial Money Market Trust and Daily
Cash
Accumulation Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust;
Vice
President of Centennial; an officer of
other
OppenheimerFunds.
</TABLE>
The OppenheimerFunds include the New York-based
OppenheimerFunds and the Denver-based OppenheimerFunds set forth below:
New York-based OppenheimerFunds
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Mortgage Income Fund
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Trust
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer Time Fund
Oppenheimer U.S. Government Trust
Denver-based OppenheimerFunds
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion High Yield Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Tax-Exempt Bond Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
The address of Oppenheimer Management Corporation, the New
York-based OppenheimerFunds, Oppenheimer Funds Distributor, Inc.,
Harbourview Asset Management Corp., Oppenheimer Partnership Holdings,
Inc., and Oppenheimer Acquisition Corp. is Two World Trade Center, New
York, New York 10048-0203.
The address of the Denver-based OppenheimerFunds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., Oppenheimer
Shareholder Services, Centennial Asset Management Corporation,
Centennial
Capital Corp., and Main Street Advisers, Inc. is 3410 South Galena
Street, Denver, Colorado 80231.
Item 29. Principal Underwriters
----------------------
Not Applicable.
Item 30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company Act
and rules promulgated thereunder are in possession of Oppenheimer
Management Corporation at its offices at 3410 South Galena Street,
Denver, Colorado 80231.
Item 31. Management Services
-------------------
Not Applicable.
Item 32. Undertakings
------------
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Denver
and State of Colorado on the 26th day of April, 1995.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
/s/ James C. Swain *
by: --------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated:
Signatures: Title Date
- ----------- ----------------- --------------
/s/ James C. Swain* Chairman of the Board April 26, 1995
- --------------------- of Trustees and
James C. Swain Principal Executive
Officer
/s/ Jon S. Fossel* President and Trustee April 26, 1995
- ----------------------
Jon S. Fossel
/s/ George Bowen* Treasurer and April 26, 1995
- ---------------------- Principal Financial
George Bowen and Accounting Officer
/s/ Robert G. Avis* Trustee April 26, 1995
- ----------------------
Robert G. Avis
/s/ William A. Baker* Trustee April 26, 1995
- ----------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee April 26, 1995
- ----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Trustee April 26, 1995
- ----------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee April 26, 1995
- ----------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee April 26, 1995
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee April 26, 1995
- -----------------------
Ned M. Steel
*By: /s/ Robert G. Zack
-------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
24(a)(8) Independent Auditors' Consent
24(b)(1) Sixth Restated Declaration of Trust dated 2/28/95
24(b)(4)(ix) Oppenheimer Growth & Income Fund Specimen Share
Certificate
24(b)5(ix) Investment Advisory Agreement for Oppenheimer Growth &
Income Fund dated 5/1/95
24(b)(8) Custody Agreement dated 11/12/92
24(b)(10)(i) Opinion and Consent of Counsel dated 3/14/85
24(b)(10)(ii) Opinion and Consent of Counsel dated 4/28/86
24(b)(10)(iii) Opinion and Consent of Counsel dated 7/31/86
24(b)(10)(iv) Opinion and Consent of Counsel dated 1/21/87
24(b)(10)(v) Opinion and Consent of Counsel dated 7/31/90
24(b)(10)(vi) Opinion and Consent of Counsel dated 4/23/93
24(b)(16) Performance Data Computation Schedule
24(b)(17) Financial Data Schedule
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Variable Account Funds:
We consent to the use in this Post-Effective Amendment No. 27 to
Registration Statement No. 2-93177 of our report dated January 23, 1995
on the financial statements of Oppenheimer Variable Account Funds
appearing in the Statement of Additional Information, which is a part of
such Registration Statement, and to the reference to us under the caption
"Financial Highlights" appearing in the Prospectus, which is also a part
of such Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
April 26, 1995
Exhibit No. 24(b)(1)
SIXTH
RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SIXTH RESTATED DECLARATION OF TRUST, made as of February 28, 1995 by
and among the individuals executing this Sixth Restated Declaration of
Trust as the initial Trustees.
WHEREAS, (i) by Declaration of Trust dated August 28, 1984, the
Trustees establish a Trust initially named Oppenheimer Variable Life
Funds, a trust fund under the laws of the Commonwealth of Massachusetts,
for the investment and reinvestments of fund contributed thereto, (ii) by
the First Restated Declaration of Trust dated March 11, 1986, the Trustees
amended and restated said Declaration of Trust to create two new Series
of Shares, and (iii) by the Second Restated Declaration of Trust dated
August 15, 1986, the Trustees further amended and restated said
Declaration of Trust to change the Trust's name to Oppenheimer Variable
Account Funds and to make certain other changes, (iv) by the Third
Restated Declaration of Trust dated October 21, 1986, the Trustees amended
and restated said Declaration of Trust to create a new Series of Shares,
(v) by the Fourth Restated Declaration of Trust dated June 4, 1990, the
Trustees amended and restated said Declaration of Trust to create a new
Series of Shares, and (vi) by the Fifth Restated Declaration of Trust
dated February 25, 1993, the Trustees amended and restated said
Declaration of Trust to create a new series;
WHEREAS, the Trustees desire to further amend such Declaration of
Trust without shareholder approval, as permitted under ARTICLE FOURTH, to
create an additional Series of Shares in addition to the eight Series
previously established and designated, and to fix and determine the
relative rights and preferences of such Additional Series of Shares as set
forth in said ARTICLE FOURTH;
NOW, THEREFORE, the Trustees declare that all money and property held
or delivered to the Trust Fund hereunder shall be held and managed under
this Sixth Restated Declaration of Trust IN TRUST as herein set forth
below.
FIRST: This Trust shall be known as OPPENHEIMER VARIABLE ACCOUNT
FUNDS. The address of Oppenheimer Variable Account Funds is 3410 South
Galena Street, Denver, Colorado 80231. The Registered Agent for service
is Massachusetts Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111, Attention: Stephen L. Kuhn, Esq.
SECOND: Whenever used herein, unless otherwise required by the
context or specifically provided:
1. All terms used in this Declaration of Trust which are defined in
the 1940 Act (defined below) shall have the meanings given to them in the
1940 Act.
2. "Board" or "Board of Trustees" or the "Trustees" means the Board
of Trustees of the Trust.
3. "By-Laws" means the By-Laws of the Trust as amended from time to
time.
4. "Commission" means the Securities and Exchange Commission.
5. "Declaration of Trust" shall mean this Declaration of Trust as
amended or restated from time to time.
6. The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations of the Commission thereunder, all as amended
from time to time.
7. "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article FOURTH.
8. "Shareholder" means a record owner of Shares of the Trust.
9. "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust or any Series of the Trust (as the
context may require) shall be divided from time to time and includes
fractions of Shares as well as whole Shares.
10. The "Trust" refers to the Massachusetts business trust created
by this Declaration of Trust, as amended or restated from time to time.
11. "Trustees" refers to the individual trustees in their capacity
as trustees hereunder of the Trust and their successor or successors for
the time being in office as such trustees.
THIRD: The purpose or purposes for which the Trust is formed and the
business or objects to be transacted, carried on and promoted by it are
as follows:
1. To hold, invest or reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase or
otherwise acquire, hold for investment or otherwise, sell, sell short,
assign, negotiate, transfer, exchange or otherwise dispose of or turn to
account or realize upon, securities (which term "securities" shall for the
purposes of this Declaration of Trust, without limitation of the
generality thereof, be deemed to include any stocks, shares, bonds,
financial futures contracts, indexes, debentures, notes, mortgages or
other obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interests therein,
or in any property or assets) created or issued by any issuer (which term
"issuer" shall for the purposes of this Declaration of Trust, without
limitation of the generality thereof be deemed to include any persons,
firms, associations, corporations, syndicates, combinations,
organizations, governments, or subdivisions thereof) and in financial
instruments (whether they are considered as securities or commodities);
and to exercise, as owner or holder of any securities or financial
instruments, all rights, powers and privileges in respect thereof; and to
do any and all acts and things for the preservation, protection,
improvement and enhancement in value of any or all such securities or
financial instruments.
2. To borrow money and pledge assets in connection with any of the
objects or purposes of the Trust, and to issue notes or other obligations
evidencing such borrowings, to the extent permitted by the 1940 Act and
by the Trust's fundamental investment policies under the 1940 Act.
3. To issue and sell its Shares in such Series and amounts and on
such terms and conditions, for such purposes and for such amount or kind
of consideration (including without limitation thereto, securities) now
or hereafter permitted by the laws of the Commonwealth of Massachusetts
and by this Declaration of Trust, as the Trustees may determine.
4. To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel its Shares, or to classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of any
Series into one or more series that may have been established and
designated from time to time, all without the vote or consent of the
Shareholders of the Trust, in any manner and to the extent now or
hereafter permitted by this Declaration of Trust.
5. To conduct its business in all its branches at one or more
offices in Colorado and elsewhere in any part of the world, without
restriction or limit as to extent.
6. To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or to the extent now or
hereafter permitted by the laws of Massachusetts, as a member of, or as
the owner or holder of any stock of, or share of interest in, any issuer,
and in connection therewith or make or enter into such deeds or contracts
with any issuers and to do such acts and things and to exercise such
powers, as a natural person could lawfully make, enter into, do or
exercise.
7. To do any and all such further acts and things and to exercise
any and all such further powers as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out
or attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause of this or any other
Article of this Declaration of Trust, and shall each be regarded as
independent and construed as powers as well as objects and purposes, and
the enumeration of specific purposes, objects and powers shall not be
construed to limit or restrict in any manner the meaning of general terms
or the general powers of the Trust now or hereafter conferred by the laws
of the Commonwealth of Massachusetts nor shall the expression of one thing
be deemed to exclude another, though it be of a similar or dissimilar
nature, not expressed; provided, however, that the Trust shall not carry
on any business, or exercise any powers, in any state, territory, district
or country except to the extent that the same may lawfully be carried on
or exercised under the laws thereof.
FOURTH: (A) The beneficial interest in the Trust shall be divided
into Shares, all without par value, but the Trustees shall have the
authority from time to time to create one or more Series of Shares in
addition to the Series specifically established and designated in part (B)
of this Article FOURTH, as they deem necessary or desirable, to establish
and designate such Series, and to fix and determine the relative rights
and preferences as between the different Series of Shares as to right of
redemption and the price, terms and manner of redemption, special and
relative rights as to dividends and other distributions and on
liquidation, sinking or purchase fund provisions, conversion on
liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the several Series shall have individual voting
rights or no voting rights. Except as aforesaid, all Shares of the
different Series shall be identical.
The number of authorized Shares and the number of Shares of each
Series that may be issued is unlimited, and the Trustees may issue Shares
of any Series for such consideration and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares
when so issued on the terms determined by the Trustees shall be fully paid
and non-assessable. The Trustees may classify or reclassify any unissued
Shares or any Shares previously issued and reacquired of any Series into
one or more Series that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
Series), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares
of any Series reacquired by the Trust.
The establishment and designation of any Series of Shares in
addition to that established and designated in part (B) of this Article
FOURTH shall be effective upon the execution by a majority of the Trustees
of an instrument setting forth such establishment and designation and the
relative rights and preferences of such Series, or as otherwise provided
in such instrument. At any time that there are no Shares outstanding of
any particular Series previously established and designated, the Trustees
may by an instrument executed by a majority of their number abolish that
Series and the establishment and designation thereof. Each instrument
referred to in this paragraph shall be an amendment to this Declaration
of Trust, and may be made by the Trustees without shareholder approval.
Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested may acquire, own, hold
and dispose of Shares of any Series of the Trust to the same extent as if
such person were not a Trustee, officer or other agent of the Trust; and
the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Series from any such person or any such
organization subject only to the general limitations, restrictions or
other provisions applicable to the sale or purchase of Shares of such
Series generally.
(B) Without limiting the authority of the Trustees set forth in part
(A) of this Article FOURTH to establish and designate any further Series,
the Trustees hereby establish and designate nine Series of Shares:
"Oppenheimer Money Fund," "Oppenheimer Bond Fund," and "Oppenheimer Growth
Fund," established by the Declaration of Trust dated August 28, 1984;
"Oppenheimer High Income Fund" and "Oppenheimer Capital Appreciation
Fund," established by the First Restated Declaration of Trust dated March
11, 1986; "Oppenheimer Multiple Strategies Fund," established by the
Third Restated Declaration of Trust dated October 21, 1986; "Oppenheimer
Global Securities Fund" established by the Fourth Restated Declaration of
Trust dated June 4, 1990; "Oppenheimer Strategic Bond Fund" established
by the Fifth Restated Declaration of Trust dated February 25, 1993; and
"Oppenheimer Growth & Income Fund" established by this Sixth Restated
Declaration of Trust dated February 28, 1995. The Shares of Oppenheimer
Money Market Fund, Oppenheimer Bond Fund, Oppenheimer Growth Fund,
Oppenheimer High Income Fund, Oppenheimer Capital Appreciation Fund,
Oppenheimer Multiple Strategies Fund, Oppenheimer Global Securities Fund,
Oppenheimer Strategic Bond Fund and Oppenheimer Growth & Income Fund and
any Shares of any further Series that may from time to time be established
and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Series at the time of establishing
and designating the same) have the following relative rights and
preferences:
(i) Assets Belonging to Series. All consideration received by
the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors, and shall be so
recorded upon the books of account of the Trust. Such consideration,
assets, income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets,
and any funds or payments derived from any reinvestment of such proceeds,
in whatever form the same may be, together with any General Items
allocated to that Series as provided in the following sentence, are
herein referred to as "assets belonging to" that Series. In the event
that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series (collectively "General Items"), the
Trustees shall allocate such General Items to and among any one or more
of the Series established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and
equitable; and any General Items so allocated to a particular Series shall
belong to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the shareholders of all Series for all
purposes.
(ii) Liabilities Belonging to Series. The assets belonging to
each particular Series shall be charged with the liabilities of the Trust
in respect of that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The
liabilities, expenses, costs, charges and reserves allocated and so
charged to a Series are herein referred to as "liabilities belonging to"
that Series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the holders
of all Series for all purposes.
(iii) Dividends. Dividends and distributions on Shares of a
particular Series may be paid to the holders of Shares of that Series,
with such frequency as the Trustees may determine, which may be daily or
otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, from such of
the income, and capital gains accrued or realized, from the assets
belonging to that Series, as the Trustees may determine, after providing
for actual and accrued liabilities belonging to that Series. All
dividends and distributions on Shares of a particular Series shall be
distributed pro rata to the holders of that Series in proportion to the
number of Shares of that Series held by such holders at the date and time
of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order
and/or payment have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends and
distributions may be made in cash or Shares or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees
may have in effect at the time for the election by each Shareholder of the
mode of the making of such dividend or distribution to that Shareholder.
Any such dividend or distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with paragraph 13 of
Article SEVENTH.
(iv) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Series that has been
established and designated shall be entitled to receive, as a Series, when
and as declared by the Trustees, the excess of the assets belonging to
that Series over the liabilities belonging to that Series. The assets so
distributable to the Shareholders of any particular Series shall be
distributed among such Shareholders in proportion to the number of Shares
of that Series held by them and recorded on the books of the Trust.
(v) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series will be
recorded on the Share transfer records of the Trust applicable to that
Series only at such times as Shareholders shall have the right to require
the Trust to redeem Shares of that Series and at such other times as may
be permitted by the Trustees.
(vi) Equality. All Shares of each particular Series shall
represent an equal proportionate interest in the assets belonging to that
Series (subject to the liabilities belonging to that Series), and each
Share of any particular Series shall be equal to each other Share of that
Series; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (iii) of part (B) of this
Article FOURTH that may exist with respect to dividends and distributions
on Shares of the same Series. The Trustees may from time to time divide
or combine the Shares of any particular Series into a greater or lesser
number of Shares of that Series without thereby changing the proportionate
beneficial interest in the assets belonging to that Series or in any way
affecting the rights of Shares of any other Series.
(vii) Fractions. Any fractional Share of any Series, if any such
fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Series, including with
respect to voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(viii) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series shall have the right to
exchange said Shares into Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established by
the Trustees.
(ix) Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of
each Series that has been established and designated. No certification
certifying the ownership of Shares need be issued except as the Trustees
may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the issuance of Share certificates,
the use of facsimile signatures, the transfer of Shares and similar
matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to
who are the Shareholders and as to the number of Shares of each Series
held from time to time by each such Shareholder.
(x) Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize. The Trustees may authorize any
distributor, principal underwriter, custodian, transfer agent or other
person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or
not conforming to such authorized terms.
FIFTH: The following provisions are hereby adopted with respect to
voting Shares of the Trust and certain other rights:
1. The Shareholders shall have the power to vote (i) for the
election of Trustees, when that issue is submitted to them, (ii) with
respect to the amendment of this Declaration of Trust, except when the
Trustees are granted authority to amend the Declaration of Trust without
shareholder approval, (iii) to the same extent as the shareholders of a
Massachusetts business corporation, as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders, and (iv) with
respect to such additional matters relating to the Trust as may be
required by the 1940 Act or required by law, by this Declaration of Trust,
or the By-Laws of the Trust or any registration statement of the Trust
with the Commission or any State, or as the Trustees may consider
desirable.
2. The Trust will not hold shareholder meetings of shareholders
unless required to do so by the 1940 Act, the provisions of this
Declaration of Trust or other applicable law, or unless such meeting is
expressly authorized by the Trustees.
3. At all meetings of Shareholders, each Shareholder shall be
entitled to one vote on each matter submitted to a vote of the
Shareholders of the affected Series (as defined in Rule 18f-2 or its
successor under the 1940 Act) for each Share standing in his name on the
books of the Trust on the date, fixed in accordance with the By-Laws, for
determination of Shareholders of the affected Series entitled to vote at
such meeting (except, if the Board so determines, for Shares redeemed
prior to the meeting), and each such Series shall vote as an individual
class ("Individual Class Voting"); provided, however, that as to any
matter with respect to which a vote of all Shareholders is required by the
1940 Act or other applicable law, such requirements as to a vote by all
Shareholders shall apply in lieu of Individual Class Voting as described
above. Any fractional Share shall carry proportionately all the rights
of a whole Share, including the right to vote and the right to receive
dividends. The presence of a quorum at any meeting of the Shareholders
shall be determined in the manner provided for in the By-Laws. If at any
meeting of the Shareholders there shall be less than a quorum present, the
Shareholders present at such meeting may, without further notice, adjourn
the same from time to time until a quorum shall attend, but no business
shall be transacted at any such adjourned meeting except such as might
have been lawfully transacted had the meeting not been adjourned.
4. Each Shareholder, upon request to the Trust in proper form
determined by the Trust, shall be entitled to require the Trust to redeem
from the net assets of that Series all or part of the Shares of such
Series standing in the name of such Shareholder. The method of computing
such net asset value, the time at which such net asset value shall be
computed and the time within which the Trust shall make payment therefor,
shall be determined as hereinafter provided in Article SEVENTH of this
Declaration of Trust. Notwithstanding the foregoing, the Trustees, when
permitted or required to do so by the 1940 Act, may suspend the right of
the Shareholders to require the Trust to redeem Shares.
5. No Shareholder shall, as such holder, have any right to
purchase or subscribe for any security of the Trust which it may issue or
sell, other than such right, if any, as the Trustees, in their discretion,
may determine.
6. All persons who shall acquire Shares shall acquire the same
subject to the provisions of the Declaration of Trust.
7. Cumulative voting for the election of Trustees shall not be
allowed.
SIXTH: (A) The persons who shall act as initial Trustees until the
first meeting or until their successors are duly chosen and qualify are
the initial trustees who executed the Declaration of Trust as of August
28, 1984. However, the By-Laws of the Trust may fix the number of
Trustees at a number greater than that of the number of initial Trustees
and may authorize the Trustees to increase or decrease the number of
Trustees, to fill the vacancies on the Board which may occur for any
reason, including any vacancies created by any such increase in the number
of Trustees, to set and alter the terms of office of the Trustees and to
lengthen or lessen their own terms of office or make their terms of office
of indefinite duration, all subject to the 1940 Act. Unless otherwise
provided by the By-Laws of the Trust, the Trustees need not be
Shareholders.
(B) A Trustee at any time may be removed either with or without
cause by resolution duly adopted by the affirmative vote of the holders
of two-thirds of the outstanding Shares, present in person or by proxy at
any meeting of Shareholders called for such purpose; such a meeting shall
be called by the Trustees when requested in writing to do so by the record
holders of not less than ten per cent of the outstanding Shares. A Trustee
may also be removed by the Board of Trustees as provided in the By-Laws
of the Trust.
(C) The Trustees shall make available a list of names and addresses
of all Shareholders as recorded on the books of the Trust, upon receipt
of the request, in writing signed by not less than ten Shareholders who
have been such for at least six months holding in the aggregate shares of
the Trust valued at not less than $25,000 at current offering price (as
defined in the Trust's Prospectus and/or Statement of Additional
Information) or holding not less than 1% in amount of the entire amount
of Shares issued and outstanding; such request must state that such
Shareholders wish to communicate with other shareholders with a view to
obtaining signatures to a request for a meeting to take action pursuant
to part (B) of this Article SIXTH and be accompanied by a form of
communication to the Shareholders. The Trustees may, in their discretion,
satisfy their obligation under this part (C) by either making available
the Shareholder list to such Shareholders at the principal offices of the
Trust, or at the offices of the Trust's transfer agent, during regular
business hours, or by mailing a copy of such communication and form of
request, at the expense of such requesting Shareholders, to all other
Shareholders and the Trustees may also take such action as may be
permitted under Section 16(c) of the 1940 Act.
(D) The Trust may at any time or from time to time apply to the
Commission for one or more exemptions from all or part of said Section
16(c) and, if an exemptive order or orders are issued by the Commission,
such order or orders shall be deemed part of Section 16(c) for the
purposes of parts (B) and (C) of this Article SIXTH.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Trust, the Trustees
and the Shareholders.
1. As soon as any Trustee is duly elected by the Shareholders or the
Trustees and shall have accepted this Trust, the Trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees,
without any further act or conveyance, and he shall be deemed a Trustee
hereunder.
2. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them shall not operate to annul
or terminate the Trust; in such event the Trust shall continue in full
force and effect pursuant to the terms of this Declaration of Trust.
3. The assets of the Trust shall be held separate and apart from any
assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets
of the Trust shall at all times be considered as vested in the Trustees.
No Shareholder shall have, as such holder of beneficial interest in the
Trust, any authority, power or right whatsoever to transact business for
or on behalf of the Trust, or on behalf of the Trustees, in connection
with the property or assets of the Trust, or in any part thereof, except
the rights to receive the income and distributable amounts arising
therefrom and of a particular Series as set forth herein.
4. The Trustees in all instances shall act as principals, and are and
shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and
execute, and to authorize the officers of the Trust to make and execute,
any and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The Trustees
shall not in any way be bound or limited by present or future laws or
customs in regard to Trust investments, but shall have full authority and
power to make any and all investments which they, in their uncontrolled
discretion, shall deem proper to accomplish the purpose of this Trust.
Subject to any applicable limitation in this Declaration of Trust or by
the By-Laws of the Trust, the Trustees shall have power and authority:
(a) to adopt By-Laws not inconsistent with this Declaration of
Trust providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to the
Shareholders;
(b) to elect and remove such officers and appoint and terminate
such officers as they consider appropriate with or without cause, and
(c) to employ a bank or trust company as custodian or any
assets of the Trust subject to any conditions set forth in this
Declaration of Trust or in the By-Laws;
(d) to retain a transfer agent and shareholder servicing agent,
or both;
(e) to provide for the distribution of Shares either through
a principal underwriter or the Trust itself or both;
(f) to set record dates in the manner provided for in the By-
Laws;
(g) to delegate such authority as they consider desirable to any
officers of the Trust and to any agent, custodian or underwriter;
(h) to vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property held in
Trust hereunder; and to execute and deliver powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to securities
or property as the Trustees shall deem proper;
(i) to exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities held in trust
hereunder;
(j) to hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or
either in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the
usual practice of Massachusetts business trusts or investment companies;
(k) to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern,
and to pay calls or subscriptions with respect to any security held in the
Trust;
(l) to compromise, arbitrate, or otherwise adjust claims in
favor of or against the Trust or any matter in controversy including, but
not limited to, claims for taxes;
(m) to make, in the manner provided in the By-Laws,
distributions of income and of capital gains to Shareholders;
(n) to borrow money to the extent and in the manner permitted
by the 1940 Act and the Trust's fundamental policy thereunder as to
borrowing;
(o) to enter into investment advisory or management contracts,
subject to the 1940 Act, with any one or more corporations, partnerships,
trusts, associations or other persons; if the other party or parties to
any such contract are authorized to enter into securities transactions on
behalf of the Trust, such transactions shall be deemed to have been
authorized by all of the Trustees;
(p) to change the name of the Trust or any of its Series,
without shareholder approval, as they consider appropriate; and
(q) to establish fees and/or compensation, for the Trustees and
for committees of the Board of Trustees, to be paid by the Trust or any
Series thereof in such manner and amount as the Trustees may determine.
5. No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order.
6. (a) The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever, and the liability of a Shareholder for the
acts, omissions to act or obligations of the Trust is hereby expressly
disclaimed, other than such as the Shareholder may at any time personally
agree to pay by way of subscription to any Shares or otherwise. Every
note, bond, contract or other undertaking issued by or on behalf of the
Trust or the Trustees relating to the Trust shall include a notice and
provision limiting the obligation represented thereby to the Trust and its
assets (but the omission of such notice and provision shall not operate
to impose any liability or obligation on any Shareholder).
(b) Whenever this Declaration of Trust calls for or permits any
action to be taken by the Trustees hereunder, such action shall mean that
taken by the Board of Trustees by vote of the majority of a quorum of
Trustees as set forth from time to time in the By-Laws of the Trust or as
required by the 1940 Act.
(c) The Trustees shall possess and exercise any and all such
additional powers as are reasonably implied from the powers herein
contained such as may be necessary or convenient in the conduct of any
business or enterprise of the Trust, to do and perform anything necessary,
suitable, or proper for the accomplishment of any of the purposes, or the
attainment of any one or more of the objects, herein enumerated, or which
shall at any time appear conducive to or expedient for the protection or
benefit of the Trust, and to do and perform all other acts and things
necessary or incidental to the purposes herein before set forth, or that
may be deemed necessary by the Trustees.
(d) The Trustees shall have the power, to the extent not
inconsistent with the 1940 Act, to determine conclusively whether any
moneys, securities, or other properties of the Trust are, for the purposes
of this Trust, to be considered as capital or income and in what manner
any expenses or disbursements are to be borne as between capital and
income whether or not in the absence of this provision such moneys,
securities, or other properties would be regarded as capital or income and
whether or not in the absence of this provision such expenses or
disbursements would ordinarily be charged to capital or to income.
7. The By-Laws of the Trust may divide the Trustees into classes and
prescribe the tenure of office of the several classes, but no class shall
be elected for a period shorter than that from the time of the election
following the division into classes until the next meeting at which
Trustees are elected and thereafter for a period shorter than the interval
between meetings or for a period longer than five years, and the term of
office of at least one class shall expire each year.
8. The Shareholders shall have the right to inspect the records,
documents, accounts and books of the Trust, subject to reasonable
regulations of the Trustees, not contrary to Massachusetts law, as to
whether and to what extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
9. Any officer elected or appointed by the Trustees, by the
Shareholders or otherwise, may be removed at any time, with or without
cause, in such lawful manner as may be provided in the By-Laws of the
Trust.
10. If the By-Laws so provide, the Trustees, and any committee
thereof shall have power to hold their meetings, to have an office or
offices and, subject to the provisions of the laws of Massachusetts, to
keep the books of the Trust outside of said Commonwealth at such places
as may from time to time be designated by them, and to take action without
a meeting by unanimous written consent or by telephone or similar method
of communication.
11. Securities held by the Trust shall be voted in person or by
proxy by the President or a Vice-President, or such officer or officers
of the Trust as the Trustees shall designate for the purpose, or by a
proxy or proxies thereunto duly authorized by the Trustees, except as
otherwise ordered by vote of the holders of a majority of the Shares
outstanding and entitled to vote in respect thereto.
12. (a) Subject to the provisions of the 1940 Act, any Trustee,
officer or employee, individually, or any partnership of which any
Trustee, officer or employee may be a member, or any corporation or
association of which any Trustee, officer or employee may be an officer,
director, trustee, employee or stockholder, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
Trust, and in the absence of fraud no contract or other transaction shall
be hereby affected or invalidated; provided that when a Trustee, or a
partnership, corporation or association of which a Trustee is a member,
officer, director, trustee, employee or stockholder is so interested, such
fact shall be disclosed or shall have been known to the Trustees,
including those Trustees who are neither "interested" nor "affiliated"
persons as those terms are defined in the 1940 Act, or a majority thereof;
and any Trustee who is so interested, or who is also a director, officer,
trustee, employee or stockholder of such other corporation or a member of
such partnership which is so interested, may be counted in determining the
existence of a quorum at any meeting of the Trustees which shall authorize
any such contract or transaction, and may vote thereat to authorize any
such contract or transaction, with like force and effect as if he were not
such director, officer, trustee, employee or stockholder of such other
trust or corporation or association or a member of a partnership so
interested.
(b) Specifically, but without limitation of the foregoing, the
Trust may enter into a management or investment advisory contract or
underwriting contract and other contracts with, and may otherwise do
business with any manager or investment adviser for the Trust and/or
principal underwriter of the Shares of the Trust or any subsidiary or
affiliate of any such manager or investment adviser and/or principal
underwriter and may permit any such firm or corporation to enter into any
contracts or other arrangements with any other firm or corporation
relating to the Trust notwithstanding that the Trustee of the Trust may
be composed in part of partners, directors, officers or employees of any
such firm or corporation, and officers of the Trust may have been or may
be or become partners, directors, officers or employees of any such firm
or corporation, and in the absence of fraud the Trust and any such firm
or corporation may deal freely with each other, and no such contract or
transaction between the Trust and any such firm or corporation shall be
invalidated or in any way affected thereby, nor shall any Trustee or
officer of the Trust be liable to the Trust or to any Shareholder or
creditor thereof or to any other person for any loss incurred by it or him
solely because of the existence of any such contract or transaction;
provided that nothing herein shall protect any director or officer of the
Trust against any liability to the trust or to its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office.
(c) (1) As used in this paragraph the following terms shall
have the meanings set forth below:
(i) the term "indemnitee" shall mean any present or former
Trustee, officer or employee of the Trust, any present or former Trustee,
or officer of another trust or corporation whose securities are or were
owned by the Trust or of which the Trust is or was a creditor and who
served or serves in such capacity at the request of the Trust, any present
or former investment advisor or principal underwriter of the Trust and the
heirs, executors, administrators, successors and assigns of any of the
foregoing; however, whenever conduct by an indemnitee is referred to, the
conduct shall be that of the original indemnitee rather than that of the
heir, executor, administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, to which an indemnitee
is or was a party or is threatened to be made a party by reason of the
fact or facts under which he or it is an indemnitee as defined above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office in question;
(iv) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by an indemnitee in connection
with a covered proceeding; and
(v) the term "adjudication of liability" shall mean, as
to any covered proceeding and as to any indemnitee, an adverse
determination as to the indemnitee whether by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent.
(d) The Trust shall not indemnify any indemnitee for any covered
expenses in any covered proceeding if there has been an adjudication of
liability against such indemnitee expressly based on a finding of
disabling conduct.
(e) Except as set forth in paragraph (d) above, the Trust shall
indemnify any indemnitee for covered expenses in any covered proceeding,
whether or not there is an adjudication of liability as to such
indemnitee, if a determination has been made that the indemnitee was not
liable by reason of disabling conduct by (i) a final decision on the
merits of the court or other body before which the covered proceeding was
brought; or (ii) in the absence of such decision, a reasonable
determination, based on a review of the facts, by either (a) the vote of
a majority of a quorum of Trustees who are neither "interested persons",
as defined in the 1940 Act nor parties to the covered proceedings, or (b)
an independent legal counsel in a written opinion; provided that such
Trustees or counsel, in reaching such determination, may but need not
presume the absence of disabling conduct on the part of the indemnitee by
reason of the manner in which the covered proceeding was terminated.
(f) Covered expenses incurred by an indemnitee in connection with
a covered proceeding shall be advanced by the Trust to an indemnitee prior
to the final disposition of a covered proceeding upon the request of the
indemnitee for such advance and the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately determined that
the indemnitee is entitled to indemnification thereunder, but only if one
or more of the following is the case: (i) the indemnitee shall provide a
security for such undertaking; (ii) the Trust shall be insured against
losses arising out of any lawful advances; or (iii) there shall have been
a determination, based on a review of the readily available facts (as
opposed to a full trial-type inquiry) that there is a reason to believe
that the indemnitee ultimately will be found entitled to indemnification,
by either independent legal counsel in a written opinion or by the vote
of a majority of a quorum of trustees who are neither "interested persons"
as defined in the 1940 Act nor parties to the covered proceeding.
(g) Nothing herein shall be deemed to affect the right of the
Trust and/or any indemnitee to acquire and pay for any insurance covering
any or all indemnitees to the extent permitted by the 1940 Act or to
affect any other indemnification rights to which any indemnitee may be
entitled to the extent permitted by the 1940 Act.
13. For purposes of the computation of net asset value, as in this
Declaration of Trust referred to, the following rules shall apply:
(a) The net asset value per Share of any Series, as of the time
of valuation on any day, shall be the quotient obtained by dividing the
value, as at such time, of the net assets of that Series (i.e., the value
of the assets of that Series less its liabilities exclusive of its
surplus) by the total number of Shares of that Series outstanding at such
time. The assets and liabilities of any Series shall be determined in
accordance with generally accepted accounting principles; provided,
however, that in determining the liabilities of any Series there shall be
included such reserves as may be authorized or approved by the Trustees,
and provided further that in connection with the accrual of any fee or
refund payable to or by an investment adviser of the Trust for such
Series, the amount of which accrual is not definitely determinable as of
any time at which the net asset value of each Share of that Series is
being determined due to the contingent nature of such fee or refund, the
Trustees are authorized to establish from time to time formulae for such
accrual, on the basis of the contingencies in question to the date of such
determination, or on such other basis as the Trustees may establish.
(1) Shares of a Series to be issued shall be deemed to be
outstanding as of the time of the determination of the net asset value per
Share applicable to such issuance and the net price thereof shall be
deemed to be an asset of that Series;
(2) Shares of a Series to be redeemed by the Trust shall be
deemed to be outstanding until the time of the determination of the net
asset value applicable to such redemption and thereupon and until paid the
redemption price thereof shall be deemed to be a liability of that Series;
and
(3) Shares of a Series voluntarily purchased or contracted to
be purchased by the Trust pursuant to the provisions of paragraph 4 of
Article FIFTH shall be deemed to be outstanding until whichever is the
later of (i) the time of the making of such purchase or contract of
purchase, and (ii) the time of which the purchase price is determined, and
thereupon and until paid, the purchase price thereof shall be deemed to
be a liability of that Series.
(b) The Trustees are empowered, in their absolute discretion, to
establish bases or times, or both, for determining the net asset value per
Share of any Series in accordance with the 1940 Act and to authorize the
voluntary purchase by any Series, either directly or through an agent, of
Shares of any Series upon such terms and conditions and for such
consideration as the Trustees shall deem advisable in accordance with the
1940 Act.
14. Payment of the net asset value per Share of any Series properly
surrendered to it for redemption shall be made by the Trust within seven
days after tender of such shares to the Trust for such purpose plus any
period of time during which the right of the holders of the shares of that
Series to require the Trust to redeem such shares has been suspended, or
as specified in any applicable law or regulation. Any such payment may
be made in portfolio securities of that Series and/or in cash, as the
Trustees shall deem advisable, and no Shareholder shall have a right,
other than as determined by the Trustees, to have his Shares redeemed in
kind.
15. The Trust shall have the right, at any time and without prior
notice to the Shareholder, to redeem Shares of the Series held by such
Shareholder held in any account registered in the name of such Shareholder
for its current net asset value, if and to the extent that such redemption
is necessary to reimburse either that Series of the Trust or the
distributor (i.e., principal underwriter) of the Shares for any loss
either has sustained by reason of the failure of such Shareholder to make
timely and good payment for Shares purchased or subscribed for by such
Shareholder, regardless of whether such Shareholder was a Shareholder at
the time of such purchase or subscription; subject to and upon such terms
and conditions as the Trustees may from time to time prescribe.
EIGHTH: The name "Oppenheimer" included in the name of the Trust and
of any Series shall be used pursuant to a royalty-free, non-exclusive
license from Oppenheimer Management Corporation, incidental to and as part
of an advisory, management or supervisory contract which may be entered
into by the Trust with Oppenheimer Management Corporation. The license
may be terminated by Oppenheimer Management Corporation upon termination
of such advisory management or supervisory contract or without cause upon
60 days' notice, in which case neither the Trust nor any Series shall have
any further right to use the name "Oppenheimer" in its name or otherwise
and the Trust, the Shareholders and its officers and Trustees shall
promptly take whatever action may be necessary to change its name
accordingly.
NINTH:
1. In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his being or having been a
Shareholder and not because of his acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor)
shall be entitled out of the Trust estate to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust shall, upon request by the Shareholder, assume the defense of any
such claim made against any Shareholder for any act or obligation of the
Trust and satisfy any judgment thereon.
2. It is hereby expressly declared that a trust and not a partnership
is created hereby. No individual Trustee hereunder shall have any power
to bind the Trust, the Trust's officers or any Shareholder. All persons
extending credit to, doing business with, contracting with or having or
asserting any claim against the Trust or the Trustees shall look only to
the assets of the Trust for payment under such credit, transaction,
contract or claim; and neither the Shareholders nor the Trustees, nor any
of their agents, whether past, present or future, shall be personally
liable therefor; notice of such disclaimer shall be given in each
agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which such Trustee would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee hereunder.
3. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to
the provisions of paragraph 2 of this Article NINTH, the Trustees shall
not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the
meaning and operations of this Declaration of Trust, applicable laws,
contracts, obligations, transactions, or any business or dealings the
Trust may enter into, and subject to the provisions of paragraph 2 of this
Article NINTH, shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any surety
if a bond is required.
4. This Trust shall continue without limitation of time but subject
to the provisions of sub-sections (a), (b), (c) and (d) of this paragraph
4.
(a) The Trustees, with the favorable vote of the holders of a
majority of the outstanding voting securities, as defined in the 1940 Act,
of any one or more Series entitled to vote, may sell and convey the assets
of that Series (which sale may be subject to the retention of assets for
the payment of liabilities and expenses) to another issuer for a
consideration which may be or include securities of such issuer. Upon
making provision for the payment of liabilities, by assumption by such
issuer or otherwise, the Trustees shall distribute the remaining proceeds
ratably among the holders of the outstanding Shares of the Series the
assets of which have been so transferred.
(b) The Trustees, with the favorable vote of the holders of a
majority of the outstanding voting securities, as defined in the 1940 Act,
of any one or more Series entitled to vote, may at any time sell and
convert into money all the assets of that Series. Upon making provisions
for the payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of that Series, the Trustees shall
distribute the remaining assets of that Series ratably among the holders
of the outstanding Shares of that Series.
(c) The Trustees, with the favorable vote of the holders of a
majority of the outstanding voting securities, as defined in the 1940 Act,
of any one or more Series entitled to vote, may at any time otherwise
alter, transfer or convert the assets of such Series.
(d) Upon completion of the distribution of the remaining proceeds
or the remaining assets as provided in sub-sections (a), (b), and (c),
whenever applicable, the Series the assets of which have been so
transferred shall terminate, and if all the assets of the Trust have been
so transferred, the Trust shall terminate and the Trustees shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties shall be cancelled and
discharged.
5. The original or a copy of this instrument and of each declaration
of trust supplemental hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. A copy of this instrument
and of each supplemental or restated declaration of trust shall be filed
with the Massachusetts Secretary of State, as well as any other
governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of
the Trust as to whether or not any such supplemental or restated
declarations of trust have been made and as to any matters in connection
with the Trust hereunder, and, with the same effect as if it were the
original, may rely on a copy certified by an officer of the Trust to be
a copy of this instrument or of any such restated or supplemental
declaration of trust. In this instrument or in any such supplemental or
restated declaration of trust, references to this instrument, and all
expressions like "herein", "hereof" and "hereunder" shall be deemed to
refer to this instrument as amended or affected by any such restated or
supplemental declaration of trust. This instrument may be executed in any
number of counterparts, each of which shall be deemed as original.
6. The Trust set forth in this instrument is created under and is to
be governed by and construed and administered according to the laws of the
Commonwealth of Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised
by such a trust.
7. The Board of Trustees is empowered to cause the redemption of the
Shares held in any account if the aggregate net asset value of such Shares
(taken at cost or value, as determined by the Board) has been reduced to
$200 or less upon such notice to the shareholder in question, with such
permission to increase the investment in question and upon such other
terms and conditions as may be fixed by the Board of Trustees in
accordance with the 1940 Act.
8. In the event that any person advances the organizational expenses
of the Trust, such advances shall become an obligation of the Trust
subject to such terms and conditions as may be fixed by, and on a date
fixed by, or determined with criteria fixed by the Board of Trustees, to
be amortized over a period or periods to be fixed by the Board.
9. Whenever any action is taken under this Declaration of Trust under
any authorization to take action which is permitted by the 1940 Act or
other applicable law, such action shall be deemed to have been properly
taken if such action is in accordance with the construction of the 1940
Act then in effect as expressed in "no action" letters of the staff of the
Commission or any release, rule, regulation or order under the 1940 Act
or any decision of a court of competent jurisdiction, notwithstanding that
any of the foregoing shall later be found to be invalid or otherwise
reversed or modified by any of the foregoing.
10. Any action which may be taken by the Board of Trustees under
this Declaration of Trust or its By-Laws may be taken by the description
thereof in the then effective prospectus or statement of additional
information relating to the Shares under the Securities Act of 1933 or in
any proxy statement of the Trust rather than by formal resolution of the
Board.
11. Whenever under this Declaration of Trust, the Board of Trustees
is permitted or required to place a value on assets of the Trust, such
action may be delegated by the Board, and/or determined in accordance with
a formula determined by the Board, to the extent permitted by the 1940
Act.
12. If authorized by vote of the Trustees and the favorable vote of
the holders of a majority of the outstanding voting securities, as defined
in the 1940 Act, entitled to vote, or by any larger vote which may be
required by applicable law in any particular case, the Trustees shall
amend or otherwise supplement this instrument, by making a Restated
Declaration of Trust or a Declaration of Trust supplemental hereto, which
thereafter shall form a part hereof; any such Supplemental or Restated
Declaration of Trust may be executed by and on behalf of the Trust and the
Trustees by an officer or officers of the Trust.
IN WITNESS WHEREOF, the undersigned have executed this instrument as
of the 28th day of February, 1995.
/s/ William A. Baker /s/ Charles Conrad, Jr.
William A. Baker, Trustee Charles Conrad, Jr., Trustee
197 Desert Lakes Drive 19411 Merion Court
Palm Springs, California, 92264 Huntington Beach, California 92648
/s/ Ned M. Steel /s/ Robert M. Kirchner
Ned M. Steel, Trustee Robert M. Kirchner, Trustee
3236 S. Steele Street 2800 S. University Boulevard
Denver, Colorado Denver, Colorado 80210
/s/ Raymond J. Kalinowski /s/ C. Howard Kast
Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee
44 Portland Drive 2252 East Alameda
St. Louis, Missouri Denver, Colorado 80209
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain, Trustee Jon S. Fossel, Trustee
23544 Wayne's Way Box 44-Mead Street
Golden, California 80401 Waccabuc, New York 10597
/s/ Robert G. Avis
Robert G. Avis, Trustee
1706 Warson Estates Drive
St. Louis, MO 63124
orgzn\600#3
OPPENHEIMER GROWTH & INCOME FUND
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) shares
(centered
below boxes) OPPENHEIMER VARIABLE ACCOUNT FUNDS
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER GROWTH & INCOME FUND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER GROWTH & INCOME FUND
a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS
(hereinafter called the "Fund"), transferable only on the
books of the Fund by the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by acceptance
hereof assents. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
_______________________ ___________________
SECRETARY PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1995
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMER SHAREHOLDER SERVICES, INC.
Denver (Colo.) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Shares of the beneficial
interest represented by the within Certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer
the said shares on the books of the within named Fund with full power of
substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Firm/Bank
by: _____________________________
Signature of Officer
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a U.S. box to
left of commercial bank or trust company, a Federally
signature(s)) chartered savings and loan association, a foreign
bank having a U.S. correspondent bank or member
firm of a national securities exchange.
edgar\600CERTA
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 1st day of May, 1995, by and between OPPENHEIMER
VARIABLE ACCOUNT FUNDS (hereinafter referred to as the "Trust"), and
OPPENHEIMER MANAGEMENT CORPORATION (hereinafter referred to as "OMC").
WHEREAS, the Trust is an open-end, diversified series management
investment company registered as such with the Securities and Exchange
Commission (the "Commission") pursuant to the Investment Company Act of
1940 (the "Investment Company Act"), and OMC is a registered investment
adviser; and
WHEREAS, OPPENHEIMER GROWTH & INCOME FUND (the "Fund") is a series of the
Trust having a separate portfolio, investment policies and investment
restrictions; and
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as
follows:
1. General Provision.
a. The Trust hereby employs OMC and OMC hereby undertakes to act
as the investment adviser of the Fund and to perform for the Fund such
other duties and functions as are hereinafter set forth. OMC shall, in
all matters, give to the Fund and the Trust's Board of Trustees the
benefit of its best judgment, effort, advice and recommendations and
shall, at all times conform to, and use its best efforts to enable the
Fund to conform to: (i) the provisions of the Investment Company Act and
any rules or regulations thereunder; (ii) any other applicable provisions
of state or Federal law; (iii) the provisions of the Declaration of Trust
and By-Laws of the Trust as amended from time to time; (iv) policies and
determinations of the Board of Trustees of the Trust; (v) the fundamental
policies and investment restrictions of the Fund as reflected in the
Trust's registration statement under the Investment Company Act or as such
policies may, from time to time, be amended by the Fund's shareholders;
and (vi) the Prospectus and Statement of Additional Information of the
Trust in effect from time to time. The appropriate officers and employees
of OMC shall be available upon reasonable notice for consultation with any
of the trustees and officers of the Trust with respect to any matters
dealing with the business and affairs of the Trust including the valuation
of portfolio securities of the Fund which securities are either not
registered for public sale or not traded on any securities market.
2. Investment Management.
a. OMC shall, subject to the direction and control by the Trust's
Board of Trustees: (i) regularly provide investment advice and
recommendations to the Fund with respect to its investments, investment
policies and the purchase and sale of securities; (ii) supervise
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased or sold by the
Fund; and (iii) arrange, subject to the provisions of paragraph 7 hereof,
for the purchase of securities and other investments for the Fund and the
sale of securities and other investments held in the portfolio of the
Fund.
b. Provided that the Trust shall not be required to pay any
compensation other than as provided by the terms of this Agreement and
subject to the provisions of paragraph 7 hereof, OMC may obtain investment
information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its investment
management services.
c. OMC shall not be liable for any loss sustained by the Trust
and/or the Fund in connection with matters to which this Agreement
relates, except a loss resulting by reason of OMC's willful misfeasance,
bad faith or gross negligence in the performance of its duties; or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
d. Nothing in this Agreement shall prevent OMC or any officer
thereof from acting as investment adviser for any other person, firm or
corporation and shall not in any way limit or restrict OMC or any of its
directors, officers, stockholders or employees from buying, selling or
trading any securities for its or their own account or for the account of
others for whom it or they may be acting, provided that such activities
will not adversely affect or otherwise impair the performance by OMC of
its duties and obligations under this Agreement.
3. Other Duties of OMC.
OMC shall, at its own expense, provide and supervise the activities
of all administrative and clerical personnel as shall be required to
provide effective administration for the Fund, including the compilation
and maintenance of such records with respect to its operations as may
reasonably be required; the preparation and filing of such reports with
respect thereto as shall be required by the Commission; composition of
periodic reports with respect to operations of the Fund for its
shareholders; composition of proxy materials for meetings of the Fund's
shareholders, and the composition of such registration statements as may
be required by Federal securities laws for continuous public sale of
shares of the Fund. OMC shall, at its own cost and expense, also provide
the Trust with adequate office space, facilities and equipment. OMC
shall, at its own expense, provide such officers for the Fund as the
Fund's Board may request.
4. Allocation of Expenses.
All other costs and expenses of the Fund not expressly assumed by OMC
under this Agreement, shall be paid by the Trust, including, but not
limited to: (i) interest and taxes; (ii) brokerage commissions; (iii)
insurance premiums for fidelity and other coverage requisite to its
operations; (iv) compensation and expenses of its trustees other than
those associated or affiliated with OMC; (v) legal and audit expenses;
(vi) custodian and transfer agent fees and expenses; (vii) expenses
incident to the redemption of its shares; (viii) expenses incident to the
issuance of its shares against payment therefor by or on behalf of the
subscribers thereto; (ix) fees and expenses, other than as hereinabove
provided, incident to the registration under Federal securities laws of
shares of the Fund for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Fund; (xi)
except as noted above, all other expenses incidental to holding meetings
of the Fund's shareholders; and (xii) such extraordinary non-recurring
expenses as may arise, including litigation, affecting the Fund and any
legal obligation which the Trust may have on behalf of the Fund to
indemnify its officers and trustees with respect thereto. Any officers
or employees of OMC or any entity controlling, controlled by or under
common control with OMC, who may also serve as officers, trustees or
employees of the Trust shall not receive any compensation from the Trust
for their services. The expenses with respect to any two or more series
of the Trust shall be allocated in proportion to the net assets of the
respective series except where allocations of direct expenses can be made.
5. Compensation of OMC.
The Trust agrees to pay OMC on behalf of the Fund and OMC agrees to
accept as full compensation for the performance of all functions and
duties on its part to be performed pursuant to the provisions hereof, a
fee computed on the aggregate net asset value of the Fund as of the close
of each business day and payable monthly at the annual rate of: .75% of
the first $200 million of average annual net assets; .72% of the next $200
million; .69% of the next $200 million; .66% of the next $200 million; and
.60% of average annual net assets in excess of $800 million.
6. Use of Name "Oppenheimer."
OMC hereby grants to the Trust a royalty-free, non-exclusive license
to use the name "Oppenheimer" in the name of the Trust and the Fund for
the duration of this Agreement and any extensions or renewals thereof.
To the extent necessary to protect OMC's rights to the name "Oppenheimer"
under applicable law, such license shall allow OMC to inspect, and subject
to control by the Trust's Board, control the name and quality of services
offered by the Fund under such name. Such license may, upon termination
of this Agreement, be terminated by OMC, in which event the Trust shall
promptly take whatever action may be necessary to change its name and the
name of the Fund and discontinue any further use of the name "Oppenheimer"
in the name of the Trust or the Fund or otherwise. The name "Oppenheimer"
may be used or licensed by OMC in connection with any of its activities,
or licensed by OMC to any other party.
7. Portfolio Transactions and Brokerage.
a. OMC is authorized, in arranging the purchase and sale of the
Fund's portfolio securities, to employ or deal with such members of
securities or commodities exchanges, brokers or dealers (hereinafter
"broker-dealers"), including "affiliated" broker-dealers (as that term is
defined in the Investment Company Act), as may, in its best judgment,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions as well
as to obtain, consistent with the provisions of subparagraph (c) of this
paragraph 7, the benefit of such investment information or research as
will be of significant assistance to the performance by OMC of its
investment management functions.
b. OMC shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by OMC on the basis of all relevant factors
and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Fund's portfolio
transactions by participating therein for its own account; the importance
to the Fund of speed, efficiency or confidentiality; the broker-dealer's
apparent familiarity with sources from or to whom particular securities
might be purchased or sold; as well as any other matters relevant to the
selection of a broker-dealer for particular and related transactions of
the Fund.
c. OMC shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to broker-dealers,
other than an affiliated broker-dealer, qualified to obtain best execution
of such transactions who provide brokerage and/or research services (as
such services are defined in Section 28(e)(3) of the Securities Exchange
Act of 1934) for the Fund and/or other accounts for which OMC or its
affiliates exercise "investment discretion" (as that term is defined in
Section 3(a)(35) of the Securities Exchange Act of 1934) and to cause the
Trust to pay such broker-dealers a commission for effecting a portfolio
transaction for the Fund that is in excess of the amount of commission
another broker-dealer adequately qualified to effect such transaction
would have charged for effecting that transaction, if OMC determines, in
good faith, that such commission is reasonable in relation to the value
of the brokerage and/or research services provided by such broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of OMC or its affiliates with respect to the accounts as
to which they exercise investment discretion. In reaching such
determination, OMC will not be required to place or attempt to place a
specific dollar value on the brokerage and/or research services provided
or being provided by such broker-dealer. In demonstrating that such
determinations were made in good faith, OMC shall be prepared to show that
all commissions were allocated for purposes contemplated by this Agreement
and that the total commissions paid by the Trust over a representative
period selected by the Trust's trustees were reasonable in relation to the
benefits to the Fund.
d. OMC shall have no duty or obligation to seek advance competitive
bidding for the most favorable commission rate applicable to any
particular portfolio transactions or to select any broker-dealer on the
basis of its purported or "posted" commission rate but will, to the best
of its ability, endeavor to be aware of the current level of the charges
of eligible broker-dealers and to minimize the expense incurred by the
Fund for effecting its portfolio transactions to the extent consistent
with the interests and policies of the Fund as established by the
determinations of the Board of Trustees of the Trust and the provisions
of this paragraph 7.
e. The Trust recognizes that an affiliated broker-dealer: (i) may
act as one of the Fund's regular brokers so long as it is lawful for it
so to act; (ii) may be a major recipient of brokerage commissions paid by
the Trust; and (iii) may effect portfolio transactions for the Fund only
if the commissions, fees or other remuneration received or to be received
by it are determined in accordance with procedures contemplated by any
rule, regulation or order adopted under the Investment Company Act for
determining the permissible level of such commissions.
f. Subject to the foregoing provisions of this paragraph 7, OMC may
also consider sales of shares of the Fund and the other funds advised by
OMC and its affiliates as a factor in the selection of broker-dealers for
its portfolio transactions.
8. Duration.
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement
shall continue in effect until December 31, 1995, and thereafter will
continue in effect from year to year, so long as such continuance shall
be approved at least annually by the Trust's Board of Trustees, including
the vote of the majority of the trustees of the Trust who are not parties
to this Agreement or "interested persons" (as defined in the Investment
Company Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or by the holders of a "majority" (as
defined in the Investment Company Act) of the outstanding voting
securities of the Fund and by such a vote of the Trust's Board of
Trustees.
9. Disclaimer of Trustee or Shareholder Liability.
OMC understands and agrees that the obligations of the Trust under
this Agreement are not binding upon any Trustee or shareholder of the
Trust or Fund personally, but bind only the Trust and the Trust's
property. OMC represents that it has notice of the provisions of the
Declaration of Trust of the Trust disclaiming Trustee or shareholder
liability for acts or obligations of the Trust.
10. Termination.
This Agreement may be terminated: (i) by OMC at any time without
penalty upon sixty days' written notice to the Trust (which notice may be
waived by the Trust); or (ii) by the Trust at any time without penalty
upon sixty days' written notice to OMC (which notice may be waived by OMC)
provided that such termination by the Trust shall be directed or approved
by the vote of a majority of all of the trustees of the Trust then in
office or by the vote of the holders of a "majority" of the outstanding
voting securities of the Fund (as defined in the Investment Company Act).
11. Assignment or Amendment.
This Agreement may not be amended or the rights of OMC hereunder
sold, transferred, pledged or otherwise in any manner encumbered without
the affirmative vote or written consent of the holders of the "majority"
of the outstanding voting securities of the Trust. This Agreement shall
automatically and immediately terminate in the event of its "assignment,"
as defined as stated below.
12. Definitions.
The terms and provisions of this Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions of the
Investment Company Act.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
for OPPENHEIMER GROWTH & INCOME FUND
By: /s/ Andrew J. Donohue
_________________________________
Andrew J. Donohue, Vice President
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Mitchell J. Lindauer
_______________________________
Mitchell J. Lindauer
Vice President
advisory\6009
OPPENHEIMER VARIABLE ACCOUNT FUNDS
CUSTODY AGREEMENT
Agreement made as of this 12th day of November, 1992, between
OPPENHEIMER VARIABLE ACCOUNT FUNDS, a business trust organized and exist-
ing under the laws of the Commonwealth of Massachusetts, having its prin-
cipal office and place of business at 3410 South Galena Street, Denver,
Colorado 80231 (hereinafter called the "Fund"), and THE BANK OF NEW YORK,
a New York corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New York, New
York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
shall have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all Appendices
and Certifications described in the Exhibits delivered in connection
herewith.
2. "Authorized Person" shall mean any person, whether or not such
person is an Officer or employee of the Fund, duly authorized by the Board
of Trustees of the Fund to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time, provided that each person who is designated in any such
Certificate as an "Officer of OSS" shall be an Authorized Person only for
purposes of Articles XII and XIII hereof.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its
successor or successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded Option with respect
to Securities other than Index, Futures Contracts, and Futures Contract
Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof
the specified underlying instruments, currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian which is actually received (irrespective of
constructive receipt) by the Custodian and signed on behalf of the Fund
by any two Officers. The term Certificate shall also include instructions
by the Fund to the Custodian communicated by a Terminal Link.
6. "Clearing Member" shall mean a registered broker-dealer which
is a clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment
company, or any broker-dealer reasonably believed by the Custodian to be
such a clearing member.
7. "Collateral Account" shall mean a segregated account so de-
nominated which is specifically allocated to a Series and pledged to the
Custodian as security for, and in consideration of, the Custodian's
issuance of any Put Option guarantee letter or similar document described
in paragraph 8 of Article V herein.
8. "Covered Call Option" shall mean an exchange traded Option
entitling the holder, upon timely exercise and payment of the exercise
price, as specified therein, to purchase from the writer thereof the
specified underlying instruments, currency, or Securities (excluding
Futures Contracts) which are owned by the writer thereof.
9. "Depository" shall mean The Depository Trust Company ("DTC"),
a clearing agency registered with the Securities and Exchange Commission,
its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized
to act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the Custodian,
including, without limitation, a Foreign Depository.
10. "Financial Futures Contract" shall mean the firm commitment to
buy or sell financial instruments on a U.S. commodities exchange or board
of trade at a specified future time at an agreed upon price.
11. "Foreign Subcustodian" shall mean an "Eligible Foreign
Custodian" as defined in Rule 17-5 which is appointed by the Custodian to
perform or coordinate the receipt, custody and delivery of Foreign
Property of the Fund outside the United States in a manner consistent with
the provisions of this Agreement and whose written contract is approved
by the Board of Trustees of the Fund in accordance with Rule 17f-5.
References to the Custodian herein shall, when appropriate, include
reference to its Foreign Subcustodians.
12. "Foreign Depository" shall mean an entity organized under the
laws of a foreign country which operates a system outside the United
States in general use by foreign banks and securities brokers for the
central or transnational handling of securities or equivalent book-entries
which is regulated by a foreign government or agency thereof and which is
an "Eligible Foreign Custodian" as defined in Rule 17f-5.
13. "Foreign Securities" shall mean securities and/or short term
paper as defined in Rule 17f-5 under the Act, whether issued in registered
or bearer form.
14. "Foreign Property" shall mean Foreign Securities and money of
any currency which is held outside of the United States.
15. "Futures Contract" shall mean a Financial Futures Contract
and/or Index Futures Contracts.
16. "Futures Contract Option" shall mean an Option with respect to
a Futures Contract.
17. "Investment Company Act of 1940" shall mean the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder.
18. "Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount
of cash equal to a specified dollar amount times the difference between
the value of a particular index at the close of the last business day of
the contract and the price at which the futures contract is originally
struck.
19. "Index Option" shall mean an exchange traded Option entitling
the holder, upon timely exercise, to receive an amount of cash determined
by reference to the difference between the exercise price and the value
of the index on the date of exercise.
20. "Margin Account" shall mean a segregated account in the name of
a broker, dealer, futures commission merchant, or a Clearing Member, or
in the name of the Fund for the benefit of a broker, dealer, futures
commission merchant, or Clearing Member, or otherwise, in accordance with
an agreement between the Fund, the Custodian and a broker, dealer, futures
commission merchant or a Clearing Member (a "Margin Account Agreement"),
separate and distinct from the custody account, in which certain
Securities and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund may from
time to time determine. Securities held in the Book-Entry System or a
Depository shall be deemed to have been deposited in, or withdrawn from,
a Margin Account upon the Custodian's effecting an appropriate entry in
its books and records.
21. "Money Market Security" shall mean all instruments and ob-
ligations commonly known as a money market instruments, where the purchase
and sale of such securities normally requires settlement in federal funds
on the same day as such purchase or sale, including, without limitation,
certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and/or principal by the government of the United
States or agencies or instrumentalities thereof, any tax, bond or revenue
anticipation note issued by any state or municipal government or public
authority, commercial paper, certificates of deposit and bankers'
acceptances, repurchase agreements with respect to Securities and bank
time deposits.
22. "Nominee" shall mean, in addition to the name of the registered
nominee of the Custodian, (i) a partnership or other entity of a Foreign
Subcustodian which is used solely for the assets of its customers other
than the Custodian and the Foreign Subcustodian, if any, by which it was
appointed; or (ii) the nominee of a Foreign Depository which is used for
the securities and other assets of its customers, members or participants.
23. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of
1934, its successor or successors, and its nominee or nominees.
24. "Officers" shall mean the President, any Vice President, the
Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer, and any other person or persons, whether or not any
such other person is an officer or employee of the Fund, but in each case
only if duly authorized by the Board of Trustees of the Fund to execute
any Certificate, instruction, notice or other instrument on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix B or such
other Certificate as may be received by the Custodian from time to time;
provided that each person who is designated in any such Certificate as
holding the position of "Officer of OSS" shall be an Officer only for
purposes of Articles XII and XIII hereof.
25. "Option" shall mean a Call Option, Covered Call Option, Index
Option and/or a Put Option.
26. "Oral Instructions" shall mean verbal instructions actually
received (irrespective of constructive receipt) by the Custodian from an
Authorized Person or from a person reasonably believed by the Custodian
to be an Authorized Person.
27. "Put Option" shall mean an exchange traded Option with respect
to instruments, currency, or Securities other than Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon timely
exercise and tender of the specified underlying instruments, currency, or
Securities, to sell such instruments, currency, or Securities to the
writer thereof for the exercise price.
28. "Repurchase Agreement" shall mean an agreement pursuant to which
the Fund buys Securities and agrees to resell such Securities at a
described or specified date and price.
29. "Reverse Repurchase Agreement" shall mean an agreement pursuant
to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specified date and price.
30. "Rule 17f-5" shall mean Rule 17f-5 (Reg. 270.17f-5) promulgated
by the Securities and Exchange Commission under the Investment Company Act
of 1940, as amended.
31. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Index Options, Index Futures
Contracts, Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, over
the counter Options on Securities, common stocks and other securities
having characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or rights to any property or assets.
32. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as
a segregated account, by recordation or otherwise, within the custody
account in which certain Securities and/or other assets of the Fund
specifically allocated to such Series shall be deposited and withdrawn
from time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may from time
to time determine.
33. "Series" shall mean the various portfolios, if any, of the Fund
as described from time to time in the current and effective prospectus for
the Fund, except that if the Fund does not have more than one portfolio,
"Series" shall mean the Fund or be ignored where a requirement would be
imposed on the Fund or the Custodian which is unnecessary if there is only
one portfolio.
34. "Shares" shall mean the shares of beneficial interest of the
Fund and its Series.
35. "Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each use
of the Terminal Link the use of an authorization code provided by the
Custodian and at least two access codes established by the Fund, provided,
that the Fund shall have delivered to the Custodian a Certificate
substantially in the form of Appendix C.
36. "Transfer Agent" shall mean Oppenheimer Shareholder Services,
a division of Oppenheimer Management Corporation, its successors and as-
signs.
37. "Transfer Agent Account" shall mean any account in the name of
the Fund, or the Transfer Agent, as agent for the Fund, maintained with
United Missouri Bank or such other Bank designated by the Fund in a
Certificate.
38. "Written Instructions" shall mean written communications
actually received (irrespective of constructive receipt) by the Custodian
from an Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such system
whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the identity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned or held by the
Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except for monies received and maintained in the Transfer Agent
Account, or as otherwise provided in paragraph 7 of this Article or in
Article VIII or XV, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, at any time during
the period of this Agreement, and shall specify with respect to such
Securities and money the Series to which the same are specifically
allocated, and the Custodian shall not be responsible for any Securities
or money not so delivered. Except for assets held at DTC, the Custodian
shall physically segregate, keep and maintain the Securities of the Series
separate and apart from each other Series and from other assets held by
the Custodian. Except as otherwise expressly provided in this Agreement,
the Custodian will not be responsible for any Securities and moneys not
actually received by it, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The Custodian will
be entitled to reverse any credit of money made on the Fund's behalf where
such credits have been previously made and moneys are not finally col-
lected, unless the Custodian has been negligent or has engaged in willful
misconduct with respect thereto; provided that if such reversal is thirty
(30) days or more after the credit was issued, the Custodian will give
five (5) days' prior notice of such reversal. The Fund shall deliver to
the Custodian a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit
in the Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically allocated and
to utilize the Book-Entry System to the extent possible in connection with
its performance hereunder, including, without limitation, in connection
with settlements of purchases and sales of Securities, loans of Securities
and deliveries and returns of Securities collateral. Prior to a deposit
of Securities specifically allocated to a Series in any Depository, the
Fund shall deliver to the Custodian a certified resolution of the Board
of Trustees of the Fund, substantially in the form of Exhibit B hereto,
approving, authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate to deposit
in such Depository all Securities specifically allocated to such Series
eligible for deposit therein, and to utilize such Depository to the extent
possible with respect to such Securities in connection with its per-
formance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys
deposited in either the Book-Entry System or a Depository will be
represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custo-
dian acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate account
for the applicable Series. Prior to the Custodian's accepting, utilizing
and acting with respect to Clearing Member confirmations for Options and
transactions in Options for a Series as provided in this Agreement, the
Custodian shall have received a certified resolution of the Fund's Board
of Trustees, substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and on-going
basis, until instructed to the contrary by a Certificate to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement with respect to such Series. All Securities are to be held or
disposed of by the Custodian for, and subject at all times to the
instructions of, the Fund pursuant to the terms of this Agreement. The
Custodian shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any Securities except as provided by the terms of
this Agreement, and shall have the sole power to release and deliver
Securities held pursuant to this Agreement.
2. The Custodian shall establish and maintain separate accounts,
in the name of each Series, and shall credit to the separate account for
each Series all moneys received by it for the account of the Fund with
respect to such Series. Money credited to a separate account for a Series
shall be subject only to drafts, orders, or charges of the Custodian
pursuant to this Agreement and shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates or Resolutions of the Fund's
Board of Trustees certified by an Officer and by the Secretary or
Assistant Secretary of the Fund setting forth the name and address of the
person to whom the payment is to be made, the Series account from which
payment is to be made, the purpose for which payment is to be made, and
declaring such purpose to be a proper corporate purpose; provided,
however, that amounts representing dividends, distributions, or
redemptions proceeds with respect to Shares shall be paid only to the
Transfer Agent Account;
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series and
authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest, taxes,
management fees or operating expenses (including, without limitation
thereto, Board of Trustees' fees and expenses, and fees for legal
accounting and auditing services), which Certificates set forth the name
and address of the person to whom payment is to be made, state the purpose
of such payment and designate the Series for whose account the payment is
to be made.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series
basis, of all transfers to or from the account of the Fund for a Series,
either hereunder or with any co-custodian or subcustodian appointed in
accordance with this Agreement during said day. Where Securities are
transferred to the account of the Fund for a Series but held in a
Depository, the Custodian shall upon such transfer also by book-entry or
otherwise identify such Securities as belonging to such Series in a
fungible bulk of Securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the Book-
Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on a per
Series basis, of the Securities and moneys held under this Agreement for
the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held hereunder may be registered in the name of the Fund,
in the name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of the Book-
Entry System or a Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or a Depository any
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in a Depository in a separate account in the name of
such Series physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or a Depository with
respect to Securities held hereunder and therein deposited, shall with
respect to all Securities held for the Fund hereunder in accordance with
preceding paragraph 4:
(a) Promptly collect all income, dividends and dis-
tributions due or payable;
(b) Promptly give notice to the Fund and promptly present
for payment and collect the amount of money or other consideration payable
upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice of such
call appears in one or more of the publications listed in Appendix D
annexed hereto, which may be amended at any time by the Custodian without
the prior consent of the Fund, provided the Custodian gives prior notice
of such amendment to the Fund;
(c) Promptly present for payment and collect for the
Fund's account the amount payable upon all Securities which mature;
(d) Promptly surrender Securities in temporary form in
exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary de-
clarations or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or hereafter
in effect;
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account
of a Series, all rights and similar securities issued with respect to any
Securities held by the Custodian for such Series hereunder; and
(g) Promptly deliver to the Fund all notices, proxies,
proxy soliciting materials, consents and other written information
(including, without limitation, notices of tender offers and exchange
offers, pendency of calls, maturities of Securities and expiration of
rights) relating to Securities held pursuant to this Agreement which are
actually received by the Custodian, such proxies and other similar
materials to be executed by the registered holder (if Securities are
registered otherwise than in the name of the Fund), but without indicating
the manner in which proxies or consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository,
shall:
(a) Promptly execute and deliver to such persons as may
be designated in such Certificate proxies, consents, authorizations, and
any other instruments whereby the authority of the Fund as owner of any
Securities held hereunder for the Series specified in such Certificate may
be exercised;
(b) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation,
or the exercise of any right, warrant or conversion privilege and receive
and hold hereunder specifically allocated to such Series any cash or other
Securities received in exchange;
(c) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold hereunder
specifically allocated to such Series in exchange therefor such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery or such
Securities as may be issued upon such delivery; and
(d) Promptly present for payment and collect the amount
payable upon Securities which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have
received a Certificate from the Fund stating, that any such instruments
or certificates are available. The Fund shall deliver to the Custodian
such a Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to such
availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940 in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer, or
futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures
Contracts, Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise in the name the
Custodian (or any nominee of the Custodian) as custodian for the Fund;
provided, however, that notwithstanding the foregoing, payments to or
deliveries from the Margin Account and payments with respect to Securities
to which a Margin Account relates, shall be made in accordance with the
terms and conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option, or Futures Contract Option for
which such instruments or such certificates are available only against the
delivery to the Custodian of such instrument or such certificate, and
deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt
by the Custodian of payment therefor. Any such instrument or certificate
delivered to the Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS,
FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS AND SHORT SALES
1. Promptly after each execution of a purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract, a Futures
Contract Option, a Repurchase Agreement, a Reverse Repurchase Agreement
or a Short Sale, the Fund shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money Market
Securities, a Certificate, oral Instructions or Written Instructions,
specifying with respect to each such purchase: (a) the Series to which
such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from whom
or the broker through whom the purchase was made, and the name of the
clearing broker, if any; and (h) the name of the broker or other party to
whom payment is to be made. Custodian shall, upon receipt of such
Securities purchased by or for the Fund, pay to the broker specified in
the Certificate out of the moneys held for the account of such Series the
total amount payable upon such purchase, provided that the same conforms
to the total amount payable as set forth in such Certificate, oral
Instructions or Written Instructions.
2. Promptly after each execution of a sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures Contract
Option, Repurchase Agreement, Reverse Repurchase Agreement or Short Sale,
the Fund shall deliver such to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate, and
(ii) with respect to each sale of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each
such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c)
the number of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale and settlement; (e) the sale price per unit; (f)
the total amount payable to the Fund upon such sale; (g) the name of the
broker through whom or the person to whom the sale was made, and the name
of the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. On the settlement date, the Custodian
shall deliver the Securities specifically allocated to such Series to the
broker in accordance with generally accepted street practices and as
specified in the Certificate upon receipt of the total amount payable to
the Fund upon such sale, provided that the same conforms to the total
amount payable as set forth in such Certificate, oral Instructions or
Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any Option by the
Fund other than a closing purchase transaction, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each Option
purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or the name of
the in the case of an Index Option, the index to which such Option relates
and the number of Index Options purchased; (d) the expiration date; (e)
the exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase; and (h)
the name of the Clearing Member through whom such Option was purchased.
The Custodian shall pay, upon receipt of a Clearing Member's written
statement confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed and
registered nominee of the Custodian) as Custodian for the Fund, out of
moneys held for the account of the Series to which such Option is to be
specifically allocated, the total amount payable upon such purchase to the
Clearing Member through whom the purchase was made, provided that the same
conforms to the amount payable as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option purchased
by the Fund, other than a closing sale transaction, pursuant to paragraph
1 hereof, the Fund shall deliver to the Custodian a Certificate specifying
with respect to each such sale: (a) the Series to which such Option was
specifically allocated; (b) the type of Option (put or call); (c) the
instrument, currency, or Security underlying such Option and the number
of Options, or the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Index Option, the index to
which such Option relates and the number of Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the
total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding paragraph of
this Article with respect to such Option upon receipt by the Custodian of
the total amount payable to the Fund, provided that the same conforms to
the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Call Option: (a) the Series to which such Call Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Call Option was exercised. The Custo-
dian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the
Series to which such Call Option was specifically allocated the total
amount payable to the Clearing Member through whom the Call Option was ex-
ercised, provided that the same conforms to the total amount payable as
set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Put Option was exercised. The Custodian
shall, upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct a Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Index Option: (a) the Series to which such Index Option was specifically
allocated; (b) the type of Index Option (put or call) (c) the number of
Options being exercised; (d) the index to which such Option relates; (e)
the expiration date; (f) the exercise price; (g) the total amount to be
received by the Fund in connection with such exercise; and (h) the
Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Covered Call Option: (a) the Series for which such Covered Call
Option was written; (b) the name of the issuer and the title and number
of shares for which the Covered Call Option was written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through whom the premium
is to be received. The Custodian shall deliver or cause to be delivered,
upon receipt of the premium specified in the Certificate with respect to
such Covered Call Option, such receipts as are required in accordance with
the customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct a Depository to impose, upon the
underlying Securities specified in the Certificate specifically allocated
to such Series such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior
written notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate instructing the Custodian
to deliver, or to direct the Depository to deliver, the Securities subject
to such Covered Call Option and specifying: (a) the Series for which such
Covered Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the Clearing
Member to whom the underlying Securities are to be delivered; and (d) the
total amount payable to the Fund upon such delivery. Upon the return
and/or cancellation of any receipts delivered pursuant to paragraph 6 of
this Article, the Custodian shall deliver, or direct a Depository to
deliver, the underlying Securities as specified in the Certificate upon
payment of the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the
name of the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f)
the date such Put Option is written; (g) the name of the Clearing Member
through whom the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash, and/or the
amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security Account for such Series; and
(i) the amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the deposits
into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the Clearing Member
specified in the Certificate upon receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall be under
no obligation to issue any Put Option guarantee letter or similar document
if it is unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put
Option was written; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount payable by
the Fund upon such delivery; (e) the amount of cash and/or the amount and
kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash
and/or the amount and kind of Securities, specifically allocated to such
series, if any, to be withdrawn from the Senior Security Account. Upon
the return and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held for the account of
the series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set
forth in such Certificate, upon delivery of such Securities, and shall
make the withdrawals specified in such Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) whether such Index Option is a put or a call; (c) the number
of Options written; (d) the index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received by the Fund;
(i) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; (j) the amount of cash and/or the amount
and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount
of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and the name
in which such account is to be or has been established. The Custodian
shall, upon receipt of the premium specified in the Certificate, make the
deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the
Custodian has specifically agreed to issue, which are in accordance with
the customs prevailing among Clearing Members in Index Options and make
the deposits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Certi-
ficate.
11. Whenever an Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) such information as may be necessary to identify the Index
Option being exercised; (c) the Clearing Member through whom such Index
Option is being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be with-
drawn from the Margin Account; and (f) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Collateral Account for
such Series. Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series
to which such Stock Index Option was specifically allocated to the Clear-
ing Member specified in the Certificate the total amount payable, if any,
as specified therein.
12. Promptly after the execution of a purchase or sale by the Fund
of any Option identical to a previously written Option described in
paragraphs, 6, 8 or 10 of this Article in a transaction expressly
designated as a "Closing Purchase Transaction" or a "Closing Sale
Transaction", the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Option being purchased: (a)
that the transaction is a Closing Purchase Transaction or a Closing Sale
Transaction; (b) the Series for which the Option was written; (c) the
instrument, currency, or Security subject to the Option, or, in the case
of an Index Option, the index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid by or
the amount to be paid to the Fund; (f) the expiration date; (g) the type
of Option (put or call); (h) the date of such purchase or sale; (i) the
name of the Clearing Member to whom the premium is to be paid or from whom
the amount is to be received; and (j) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security Account for
such Series. Upon the Custodian's payment of the premium or receipt of
the amount, as the case may be, specified in the Certificate and the
return and/or cancellation of any receipt issued pursuant to paragraphs
6, 8 or 10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction or the Closing Sale Transaction,
the Custodian shall remove, or direct a Depository to remove, the pre-
viously imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to any Option purchased or written by
the Fund and described in this Article, the Custodian shall delete such
Option from the statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation of any
receipts issued by the Custodian, shall make such withdrawals from the
Collateral Account, and the Margin Account and/or the Senior Security
Account as may be specified in a Certificate received in connection with
such expiration, exercise, or consummation.
14. Securities acquired by the Fund through the exercise of an
Option described in this Article shall be subject to Article IV hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
such Futures Contract, (or with respect to any number of identical Futures
Contract (s)): (a) the Series for which the Futures Contract is being
entered; (b) the category of Futures Contract (the name of the underlying
index or financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were) entered into
and the maturity date; (f) whether the Fund is buying (going long) or
selling (going short) such Futures Contract(s); (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the broker,
dealer, or futures commission merchant through whom the Futures Contract
was entered into; and (i) the amount of fee or commission, if any, to be
paid and the name of the broker, dealer, or futures commission merchant
to whom such amount is to be paid. The Custodian shall make the deposits,
if any, to the Margin Account in accordance with the terms and conditions
of the Margin Account Agreement. The Custodian shall make payment out of
the moneys specifically allocated to such Series of the fee or commission,
if any, specified in the Certificate and deposit in the Senior Security
Account for such Series the amount of cash and/or the amount and kind of
Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures commission
merchant with respect to an outstanding Futures Contract shall be made by
the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer, or futures commission merchant to the Fund with respect
to an outstanding Futures Contract shall be received and dealt with by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian prior to the delivery
or settlement date a Certificate specifying: (a) the Futures Contract and
the Series to which the same relates; (b) with respect to an Index Futures
Contract, the total cash settlement amount to be paid or received, and
with respect to a Financial Futures Contract, the Securities and/or amount
of cash to be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn
from the Senior Security Account for such Series. The Custodian shall
make the payment or delivery specified in the Certificate, and delete such
Futures Contract from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset
a Futures Contract held by the Custodian hereunder, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the items of information
required in a Certificate described in paragraph 1 of this Article, and
(b) the Futures Contract being offset. The Custodian shall make payment
out of the money specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund pursuant
to paragraph 3 of Article III herein, and make such withdrawals from the
Senior Security Account for such Series as may be specified in the Cer-
tificate. The withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a)
the Series to which such Option is specifically allocated; (b) the type
of Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the amount of premium to be paid by the Fund upon such
purchase; (h) the name of the broker or futures commission merchant
through whom such Option was purchased; and (i) the name of the broker,
or futures commission merchant, to whom payment is to be made. The Cus-
todian shall pay out of the moneys specifically allocated to such Series
the total amount to be paid upon such purchase to the broker or futures
commissions merchant through whom the purchase was made, provided that the
same conforms to the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or
call); (c) the type of Futures Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f) the date
of settlement; (g) the total amount payable to the Fund upon such sale;
and (h) the name of the broker of futures commission merchant through whom
the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of
the total amount payable to the Fund, provided the same conforms to the
total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to
which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the
type of Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures commission
merchant through whom the Futures Contract Option is exercised; (f) the
net total amount, if any, payable by the Fund; (g) the amount, if any, to
be received by the Fund; and (h) the amount of cash and/or the amount and
kind of Securities to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and Securities
specifically allocated to such Series, the payments of money, if any, and
the deposits of Securities, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to such Futures Contract Option: (a) the Series for which such
Futures Contract Option was written; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund; (g) the name
of the broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon receipt of the premium specified
in the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Account,
if any, as specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is
a call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract
Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
of cash and/or the amount and kind of Securities to be deposited in the
Senior Security Account for such Series. The Custodian shall, upon its
receipt of the net total amount payable to the Fund, if any, specified in
such Certificate make the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The de-
posits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund
and which is a put is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Option
was specifically allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
and kind of Securities and/or cash to be withdrawn from or deposited in,
the Senior Security Account for such Series, if any. The Custodian shall,
upon its receipt of the net total amount payable to the Fund, if any,
specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account,
if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
7. Promptly after the execution by the Fund of a purchase of any
Futures Contract Option identical to a previously written Futures Contract
Option described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall deliver to the
Custodian a Certificate specifying with respect to the Futures Contract
Option being purchased: (a) the Series to which such Option is
specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or futures commission
merchant to whom the premium is to be paid; and (h) the amount of cash
and/or the amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate.
The withdrawals, if any, to be made from the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian shall
(a) delete such Futures Contract Option from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein and (b) make such
withdrawals from and/or in the case of an exercise such deposits into the
Senior Security Account as may be specified in a Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of
a Futures Contract Option described in this Article shall be subject to
Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of Securities
by any Series of the Fund, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was
made; (b) the name of the issuer-and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of the sale and settlement; (e) the sale
price per unit; (f) the total amount credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited
in a Senior Security Account, and (i) the name of the broker through whom
such short sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the total amount
credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or
any nominee of the Custodian) as custodian of the Fund, issue a receipt
or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. Promptly after the execution of a purchase to close-out any
short sale of Securities, the Fund shall promptly deliver to the Custodian
a Certificate specifying with respect to each such closing out: (a) the
Series for which such transaction is being made; (b) the name of the
issuer and the title of the Security; (c) the number of shares or the
principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net
total amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount of cash
and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account; and
(j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Fund upon such closing-out, and the return and/or
cancellation of the receipts, if any, issued by the Custodian with respect
to the short sale being closed-out, pay out of the moneys held for the
account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Repurchase Agreement or a
Reverse Repurchase Agreement with respect to Securities and money held by
the Custodian hereunder, the Fund shall deliver to the Custodian a Certi-
ficate, or in the event such Repurchase Agreement or Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions,
or Written Instructions specifying: (a) the Series for which the
Repurchase Agreement or Reverse Repurchase Agreement is entered; (b) the
total amount payable to or by the Fund in connection with such Repurchase
Agreement or Reverse Repurchase Agreement and specifically allocated to
such Series; (c) the broker, dealer, or financial institution with whom
the Repurchase Agreement or Reverse Repurchase Agreement is entered; (d)
the amount and kind of Securities to be delivered or received by the Fund
to or from such broker, dealer, or financial institution; (e) the date of
such Repurchase Agreement or Reverse Repurchase Agreement; and (f) the
amount of cash and/or the amount and kind of Securities, if any, specifi-
cally allocated to such Series to be deposited in a Senior Security Ac-
count for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable
to or by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions make or accept the delivery to or from the broker,
dealer, or financial institution and the deposits, if any, to the Senior
Security Account, specified in such Certificate, Oral Instructions, or
Written Instructions.
2. Upon the termination of a Repurchase Agreement or a Reverse
Repurchase Agreement described in preceding paragraph 1 of this Article,
the Fund shall promptly deliver a Certificate or, in the event such
Repurchase Agreement or Reverse Repurchase Agreement is a Money Market
Security, a Certificate, Oral Instructions, or Written Instructions to the
Custodian specifying: (a) the Repurchase Agreement or Reverse Repurchase
Agreement being terminated and the Series for which same was entered; (b)
the total amount payable to or by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received or
delivered by the Fund and specifically allocated to such Series in
connection with such termination; (d) the date of termination; (e) the
name of the broker, dealer, or financial institution with whom the Repur-
chase Agreement or Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Senior Securities Account for such Series. The
Custodian shall, upon receipt or delivery of the amount and kind of
Securities or cash to be received or delivered by the Fund specified in
the Certificate, Oral Instructions, or Written Instructions, make or
receive the payment to or from the broker, dealer, or financial
institution and make the withdrawals, if any, from the Senior Security
Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
3. The Certificates, Oral Instructions, or Written Instructions
described in paragraphs 1 and 2 of this Article may with respect to any
particular Repurchase Agreement or Reverse Repurchase Agreement be
combined and delivered to the Custodian at the time of entering into such
Repurchase Agreement or Reverse Repurchase Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall
deliver or cause to be delivered to the Custodian a Certificate specifying
with respect to each such loan: (a) the Series to which the loaned
Securities are specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the principal amount
loaned, (d) the date of loan and delivery, (e) the total amount to be
delivered to the Custodian against the loan of the Securities, including
the amount of cash collateral and the premium, if any, separately iden-
tified, and (f) the name of the broker, dealer, or financial institution
to which the loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated in the
Certificate as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or a Depository only in the form of a
certified or bank cashier's check payable to the order of the Fund or the
Custodian drawn on New York Clearing House funds.
2. In connection with each termination of a loan of Securities by
the Fund, the Fund shall deliver or cause to be delivered to the Custodian
a Certificate specifying with respect to each such loan termination and
return of Securities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities to be returned, (c) the number of shares or the principal
amount to be returned, (d) the date of termination, (e) the total amount
to be delivered by the Custodian (including the cash collateral for such
Securities minus any offsetting credits as described in said Certificate),
and (f) the name of the broker, dealer, or financial institution from
which the Securities will be returned. The Custodian shall receive all
Securities returned from the broker, dealer, or financial institution to
which such Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account and from
time to time make such deposits thereto, or withdrawals therefrom, as
specified in a Certificate. Such Certificate shall specify the Series for
which such deposit or withdrawal is to be made and the amount of cash
and/or the amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior Security Account
for such Series. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities to be
deposited by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall promptly notify the Fund that no such
deposit has been made.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing
Member in whose name, or for whose benefit, the account was established
as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt
with in accordance with the terms and conditions of the Margin Account
Agreement.
4. The Custodian shall to the extent permitted by the Fund's
Declaration of Trust, investment restrictions and the Investment Company
Act of 1940 have a continuing lien and security interest in and to any
property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by the Custodian;
provided, however, that the Custodian shall not be required to issue any
Put Option guarantee letter unless it shall have received an opinion of
counsel to the Fund or its investment adviser that the issuance of such
letters is authorized by the Fund and that the Custodian's continuing lien
and security interest is valid, enforceable and not limited by the
Declaration of Trust, any investment restrictions or the Investment
Company Act of 1940. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's obligations
under any Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund within the
scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with
a statement with respect to each Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind
of Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker, dealer, or
futures commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such Margin
Account.
6. The Custodian shall establish a Collateral Account and from time
to time shall make such deposits thereto as may be specified in a
Certificate. Promptly after the close of business on each business day
in which cash and/or Securities are maintained in a Collateral Account for
any Series, the Custodian shall furnish the Fund with a statement with
respect to such Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No later than the close
of business next succeeding the delivery to the Fund of such statement,
the Fund shall furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the Securities described
in such statement. In the event such then market value is indicated to
be less than the Custodian's obligation with respect to any outstanding
Put Option guarantee letter or similar document, the Fund shall promptly
specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution
of the Board of Trustees of the Fund, certified by the Secretary or any
Assistant Secretary, either (i) setting forth with respect to the Series
specified therein the date of the declaration of a dividend or distribu-
tion, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and
the total amount payable to the Transfer Agent Account and any sub-
dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein and the
declaration of dividends and distributions thereon the Custodian to rely
on Oral Instructions, Written Instructions, or a Certificate setting forth
the date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share of such Series
to the shareholders of record as of that date and the total amount payable
to the Transfer Agent Account on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions, or Certificate, as the case may be,
the Custodian shall pay to the Transfer Agent Account out of the moneys
held for the account of the Series specified therein the total amount
payable to the Transfer Agent Account and with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or
cause to be delivered, to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian
for the sale of such Shares and specifically allocated to the separate
account in the name of such Series.
2. Upon receipt of such money from the Fund's General Distributor,
the Custodian shall credit such money to the separate account in the name
of the Series for which such money was received.
3. Upon issuance of any Shares of any Series the Custodian shall
pay, out of the money held for the account of such Series, all original
issue or other taxes required to be paid by the Fund in connection with
such issuance upon the receipt of a Certificate specifying the amount to
be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder
in connection with a redemption of any Shares, it shall furnish, or cause
to be furnished, to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person setting
forth the Series and number of Shares received by the Transfer Agent for
redemption and that such Shares are in good form for redemption, the
Custodian shall make payment to the Transfer Agent Account out of the
moneys held in the separate account in the name of the Series the total
amount specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held
by the Custodian in the separate account for such Series shall be insuffi-
cient to pay the total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a Certificate, Oral
Instructions, or Written Instructions or which results in an overdraft in
the separate account of such Series for some other reason, or if the Fund
is for any other reason indebted to the Custodian with respect to a Ser-
ies, (except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement
and subject to the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day
year for the actual number of days involved) equal to the Federal Funds
Rate plus 1/2%, such rate to be adjusted on the effective date of any change
in such Federal Funds Rate but in no event to be less than 6% per annum.
In addition, unless the Fund has given a Certificate that the Custodian
shall not impose a lien and security interest to secure such overdrafts
(in which event it shall not do so), the Custodian shall have a continuing
lien and security interest in the aggregate amount of such overdrafts and
indebtedness as may from time to time exist in and to any property
specifically allocated to such Series at any time held by it for the
benefit of such Series or in which the Fund may have an interest which is
then in the Custodian's possession or control or in possession or control
of any third party acting in the Custodian's behalf. The Fund authorizes
the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any
money balance in an account standing in the name of such Series' credit
on the Custodian's books. In addition, the Fund hereby covenants that on
each Business Day on which either it intends to enter a Reverse Repurchase
Agreement and/or otherwise borrow from a third party, or which next
succeeds a Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a borrowing, it shall
prior to 9 a.m., New York City time, advise the Custodian, in writing, of
each such borrowing, shall specify the Series to which the same relates,
and shall not incur any indebtedness, including pursuant to any Reverse
Repurchase Agreement, not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities held by the Custodian hereunder as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the
Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Fund, or
other loan agreement, (d) the time and date, if known, on which the loan
is to be entered into, (e) the date on which the loan becomes due and
payable, (f) the total amount payable to the Fund on the borrowing date,
(g) the market value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number of shares
or the principal amount of any particular Securities, and (h) a statement
specifying whether such loan is for investment purposes or for temporary
or emergency purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus and Statement of
Additional Information. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank of the total
amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its possession, but
such collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified
in a Certificate to collateralize further any transaction described in
this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the
Custodian shall receive from time to time such return of collateral as may
be tendered to it. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, to any such bank, the Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE XV
CUSTODY OF ASSETS OUTSIDE THE U.S.
1. The Custodian is authorized and instructed to employ, as its
agent, as subcustodians for the securities and other assets of the Fund
maintained outside of the United States the Foreign Subcustodians and For-
eign Depositories designated on Schedule A hereto. Except as provided in
Schedule A, the Custodian shall employ no other Foreign Custodian or
Foreign Depository. The Custodian and the Fund may amend Schedule A
hereto from time to time to agree to designate any additional Foreign
Subcustodian or Foreign Depository with which the Custodian has an
agreement for such entity to act as the Custodian's agent, as subcus-
todian, and which the Custodian in its absolute discretion proposes to
utilize to hold any of the Fund's Foreign Property. Upon receipt of a
Certificate or Written Instructions from the Fund, the Custodian shall
cease the employment of any one or more of such subcustodians for
maintaining custody of the Fund's assets and such custodian shall be
deemed deleted from Schedule A.
2. The Custodian shall limit the securities and other assets
maintained in the custody of the Foreign Subcustodians to: (a) "foreign
securities," as defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Fund may determine to be reasonably necessary to effect the
foreign securities transactions of the Fund.
3. The Custodian shall identify on its books as belonging to the
Fund, the Foreign Securities held by each Foreign Subcustodian.
4. Each agreement pursuant to which the Custodian employs a Foreign
Subcustodian shall be substantially in the form reviewed and approved by
the Fund and will not be amended in a way that materially affects the Fund
without the Fund's prior written consent and shall:
(a) require that such institution establish custody account(s)
for the Custodian on behalf of the Fund and physically segregate in each
such account securities and other assets of the fund, and, in the event
that such institution deposits the securities of the Fund in a Foreign
Depository, that it shall identify on its books as belonging to the Fund
or the Custodian, as agent for the Fund, the securities so deposited;
(b) provide that:
(1) the assets of the Fund will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of
the Foreign Subcustodian or its creditors, except a claim of payment for
their safe custody or administration;
(2) beneficial ownership for the assets of the Fund will
be freely transferable without the payment of money or value other than
for custody or administration;
(3) adequate records will be maintained identifying the
assets as belonging to the Fund;
(4) the independent public accountants for the Fund will
be given access to the books and records of the Foreign Subcustodian
relating to its actions under its agreement with the Custodian or
confirmation of the contents of those records;
(5) the Fund will receive periodic reports with respect
to the safekeeping of the Fund's assets, including, but not necessarily
limited to, notification of any transfer to or from the custody
account(s); and
(6) assets of the Fund held by the Foreign Subcustodian
will be subject only to the instructions of the Custodian or its agents.
(c) Require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian from and against any loss, damage, cost, expense, liability or
claim arising out of or in connection with the institution's performance
of such obligations, with the exception of any such losses, damages,
costs, expenses, liabilities or claims arising as a result of an act of
God. At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
Foreign Subcustodian as a consequence of any such loss, damage, cost,
expense, liability or claim of or to the Fund, if and to the extent that
the Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
5. Upon receipt of a Certificate or Written Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall on behalf of the Fund make or cause its Foreign
Subcustodian to transfer, exchange or deliver securities owned by the
Fund, except to the extent explicitly prohibited therein. Upon receipt
of a Certificate or Written Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
on behalf of the fund pay out or cause its Foreign Subcustodians to pay
out monies of the Fund. The Custodian shall use all means reasonably
available to it, including, if specifically authorized by the Fund in a
Certificate, any necessary litigation at the cost and expense of the Fund
(except as to matters for which the Custodian is responsible hereunder)
to require or compel each Foreign Subcustodian or Foreign Depository to
perform the services required of it by the agreement between it and the
Custodian authorized pursuant to this Agreement.
6. The Custodian shall maintain all books and records as shall be
necessary to enable the Custodian readily to perform the services required
of it hereunder with respect to the Fund's Foreign Properties. The
Custodians shall supply to the Fund from time to time, as mutually agreed
upon, statements in respect of the Foreign Securities and other Foreign
Properties of the Fund held by Foreign Subcustodians, directly or through
Foreign Depositories, including but not limited to an identification of
entities having possession of the Fund's Foreign Securities and other
assets, an advice or other notification of any transfers of securities to
or from each custodial account maintained for the Fund or the Custodian
on behalf of the Fund indicating, as to securities acquired for the Fund,
the identity of the entity having physical possession of such securities.
The Custodian shall promptly and faithfully transmit all reports and
information received pertaining to the Foreign Property of the Fund,
including, without limitation, notices or reports of corporate action,
proxies and proxy soliciting materials.
7. Upon request of the Fund, the Custodian shall use reasonable
efforts to arrange for the independent accountants of the Fund to be
afforded access to the books and records of any Foreign Subcustodian, or
confirmation of the contents thereof, insofar as such books and records
relate to the Foreign Property of the Fund or the performance of such
Foreign Subcustodian under its agreement with the Custodian; provided that
any litigation to afford such access shall be at the sole cost and expense
of the Fund.
8. The Custodian recognizes that employment of a Foreign Sub-
custodian or Foreign Depository for the Fund's Foreign Securities and
Foreign Property is permitted by Section 17(f) of the Investment Company
Act of 1940 only upon compliance with Section (a) of Rule 17f-5
promulgated thereunder. With respect to the Foreign Subcustodians and
Foreign Depositories identified on Schedule A, the Custodian represents
that it has furnished the Fund with certain materials prepared by the
Custodian and with such other information in the possession of the Cus-
todian as the Fund advised the Custodian was reasonably necessary to
assist the Board of Trustees of the Fund in making the determinations
required of the Board of Trustees by Rule 17f-5, including, without
limitation, consideration of the matters set forth in the Notes to Rule
17f-5. If the Custodian recommends any additional Foreign Subcustodian
or Foreign Depository, the Custodian shall supply information similar in
kind and scope to that furnished pursuant to the preceding sentence. Fur-
ther, the Custodian shall furnish annually to the Fund, at such time as
the Fund and Custodian shall mutually agree, information concerning each
Foreign Subcustodian and Foreign Depository then identified on Schedule
A similar in kind and scope to that furnished pursuant to the preceding
two sentences.
9. The Custodian's employment of any Foreign Subcustodian or
Foreign Depository shall constitute a representation that the Custodian
believes in good faith that such Foreign Subcustodian or Foreign
Depository provides a level of safeguards for maintaining the Fund's
assets not materially different from that provided by the Custodian in
maintaining the Fund's securities in the United States. In addition, the
Custodian shall monitor the financial condition and general operational
performance of the Foreign Subcustodians and Foreign Depositories and
shall promptly inform the Fund in the event that the Custodian has actual
knowledge of a material adverse change in the financial condition thereof
or that there appears to be a substantial likelihood that the share-
holders' equity of any Foreign Subcustodian will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million , or that the Foreign Subcustodian
or Foreign Depository has breached the agreement between it and the
Custodian in a way that the Custodian believes adversely affects the Fund.
Further, the Custodian shall advise the Fund if it believes that there is
a material adverse change in the operating environment of any Foreign
Subcustodian or Foreign Depository.
ARTICLE XVI
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the performance of
its duties hereunder, and, except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except
for any such loss or damage arising out of its own negligence, bad faith,
or willful misconduct or that of the subcustodians or co-custodians
appointed by the Custodian or of the officers, employees, or agents of any
of them. The Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and obtain the
advice and opinion of counsel to the Fund, at the expense of the Fund, or
of its own counsel, at its own expense, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any
loss or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, bad faith or willful mis-
conduct on the part of the Custodian or any of its employees or agents.
2. Notwithstanding the foregoing, the Custodian shall be under no
obligation to inquire into, and shall not be liable for:
(a) The validity (but not the authenticity) of the issue of any
Securities purchased, sold, or written by or for the Fund, the legality
of the purchase, sale or writing thereof, or the propriety of the amount
paid or received therefor, as specified in a Certificate, Oral
Instructions, or Written Instructions;
(b) The legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor, as specified
in a Certificate;
(c) The legality of the declaration or payment of any dividend
by the Fund, as specified in a resolution, Certificate, Oral Instructions,
or Written Instructions;
(d) The legality of any borrowing by the Fund using Securities
as collateral;
(e) The legality of any loan of portfolio Securities, nor shall
the Custodian be under any duty or obligation to see to it that the cash
collateral delivered to it by a broker, dealer, or financial institution
or held by it at any time as a result of such loan of portfolio Securities
of the Fund is adequate collateral for the Fund against any loss it might
sustain as a result of such loan, except that this subparagraph shall not
excuse any liability the Custodian may have for failing to act in accor-
dance with Article X hereof or any Certificate, Oral Instructions or
Written Instructions given in accordance with this Agreement. The Custo-
dian specifically, but not by way of limitation, shall not be under any
duty or obligation periodically to check or notify the Fund that the
amount of such cash collateral held by it for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution
to which portfolio Securities of the Fund are lent pursuant to Article X
of this Agreement makes payment to it of any dividends or interest which
are payable to or for the account of the Fund during the period of such
loan or at the termination of such loan, provided, however, that the
Custodian shall promptly notify the Fund in the event that such dividends
or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or
Collateral Account in connection with transactions by the Fund, except
that this subparagraph shall not excuse any liability the Custodian may
have for failing to establish, maintain, make deposits to or withdrawals
from such accounts in accordance with this Agreement. In addition, the
Custodian shall be under no duty or obligation to see that any broker,
dealer, futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment which the Fund
may be entitled to receive from such broker, dealer, futures commission
merchant or Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, futures commission merchant or Clearing
Member is the amount the Fund is entitled to receive, or to notify the
Fund of the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft,
or other instrument for the payment of money, received by it on behalf of
the Fund until the Custodian actually receives such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. With respect to Securities held in a Depository, except as
otherwise provided in paragraph 5(b) of Article III hereof, the Custodian
shall have no responsibility and shall not be liable for ascertaining or
acting upon any calls, conversions, exchange offers, tenders, interest
rate changes or similar matters relating to such Securities, unless the
Custodian shall have actually received timely notice from the Depository
in which such Securities are held. In no event shall the Custodian have
any responsibility or liability for the failure of a Depository to
collect, or for the late collection or late crediting by a Depository of
any amount payable upon Securities deposited in a Depository which may
mature or be redeemed, retired, called or otherwise become payable. How-
ever, upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in a Depository the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian shall not
be under any obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by a Depository which in
its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be furnished as often
as may be required, or alternatively, the Fund shall be subrogated to the
rights of the Custodian with respect to such claim against the Depository
should it so request in a Certificate. This paragraph shall not, however,
excuse any failure by the Custodian to act in accordance with a
Certificate, Oral Instructions, or Written Instructions given in
accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution
by the Transfer Agent of the Fund of any amount paid by the Custodian to
the Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which
such amount is payable are in default, or if payment is refused after the
Custodian has timely and properly, in accordance with this Agreement, made
due demand or presentation, unless and until (i) it shall be directed to
take such action by a Certificate and (ii) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in connection with
any such action, but the Custodian shall have such a duty if the Secu-
rities were not in default on the payable date and the Custodian failed
to timely and properly make such demand for payment and such failure is
the reason for the non-receipt of payment.
7. The Custodian may, with the prior approval of the Board of
Trustees of the Fund, appoint one or more banking institutions as
subcustodian or subcustodians, or as co-Custodian or co-Custodians, of
Securities and moneys at any time owned by the Fund, upon such terms and
conditions as may be approved in a Certificate or contained in an
agreement executed by the Custodian, the Fund and the appointed
institution; provided, however, that appointment of any foreign banking
institution or depository shall be subject to the provisions of Article
XV hereof.
8. The Custodian agrees to indemnify the Fund against and save the
Fund harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of the
negligence, bad faith or willful misconduct of any subcustodian of the
Securities and moneys owned by the Fund.
9. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it,
for the account of the Fund and specifically allocated to a Series are
such as properly may be held by the Fund or such Series under the
provisions of its then current prospectus, or (b) to ascertain whether any
transactions by the Fund, whether or not involving the Custodian, are such
transactions as may properly be engaged in by the Fund.
10. The Custodian shall be entitled to receive and the Fund agrees
to pay to the Custodian all reasonable out-of-pocket expenses and such
compensation as may be agreed upon in writing from time to time between
the Custodian and the Fund. The Custodian may charge such compensation,
and any such expenses with respect to a Series incurred by the Custodian
in the performance of its duties under this Agreement against any money
specifically allocated to such Series. The Custodian shall also be
entitled to charge against any money held by it for the account of a
Series the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement under the
provisions of this Agreement attributable to, or arising out of, its
serving as Custodian for such Series. The expenses for which the
Custodian shall be entitled to reimbursement hereunder shall include, but
are not limited to, the expenses of subcustodians and foreign branches of
the Custodian incurred in settling outside of New York City transactions
involving the purchase and sale of Securities of the Fund. Notwithstanding
the foregoing or anything else contained in this Agreement to the
contrary, the Custodian shall, prior to effecting any charge for
compensation, expenses, or any overdraft or indebtedness or interest
thereon, submit an invoice therefor to the Fund.
11. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing, Oral Instructions, or Written
Instructions received by the Custodian and reasonably believed by the
Custodian to be genuine. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof
is received by the Custodian, whether by hand delivery, telecopier or
other similar device, or otherwise, by the close of business of the same
day that such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions thereby
authorized by the Fund. The Fund agrees that the Custodian shall incur
no liability to the Fund in acting upon Oral Instructions or Written
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from
an Authorized Person.
12. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed
by the Custodian to be given in accordance with the terms and conditions
of any Margin Account Agreement. Without limiting the generality of the
foregoing, the Custodian shall be under no duty to inquire into, and shall
not be liable for, the accuracy of any statements or representations
contained in any such instrument or other notice including, without limi-
tation, any specification of any amount to be paid to a broker, dealer,
futures commission merchant or Clearing Member. This paragraph shall not
excuse any failure by the Custodian to have acted in accordance with any
Margin Agreement it has executed or any Certificate, Oral Instructions,
or Written Instructions given in accordance with this Agreement.
13. The books and records pertaining to the Fund, as described in
Appendix E hereto, which are in the possession of the Custodian shall be
the property of the Fund. Such books and records shall be prepared and
maintained by the Custodian as required by the Investment Company Act of
1940, as amended, and other applicable Securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall
have access to such books and records during the Custodian's normal
business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by the Custodian to the Fund or
the Fund's authorized representative, and the Fund shall reimburse the
Custodian its expenses of providing such copies. Upon reasonable request
of the Fund, the Custodian shall provide in hard copy or on micro-film,
whichever the Custodian elects, any records included in any such delivery
which are maintained by the Custodian on a computer disc, or are similarly
maintained, and the Fund shall reimburse the Custodian for its expenses
of providing such hard copy or micro-film.
14. The Custodian shall provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the Book-
Entry system, each Depository or O.C.C., and with such reports on its own
systems of internal accounting control as the Fund may reasonably request
from time to time.
15. The Custodian shall furnish upon request annually to the Fund
a letter prepared by the Custodian's accountants with respect to the
Custodian's internal systems and controls in the form generally provided
by the Custodian to other investment companies for which the Custodian
acts as custodian.
16. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising out of, or
related to, the Custodian's performance of its obligations under this
Agreement, except for any such liability, claim, loss and demand arising
out of the negligence, bad faith, or willful misconduct of the Custodian,
any co-Custodian or subcustodian appointed by the Custodian, or that of
the officers, employees, or agents of any of them.
17. Subject to the foregoing provisions of this Agreement, the
Custodian shall deliver and receive Securities, and receipts with respect
to such Securities, and shall make and receive payments only in accordance
with the customs prevailing from time to time among brokers or dealers in
such Securities and, except as may otherwise be provided by this Agreement
or as may be in accordance with such customs, shall make payment for
Securities only against delivery thereof and deliveries of Securities only
against payment therefor.
18. The Custodian will comply with the procedures, guidelines or
restrictions ("Procedures") adopted by the Fund from time to time for par-
ticular types of investments or transactions, e.g., Repurchase Agreements
and Reverse Repurchase Agreements, provided that the Custodian has
received from the Fund a copy of such Procedures. If within ten days
after receipt of any such Procedures, the Custodian determines in good
faith that it is unreasonable for it to comply with any new procedures,
guidelines or restrictions set forth therein, it may within such ten day
period send notice to the Fund that it does not intend to comply with
those new procedures, guidelines or restrictions which it identifies with
particularity in such notice, in which event the Custodian shall not be
required to comply with such identified procedures, guidelines or
restrictions; provided, however, that, anything to the contrary set forth
herein or in any other agreement with the Fund, if the Custodian identi-
fies procedures, guidelines or restrictions with which it does not intend
to comply, the Fund shall be entitled to terminate this Agreement without
cost or penalty to the Fund upon thirty days' written notice.
19. Whenever the Custodian has the authority to deduct monies from
the account for a series without a Certificate, it shall notify the Fund
within one business day of such deduction and the reason for it. Whenever
the Custodian has the authority to sell Securities or any other property
of the Fund on behalf of any Series without a Certificate, the Custodian
will notify the Fund of its intention to do so and afford the Fund the
reasonable opportunity to select which Securities or other property it
wishes to sell on behalf of such Series. If the Fund does not promptly
sell sufficient Securities or Deposited Property on behalf of the Series,
then, after notice, the Custodian may proceed with the intended sale.
20. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth or referred to in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
ARTICLE XVII
TERMINATION
1. Except as provided in paragraph 3 of this Article, this
Agreement shall continue until terminated by either the Custodian giving
to the Fund, or the Fund giving to the Custodian, a notice in writing
specifying the date of such termination, which date shall be not less than
60 days after the date of the giving of such notice. In the event such
notice or a notice pursuant to paragraph 3 of this Article is given by the
Fund, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Fund, certified by an Officer and the Secretary or an
Assistant Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be
eligible to serve as a custodian for the Securities of a management
investment company under the Investment Company Act of 1940. In the event
such notice is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the
Board of Trustees of the Fund, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In the ab-
sence of such designation by the Fund, the Custodian may designate a
successor custodian which shall be a bank or trust company eligible to
serve as a custodian for Securities of a management investment company
under the Investment Company Act of 1940 and which is acceptable to the
Fund. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of acceptance
by the successor custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and held by it
as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon
the date specified in the notice of termination of this Agreement and upon
the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement arising thereafter, other than the duty with
respect to Securities held in the Book Entry System which cannot be deliv-
ered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
3. Notwithstanding the foregoing, the Fund may terminate this
Agreement upon the date specified in a written notice in the event of the
"Bankruptcy" of The Bank of New York. As used in this sub-paragraph, the
term "Bankruptcy" shall mean The Bank of New York's making a general
assignment, arrangement or composition with or for the benefit of its
creditors, or instituting or having instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or the entry of a order for
relief under any applicable bankruptcy law or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors
rights, or if a petition is presented for the winding up or liquidation
of the party or a resolution is passed for its winding up or liquidation,
or it seeks, or becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or for all
or substantially all of its assets or its taking any action in furtherance
of, or indicating its consent to approval of, or acquiescence in, any of
the foregoing.
ARTICLE XVIII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the provisions of this
Article shall apply if, but only if, the Fund in its sole and absolute
discretion elects to utilize the Terminal Link to transmit Certificates
to the Custodian.
2. The Terminal Link shall be utilized only for the purpose of the
Fund providing Certificates to the Custodian and the Custodian providing
notices to the Fund and only after the Fund shall have established access
codes and internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes. Each use of the
Terminal Link by the Fund shall constitute a representation and warranty
that at least two officers have each utilized an access code that such
internal safekeeping procedures have been established by the Fund, and
that such use does not contravene the Investment Company Act of 1940 and
the rules and regulations thereunder.
3. Each party shall obtain and maintain at its own cost and expense
all equipment and services, including, but not limited to communications
services, necessary for it to utilize the Terminal Link, and the other
party shall not be responsible for the reliability or availability of any
such equipment or services, except that the Custodian shall not pay any
communications costs of any line leased by the Fund, even if such line is
also used by the Custodian.
4. The Fund acknowledges that any data bases made available as part
of, or through the Terminal Link and any proprietary data, software,
processes, information and documentation (other than any such which are
or become part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"), are the
exclusive and confidential property of the Custodian. The Fund shall, and
shall cause others to which it discloses the Information, to keep the
Information confidential by using the same care and discretion it uses
with respect to its own confidential property and trade secrets, and shall
neither make nor permit any disclosure without the express prior written
consent of the Custodian.
5. Upon termination of this Agreement for any reason, each Fund
shall return to the Custodian any and all copies of the Information which
are in the Fund's possession or under its control, or which the Fund
distributed to third parties. The provisions of this Article shall not
affect the copyright status of any of the Information which may be
copyrighted and shall apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from
time to time without notice to the Fund, except that the Custodian shall
give the Fund notice not less than 75 days in advance of any modification
which would materially adversely affect the Fund's operation, and the Fund
agrees not to modify or attempt to modify the Terminal Link without the
Custodian's prior written consent. The Fund acknowledges that any
software provided by the Custodian as part of the Terminal Link is the
property of the Custodian and, accordingly, the Fund agrees that any
modifications to the same, whether by the Fund or the Custodian and
whether with or without the Custodian's consent, shall become the property
of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it
utilizes or the Fund utilizes in connection with the Terminal Link makes
any warranties or representations, express or implied, in fact or in law,
including but not limited to warranties of merchantability and fitness for
a particular purpose.
8. Each party will cause its officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and irrevocably authorizes the other to act in accordance
with and rely on Certificates and notices received by it through the
Terminal Link. Each party acknowledges that it is its responsibility to
assure that only its authorized persons use the Terminal Link on its
behalf, and that a party shall not be responsible nor liable for use of
the Terminal Link on behalf of the other party by unauthorized persons of
such other party.
9. Notwithstanding anything else in this Agreement to the contrary,
neither party shall have any liability to the other for any losses,
damages, injuries, claims, costs or expenses arising as a result of a
delay, omission or error in the transmission of a Certificate or notice
by use of the Terminal Link except for money damages for those suffered
as the result of the negligence, bad faith or willful misconduct of such
party or its officers, employees or agents in an amount not exceeding for
any incident $100,000; provided, however, that a party shall have no
liability under this Section 9 if the other party fails to comply with the
provisions of Section 11.
10. Without limiting the generality of the foregoing, in no event
shall either party or any manufacturer or supplier of its computer
equipment, software or services relating to the Terminal Link be
responsible for any special, indirect, incidental or consequential damages
which the other party may incur or experience by reason of its use of the
Terminal Link even if such party, manufacturer or supplier has been
advised of the possibility of such damages, nor with respect to the use
of the Terminal Link shall either party or any such manufacturer or
supplier be liable for acts of God, or with respect to the following to
the extent beyond such person's reasonable control: machine or computer
breakdown or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as
promptly as practicable, and in any event within 24 hours after the
earliest of (i) discovery thereof, and (ii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error,
it being agreed that discovery and receipt of notice may only occur on a
business day. The Custodian shall promptly advise the Fund whenever the
Custodian learns of any errors, omissions or interruption in, or delay or
unavailability of, the Terminal Link.
12. Each party shall, as soon as practicable after its receipt of
a Certificate or a notice transmitted by the Terminal Link, verify to the
other party by use of the Terminal Link its receipt of such Certificate
or notice, and in the absence of such verification the party to which the
Certificate or notice is sent shall not be liable for any failure to act
in accordance with such Certificate or notice and the sending party may
not claim that such Certificate or notice was received by the other party.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event
that any such present Authorized Person ceases to be an Authorized Person
or in the event that other or additional Authorized Persons are elected
or appointed. Until such new Certificate shall be received, the Custodian
shall be entitled to rely and to act upon Oral Instructions, Written
Instructions, or signatures of the present Authorized Persons as set forth
in the last delivered Certificate to the extent provided by this
Agreement.
2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees
to furnish to the Custodian a new Certificate in similar form in the event
any such present officer ceases to be an officer of the Fund, or in the
event that other or additional officers are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be entitled
to rely and to act upon the signatures of the officers as set forth in the
last delivered Certificate to the extent provided by this Agreement.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, other than any
Certificate or Written Instructions, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices
at 90 Washington Street, New York, New York 10286, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or rehired
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at the
address for the Fund first above written, or at such other place as the
Fund may from time to time designate in writing.
5. This Agreement constitutes the entire agreement between the
parties, replaces all prior agreements and may not be amended or modified
in any manner except by a written agreement executed by both parties with
the same formality as this Agreement and approved by a resolution of the
Board of Trustees of the Fund, except that Appendices A and B may be
amended unilaterally by the Fund without such an approving resolution.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without
the written consent of the Custodian, or by the Custodian or The Bank of
New York without the written consent of the Fund, authorized or approved
by a resolution of the Fund's Board of Trustees. For purposes of this
paragraph, no merger, consolidation, or amalgamation of the Custodian, The
Bank of New York, or the Fund shall be deemed to constitute an assignment
of this Agreement.
7. This Agreement shall be construed in accordance with the laws
of the State of New York without giving effect to conflict of laws
principles thereof. Each party hereby consents to the jurisdiction of a
state or federal court situated in New York City, New York in connection
with any dispute arising hereunder and hereby waives its right to trial
by jury.
8. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Board of Trustees
of the Fund as Trustees and not individually and that the obligations of
the instrument are not binding upon any of the Trustees or shareholders
individually but are binding upon the assets and property of the Fund;
provided, however, that the Declaration of Trust of the Fund provides that
the assets of a particular series of the Fund shall under no circumstances
be charges with liabilities attributable to any other series of the Fund
and that all persons extending credit to, or contracting with or having
any claim against a particular series of the Fund shall look only to the
assets of that particular series for payment of such credit, contract or
claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized and
their respective seals to be hereunto affixed, as of the day and year
first above written.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
By: /s/ Robert G. Galli
Robert G. Galli, Vice President
[SEAL]
Attest:
/s/ Robert G. Zack
Robert G. Zack, Assistant Secretary
THE BANK OF NEW YORK
[SEAL] By__________________________________
Attest:
___________________________________
<PAGE>
APPENDIX A
I, President and I,
, of Oppenheimer Fund,
a Massachusetts business trust (the "Fund") do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust
and By-Laws to give Oral Instructions and Written Instructions on behalf
of the Fund, except that those persons designated as being an "Officer of
OSS" shall be an Authorized Person only for purposes of Articles XII and
XIII. The signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
<PAGE>
APPENDIX B
I, President and I,
, of Oppenheimer Fund, a
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals for whom a position other than "Officer of
OSS" is specified serve in the following positions with the Fund and each
has been duly elected or appointed by the Board of Trustees of the Fund
to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws. With respect to the following
individuals for whom a position of "Officer of OSS" is specified, each
such individual has been designated by a resolution of the Board of
Trustees of the Fund to be an Officer for purposes of the Fund's Custody
Agreement with The Bank of New York, but only for purposes of Articles XII
and XIII thereof and a certified copy of such resolution is attached
hereto. The signatures of each individual below set forth opposite their
respective names are their true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
<PAGE>
APPENDIX C
The undersigned, hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund (the "Fund"),
further certifies that the following resolutions were adopted by the Board
of Trustees of the Fund at a meeting duly held on __________________, 199
, at which a quorum at all times present and that such resolutions have
not been modified or rescinded and are in full force an effect as of the
date hereof.
RESOLVED, that The Bank New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the
Fund dated as of 199 (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
to act in accordance with, and to rely on instructions by
the Fund to the Custodian communicated by a Terminal Link as
defined in the Custody Agreement.
RESOLVED, that the Fund shall establish access codes and
grant use of such access codes only to officers of the Fund
as defined in the Custody Agreement, and shall establish
internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes.
RESOLVED, that Officers of the Fund as defined in the
Custody Agreement shall, following the establishment of such
access codes and such internal safekeeping procedures,
advise the Custodian that the same have been established by
delivering a Certificate, as defined in the Custody
Agreement, and the Custodian shall be entitled to rely upon
such advice.
IN WITNESS WHEREOF, I hereunto set my hand in the seal of
, as of the day of , 199 .
<PAGE>
APPENDIX D
I, Richard P. Lando, an Assistant Vice President with THE BANK OF NEW
YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal<PAGE>
APPENDIX E
The following books and records pertaining to Fund shall be prepared
and maintained by the Custodian and shall be the property of the Fund:
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust
(the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on 199
, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis to deposit in the Book-Entry System, as defined in the
Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance
thereunder, including, without limitation, In connection
with settlements of purchases and sales of Securities, loans
of Securities, and deliveries and returns of Securities col-
lateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, 199 .
__________________________
[SEAL]<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned , hereby certifies
that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit
in The Depository Trust Company ("DTC") as a "Depository" as
defined in the Custody Agreement, all Securities eligible
for deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize DTC to the
extent possible in connection with its performance there-
under, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
as of the day of , 199 .
___________________________
[SEAL]<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, hereby certifies that he or she
is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of 199 , (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
until such time as it receives a Certificate, as defined in
the Custody Agreement, to the contrary to deposit in the
Participants Trust Company as a Depository, as defined in
the Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Participants
Trust Company to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns
of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
, as of the day of , 199 .
_______________________
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies that
he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that
such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary, to ac-
cept, utilize and act with respect to Clearing Member
confirmations for Options and transaction in Options,
regardless of the Series to which the same are specifically
allocated, as such terms are defined in the Custody
Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of , as of the day of , 199 .
____________________________
[SEAL]<PAGE>
EXHIBIT D
[FORM OF FOREIGN SUBCUSTODIAN AGREEMENT]<PAGE>
Appendix A
Article XIX.1 49
Appendix B
Article XIX.2 50
Exhibit A
Article III.1 7
Exhibit B
Article III.1 8
Exhibit C
Article III.1 8
Exhibit D34
Article XV.4 34
Schedule A
Article XV.1 33
CUSTODY\600
NEEF, SWANSON, MYER & CLARK
ATTORNEYS AT LAW
SUITE 600
THE COLORADO STATE BANK BUILDING
1600 BROADWAY
DENVER, COLORADO 80202-4988
March 14, 1985
Oppenheimer Variable Life Funds
3410 South Galena Street
Denver, Colorado 80231
Gentlemen:
In connection with the proposed public offering of shares of beneficial
interest of Oppenheimer Growth Fund, Oppenheimer Money Fund and
Oppenheimer Bond Fund (collectively, the "Funds"), each being a series of
Oppenheimer Variable Life Funds (the "Trust"), we have examined such
records and documents as we deem necessary for the purpose of this
opinion.
The Trust is a business trust duly organized and validly existing under
the laws of the Commonwealth of Massachusetts. As of the date of this
letter, it is our opinion that the indefinite number of shares of each
Fund covered by the Trust's Registration Statement on Form N-1A (SEC Reg.
No. 2-93177), when issued and paid for in accordance with the terms of the
offering, as set forth in the Prospectus and Statement of Additional
Information forming a part of the Registration Statement, will be, when
such Registration Statement shall have become effective, legally issued,
fully paid and non-assessable by the Trust tot he extent set forth in such
Registration Statement.
We hereby consent to the filing of this opinion as an Exhibit to such
Registration Statement and to the reference to Counsel in such Prospectus
and/or Statement of Additional Information. We also consent to the filing
of this opinion with the authorities administering the securities or
insurance law of any jurisdiction in connection with the registration or
qualification under such law of the Trust, the Fund's shares and/or
policies for which such shares are the underlying investment.
Very truly yours,
NEEF, SWANSON, MYER & CLARK
By: /s/ Rendle Myer
Rendle Myer, Partner
opinion\600#1
HAMILTON, MYER, SWANSON, FAATZ & CLARK
ATTORNEYS AT LAW
THE COLORADO STATE BANK BUILDING
1600 BROADWAY-SUITE 600
DENVER, COLORADO 80202-4988
TELEPHONE: (303) 830-0500
April 28, 1986
Oppenheimer Variable Life Funds
3410 South Galena Street
Denver, Colorado 80231
Gentlemen:
In connection with the proposed public offering of shares of beneficial
interest of Oppenheimer High Income Fund (the "Fund"), which is a series
of Oppenheimer Variable Life Funds (the "Trust"), we have examined such
records and documents as we deem necessary for the purpose of this
opinion.
The Trust is a business trust duly organized and validly existing under
the laws of the Commonwealth of Massachusetts. As of the date of this
letter, it is our opinion that the indefinite number of shares of the Fund
covered by the Trust's post-effective Registration Statement No. 3 on Form
N-1A (SEC Reg. No. 2-93177), when issued and paid for in accordance with
the terms of the offering, as set forth in the Prospectus and Statement
of Additional Information forming a part of the Registration Statement,
will be, when such Registration Statement shall have become effective,
legally issued, fully paid and, except as set forth in the next paragraph,
non-assessable by the Trust.
Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. The Declaration of Trust does, however, contain an express
disclaimer of shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable for the
obligations of 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.
OPINION\600#2
HAMILTON, MYER, SWANSON, FAATZ & CLARK
ATTORNEYS AT LAW
THE COLORADO STATE BANK BUILDING
TELEPHONE: (303) 830-0500
January 21, 1987
Oppenheimer Variable Account Funds
3410 South Galena Street
Denver, Colorado 80231
Gentlemen:
In connection with the proposed public offering of shares of beneficial
interest of Oppenheimer Multiple Strategies Fund (the "Fund"), which is
a series of Oppenheimer Variable Account Funds (the "Trust"), we have
examined such records and documents as we deem necessary for the purpose
of this opinion.
The Trust is a business trust duly organized and validly existing under
the laws of the Commonwealth of Massachusetts. As of the date of this
letter, it is our opinion that the indefinite number of shares of the Fund
covered by the Trust's post-effective Registration Statement No. 7 under
the Securities Act of 1933 on Form N-1A (SEC Reg. No. 2-93177), when
issued and paid for in accordance with the terms of the offering, as set
forth in the Prospectus and Statement of Additional Information forming
a part of the Registration Statement, will be, when such Registration
Statement shall have become effective, legally issued, fully paid and,
except as set forth in the next paragraph, non-assessable by the Trust.
Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. The Declaration of Trust does, however, contain an express
disclaimer of shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable for the
obligations of the Trust. 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.
The shares of the Fund are sold to separate accounts offered by Bankers
Security Life Insurance Society and Monarch Life Insurance Company. We
have not reviewed, and express no opinion on the sufficiency of, any
registration statements filed by any such insurance company in connection
with the offering of separate accounts.
We hereby consent to the filing of this opinion as an Exhibit to such
Registration Statement and to the reference to Counsel in such Prospectus
and/or Statement of Additional Information. We also consent to the filing
of this opinion with the authorities administering the securities or
insurance law of any jurisdiction in connection with the registration or
qualification under such law of the Trust, the Fund's shares and/or
policies for which such shares are the underlying investment.
Very truly yours,
HAMILTON, MYER, SWANSON,
FAATZ & CLARK
By:/s/ Allan B. Adams
Allan B. Adams, Partner
opinion\600#3
MYER, SWANSON & ADAMS, P.C.
ATTORNEYS AT LAW
THE COLORADO STATE BANK BUILDING
1600 BROADWAY-SUITE 1850
DENVER, COLORADO 80202-4918
TELEPHONE: (303) 866-9800
FACSIMILE (303) 866-9818
April 23, 1993
Oppenheimer Variable Account Funds
3410 South Galena Street
Denver, Colorado 80231
Gentlemen:
In connection with the proposed public offering of shares of the
Oppenheimer Strategic Bond Fund Series (the "Fund") of Oppenheimer
Variable Account Funds, we have examined such records and documents as we
deem necessary for the purposes of this opinion.
The Fund is a duly organized and validly existing Series of Oppenheimer
Variable Account Funds, a Massachusetts business trust (the "Trust"). As
of the date of this letter, it is our opinion that the shares of the Fund
covered by the Registration Statement for an indefinite number of shares
of the Fund on Form N-1A, when issued and paid for in accordance with the
terms of the offering, as set forth in the Prospectus and Statement of
Additional Information forming a part of the Registration Statement, will
be, when such Registration Statement shall have become effective, legally
issued and, except as set forth in the next paragraph, fully paid and non-
assessable.
Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. The Declaration of Trust does, however, contain an express
disclaimer of shareholder liability for acts or obligations oft he Trust
and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the
Trustees. 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.
The shares of the Oppenheimer Strategic Bond Fund Series are sold only to
separate accounts of certain insurance companies to provide benefits under
variable life insurance policies and variable annuity contracts. We have
not reviewed, and express no opinion on the sufficiency of, any
registration statements filed by any such insurance company in connection
with the offering of separate accounts.
We hereby consent to the filing of this opinion as an Exhibit to such
Registration Statement and to the reference to Counsel in such Prospectus
and/or Statement of Additional Information. We also consent tot the
filing of this opinion with the authorities administering the securities
laws of any jurisdiction in connection with the registration or
qualification under such laws of Oppenheimer Variable Account Funds and
its shares.
Very truly yours,
MYER, SWANSON & ADAMS, P.C.
By: /s/ Allan B. Adams
Allan B. Adams
opinion\600#4
HAMILTON, MYER, SWANSON & FAATZ, P.C.
ATTORNEYS AT LAW
THE COLORADO STATE BANK BUILDING
1600 BROADWAY-SUITE 600
DENVER, COLORADO 80202-4988
TELEPHONE: (303) 830-0500
FACSIMILE: (303) 860-7855
July 31, 1990
Oppenheimer Variable Account Funds
3410 South Galena Street
Denver, Colorado 80231
Gentlemen:
In connection with the proposed public offering of shares of the
Oppenheimer Global Securities Fund Series (the "Fund") of Oppenheimer
Variable Account Funds, we have examined such records and documents as we
deem necessary for the purpose of this opinion.
The Fund is a duly organized and validly existing Series of Oppenheimer
Variable Account Funds, a Massachusetts business trust. As of the date
of this letter, it is our opinion the indefinite number of shares of the
Fund covered by the Registration Statement for the Fund on Form N-1A, when
issued and paid for in accordance with the terms of the offering, as set
forth in the Prospectus and Statement of Additional Information forming
a part of the Registration Statement, will be, when such Registration
Statement shall have become effective, legally issued and, except as set
forth in the next paragraph, fully paid and non-assessable by the Fund.
Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. The Declaration of Trust does, however, contain an express
disclaimer of shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable for the
obligations forth the Trust. 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.
The shares of the Oppenheimer Global Securities Fund Series are sold only
to separate accounts of certain insurance companies to provide benefits
under variable life insurance policies and variable annuity contracts.
We have not reviewed, and express no opinion on the sufficiency of, any
registration statements filed by any such insurance company in connection
with the offering of separate accounts.
We hereby consent to the filing of this opinion as an Exhibit to such
Registration Statement and to the reference to Counsel in such Prospectus
and/or Statement of Additional Information. We also consent to the filing
of this opinion with the authorities administering the securities laws of
any jurisdiction in connection with the registration or qualification
under such laws of Oppenheimer Variable Account Funds and its shares.
Very truly yours,
HAMILTON, MYER, SWANSON, & FAATZ, P.C.
By: /s/ Allan B. Adams
Allan B. Adams
opinion\600#5
HAMILTON, MYER, SWANSON, FAATZ & CLARK
ATTORNEYS AT LAW
THE COLORADO STATE BANK BUILDING
1600 BROADWAY-SUITE 600
DENVER, COLORADO 80202-4988
TELEPHONE (303) 830-0500
July 31, 1986
Oppenheimer Variable Life Funds
3410 South Galena Street
Denver, Colorado 80231
Gentlemen:
In connection with the proposed public offering of shares of beneficial
interest of Oppenheimer Capital Appreciation Fund (the "Fund"), which is
a series of Oppenheimer Variable Life Funds (the "Trust"), we have
examined such records and documents as we deem necessary for the purpose
of this opinion.
The Trust is a business trust duly organized and validly existing under
the laws of the Commonwealth of Massachusetts. As of the date of this
letter, it is our opinion that the indefinite number of shares of the Fund
covered by the Trust's post-effective Registration Statement No. 4 on Form
N-1A (SEC Reg. No. 2-93177), when issued and paid for in accordance with
the terms of the offering, as set forth in the Prospectus and Statement
of Additional Information forming a part of the Registration Statement,
will be, when such Registration Statement shall have become effective,
legally issued, fully paid and, except as set forth in the next paragraph,
non-assessable by the Trust.
Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. The Declaration of Trust does, however, contain an express
disclaimer of shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable for the
obligations of the Trust. 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.
The shares of the Fund are sold only to separate accounts of certain
insurance companies in connection with variable annuity, variable life,
or similar life insurance policies. We have not reviewed, and express no
opinion on the sufficiency of, any registration statements filed by any
such insurance company in connection with the offering of separate
accounts.
We hereby consent to the filing of this opinion as an Exhibit to such
Registration Statement and amendments thereto, and to the reference to
Counsel in such Prospectus and/or Statement of Additional Information.
We also consent to the filing of this opinion with the authorities
administering the securities or insurance law of any jurisdiction in
connection with the registration or qualification under such law of the
Trust, the Fund's shares and/or policies for which such shares are the
underlying investment.
Very truly yours,
Hamilton, Myer, Swanson, Faatz & Clark
/s/ Allan B. Adams
Allan B. Adams, Partner
opinion\600#7
Oppenheimer Variable Account Funds
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the
past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Oppenheimer Bond Fund
07/05/85 0.2900 0.0000 10.690
10/07/85 0.2900 0.0000 10.560
01/06/86 0.2900 0.0750 10.930
04/07/86 0.2700 0.0000 11.020
07/05/86 0.2420 0.0780 10.880
10/06/86 0.2300 0.0000 10.800
01/09/87 0.2450 0.0480 10.900
04/03/87 0.2150 0.0000 10.810
07/10/87 0.2600 0.0000 10.460
10/09/87 0.2500 0.0000 10.010
12/24/87 0.2000 0.0000 10.140
03/25/88 0.2300 0.0000 10.310
06/24/88 0.2200 0.0000 10.210
09/23/88 0.2400 0.0000 10.280
12/23/88 0.2400 0.0000 10.150
03/23/89 0.2400 0.0000 10.020
06/23/89 0.2400 0.0000 10.360
09/22/89 0.2400 0.0000 10.340
12/22/89 0.2400 0.0000 10.500
03/23/90 0.2400 0.0000 10.270
06/25/90 0.2400 0.0000 10.300
09/21/90 0.2400 0.0000 10.130
12/21/90 0.2300 0.0000 10.330
03/22/91 0.2400 0.0000 10.430
06/21/91 0.2400 0.0000 10.530
09/20/91 0.2300 0.0000 10.860
12/20/91 0.2200 0.0000 11.050
03/27/92 0.2400 0.0000 10.840
06/26/92 0.2400 0.0000 11.040
09/25/92 0.2100 0.0000 11.180
12/18/92 0.1700 0.0000 10.940
03/26/93 0.1500 0.0000 11.400
06/25/93 0.1800 0.0000 11.550
09/24/93 0.2100 0.0000 11.760
12/27/93 0.2120 0.0000 11.660
03/25/94 0.0110 0.0280 11.460
06/24/94 0.2000 0.0000 11.190
09/23/94 0.2000 0.0000 11.060
12/16/94 0.2100 0.0000 10.940
Oppenheimer Variable Account Funds
Page 2
April 25, 1995
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Oppenheimer High Income Fund
10/06/86 0.4400 0.0000 9.740
01/09/87 0.3100 0.0580 9.790
04/03/87 0.2800 0.0000 10.150
07/10/87 0.3200 0.0000 9.830
10/09/87 0.3200 0.0000 9.730
12/24/87 0.3220 0.0780 9.100
03/25/88 0.3000 0.1180 9.110
06/24/88 0.2620 0.0000 9.280
09/23/88 0.2500 0.0000 9.200
12/23/88 0.2600 0.0000 9.180
03/23/89 0.2700 0.0700 9.110
06/23/89 0.2700 0.0000 9.060
09/22/89 0.2700 0.0000 8.970
12/22/89 0.2700 0.0000 8.560
03/23/90 0.2700 0.0000 8.250
06/25/90 0.2700 0.0000 8.510
09/21/90 0.2700 0.0000 8.290
12/21/90 0.2700 0.0000 7.880
03/22/91 0.2700 0.0000 8.590
06/21/91 0.2700 0.0000 8.880
09/20/91 0.2700 0.0000 9.270
12/20/91 0.2700 0.0000 9.320
03/27/92 0.4700 0.0000 9.640
06/26/92 0.2700 0.0000 9.730
09/25/92 0.2700 0.0000 9.920
12/18/92 0.2700 0.0000 9.690
03/26/93 0.2700 0.0000 10.380
06/25/93 0.3900 0.0000 10.560
09/24/93 0.2700 0.0000 10.660
12/27/93 0.2600 0.0000 11.010
03/25/94 0.0200 0.2390 10.800
06/24/94 0.2100 0.0000 10.430
09/23/94 0.2100 0.0000 10.260
12/16/94 0.2200 0.0000 9.820
Oppenheimer Variable Account Funds
Page 3
April 25, 1995
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Oppenheimer Growth Fund
01/27/86 0.1470 0.1630 10.660
01/09/87 0.1500 0.4670 12.490
12/24/87 0.1850 0.9550 11.350
06/24/88 0.0000 0.0450 13.120
03/23/89 0.3500 0.0700 14.420
03/23/90 0.6200 1.9900 13.120
03/22/91 0.4900 0.0000 12.980
03/27/92 0.3600 0.0000 14.740
03/26/93 0.1400 0.3170 16.530
03/25/94 0.1540 0.0380 17.750
Oppenheimer Capital Appreciation Fund
01/09/87 0.1500 0.0000 13.780
12/24/87 0.1870 0.2680 14.560
06/24/88 0.0000 0.0100 16.280
03/23/89 0.3400 0.0000 17.070
03/23/90 0.5100 1.3350 17.120
06/25/90 0.0200 0.0700 17.600
03/22/91 0.2600 0.0000 17.830
03/27/92 0.1350 0.5500 22.750
03/26/93 0.0550 1.1020 24.170
03/25/94 0.0450 3.5280 28.200
Oppenheimer Multiple Strategies Fund
04/03/87 0.0350 0.0000 10.690
07/10/87 0.1300 0.0000 10.850
10/09/87 0.1400 0.0000 11.130
12/24/87 0.1250 0.0400 10.100
03/25/88 0.1400 0.0000 10.830
06/24/88 0.1400 0.0000 11.320
09/23/88 0.1900 0.0000 11.350
12/23/88 0.1800 0.0000 11.430
03/23/89 0.1000 0.3725 11.750
06/23/89 0.1800 0.0000 12.320
09/22/89 0.2000 0.0000 12.540
12/22/89 0.2000 0.0000 12.200
03/23/90 0.1000 0.4600 11.440
06/25/90 0.2000 0.0000 11.380
09/21/90 0.2000 0.0000 10.980
12/21/90 0.2000 0.0000 10.810
03/22/91 0.2000 0.0000 11.290
06/21/91 0.2000 0.0000 11.200
09/20/91 0.2000 0.0000 11.450
12/20/91 0.1800 0.0000 11.380
Oppenheimer Variable Account Funds
Page 4
April 25, 1995
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Oppenheimer Multiple Strategies Fund (Continued)
03/27/92 0.1300 0.0000 12.080
06/26/92 0.1300 0.0000 11.910
09/25/92 0.1500 0.0000 12.100
12/18/92 0.1300 0.0000 12.420
03/26/93 0.1000 0.0000 12.870
06/25/93 0.1700 0.0000 13.050
09/24/93 0.1300 0.0000 13.470
12/27/93 0.1470 0.0000 13.840
03/25/94 0.0110 0.0980 13.830
06/24/94 0.2000 0.0000 12.990
09/23/94 0.2000 0.0000 13.290
12/16/94 0.1900 0.0000 12.810
Oppenheimer Global Securities Fund
03/27/92 0.0400 0.0400 10.600
03/25/94 0.0370 0.2510 15.680
Oppenheimer Strategic Bond Fund
09/24/93 0.0200 0.0000 5.030
12/27/93 0.0720 0.0000 5.120
03/25/94 0.0050 0.0060 5.010
06/24/94 0.1050 0.0000 4.850
09/23/94 0.1100 0.0000 4.800
12/16/94 0.1050 0.0000 4.650
Oppenheimer Money Fund
12/31/85 0.0500 0.0000 1.000
12/31/86 0.0600 0.0000 1.000
01/16/87 0.0054373 0.0000 1.000
02/19/87 0.0054789 0.0000 1.000
03/19/87 0.0044160 0.0000 1.000
04/16/87 0.0044382 0.0000 1.000
05/21/87 0.0057474 0.0000 1.000
06/18/87 0.0049028 0.0000 1.000
07/16/87 0.0046062 0.0000 1.000
08/20/87 0.0060240 0.0000 1.000
09/17/87 0.0048762 0.0000 1.000
10/15/87 0.0051410 0.0000 1.000
11/19/87 0.0065051 0.0000 1.000
12/17/87 0.0051295 0.0000158 1.000
12/31/87 0.0027197 0.0000 1.000
01/21/88 0.0033977 0.0000 1.000
02/18/88 0.0050790 0.0000 1.000
03/17/88 0.0047712 0.0000 1.000
Oppenheimer Variable Account Funds
Page 5
April 25, 1995
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Oppenheimer Money Fund (Continued)
04/21/88 0.0059210 0.0000 1.000
05/19/88 0.0048993 0.0000 1.000
06/16/88 0.0051694 0.0000 1.000
07/21/88 0.0067519 0.0000 1.000
08/18/88 0.0056709 0.0000 1.000
09/15/88 0.0059928 0.0000 1.000
10/20/88 0.0075103 0.0000 1.000
11/17/88 0.0059949 0.0000 1.000
12/15/88 0.0062877 0.0000 1.000
01/19/89 0.0084978 0.0000 1.000
02/16/89 0.0066960 0.0000 1.000
03/16/89 0.0069414 0.0000 1.000
04/20/89 0.0091675 0.0000 1.000
05/18/89 0.0072792 0.0000 1.000
06/15/89 0.0071145 0.0000 1.000
07/20/89 0.0085670 0.0000 1.000
08/17/89 0.0066242 0.0000 1.000
09/21/89 0.0080937 0.0000 1.000
10/19/89 0.0065014 0.0000 1.000
11/16/89 0.0063813 0.0000 1.000
12/21/89 0.0077824 0.0000 1.000
01/18/90 0.0061815 0.0000 1.000
02/15/90 0.0060100 0.0000 1.000
03/15/90 0.0059834 0.0000 1.000
04/19/90 0.0075221 0.0000 1.000
05/17/90 0.0060544 0.0000 1.000
06/21/90 0.0075619 0.0000 1.000
07/19/90 0.0060056 0.0000 1.000
08/16/90 0.0059027 0.0000 1.000
09/20/90 0.0072873 0.0000 1.000
10/18/90 0.0058596 0.0000 1.000
11/15/90 0.0058956 0.0000 1.000
12/20/90 0.0074544 0.0000 1.000
01/17/91 0.0058222 0.0000 1.000
02/21/91 0.0068625 0.0000 1.000
03/21/91 0.0050839 0.0000 1.000
04/19/91 0.0051499 0.0000 1.000
05/17/91 0.0046004 0.0000 1.000
06/21/91 0.0054765 0.0000 1.000
07/19/91 0.0043019 0.0000 1.000
08/16/91 0.0043041 0.0000 1.000
09/20/91 0.0053577 0.0000 1.000
10/18/91 0.0040952 0.0000 1.000
11/15/91 0.0040785 0.0000 1.000
12/20/91 0.0049789 0.0000 1.000
01/17/92 0.0034853 0.0000 1.000
02/21/92 0.0040293 0.0000 1.000
Oppenheimer Variable Account Funds
Page 6
April 25, 1995
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Oppenheimer Money Fund (Continued)
03/20/92 0.0032580 0.0000 1.000
04/16/92 0.0031515 0.0000 1.000
05/15/92 0.0030720 0.0000 1.000
06/19/92 0.0038373 0.0000 1.000
07/17/92 0.0029314 0.0000 1.000
08/21/92 0.0034187 0.0000 1.000
09/18/92 0.0032203 0.0000 1.000
10/16/92 0.0024655 0.0000 1.000
11/20/92 0.0030929 0.0000 1.000
12/18/92 0.0025495 0.0000 1.000
01/15/93 0.0022736 0.0002562 1.000
02/19/93 0.0031033 0.0000 1.000
03/19/93 0.0024019 0.0000 1.000
04/16/93 0.0024112 0.0000 1.000
05/21/93 0.0027481 0.0000 1.000
06/18/93 0.0023439 0.0000 1.000
07/16/93 0.0025210 0.0000 1.000
08/20/93 0.0022698 0.0000 1.000
09/17/93 0.0023572 0.0000 1.000
10/15/93 0.0023719 0.0000 1.000
11/19/93 0.0030108 0.0000 1.000
12/17/93 0.0024067 0.0000 1.000
01/21/94 0.0030030 0.0000 1.000
02/18/94 0.0028958 0.0000 1.000
03/18/94 0.0023556 0.0000 1.000
04/15/94 0.0025930 0.0000 1.000
05/20/94 0.0035061 0.0000 1.000
06/17/94 0.0030087 0.0000 1.000
07/15/94 0.0032125 0.0000 1.000
08/19/94 0.0041195 0.0000 1.000
09/16/94 0.0034908 0.0000 1.000
10/21/94 0.0044305 0.0000 1.000
11/18/94 0.0036514 0.0000 1.000
12/15/94 0.0040261 0.0000 1.000
Oppenheimer Variable Account Funds
Page 7
April 25, 1995
1. Average Annual Total Returns for the Periods Ended 12/31/94:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Examples at NAV:
Oppenheimer Bond Fund
One Year Five Year
$ 980.62 1 $1,498.60 .2
(---------) - 1 = -1.94% (---------) - 1 = 8.43%
$1,000 $1,000
Inception
$2,482.50 .1026
(---------) - 1 = 9.78%
$1,000
Oppenheimer High Income Fund
One Year Five Year
$ 968.22 1 $2,021.36 .2
(---------) - 1 = -3.18% (---------) - 1 = 15.11%
$1,000 $1,000
Inception
$2,772.24 .1153
(---------) - 1 = 12.48%
$1,000
Oppenheimer Variable Account Funds
Page 8
April 25, 1995
1. Average Annual Total Returns for the Periods Ended 12/31/94 (Continued):
Examples at NAV:
Oppenheimer Growth Fund
One Year Five Year
$1,009.67 1 $1,429.06 .2
(---------) - 1 = 0.97% (---------) - 1 = 7.40%
$1,000 $1,000
Inception
$2,872.62 .10265
(---------) - 1 = 11.44%
$1,000
Oppenheimer Capital Appreciation Fund
One Year Five Year
$ 924.08 1 $1,747.67 .2
(---------) - 1 = -7.59% (---------) - 1 = 11.81%
$1,000 $1,000
Inception
$2,843.35 .1194
(---------) - 1 = 13.29%
$1,000
Oppenheimer Multiple Strategies Fund
One Year Five Year
$ 980.53 1 $1,427.90 .2
(---------) - 1 = -1.95% (---------) - 1 = 7.38%
$1,000 $1,000
Inception
$2,099.12 .1267
(---------) - 1 = 9.85%
$1,000
Oppenheimer Variable Account Funds
Page 9
April 25, 1995
1. Average Annual Total Returns for the Periods Ended 12/31/94 (Continued):
Examples at NAV:
Oppenheimer Global Securities Fund
One Year Inception
$ 942.77 1 $1,548.31 .24175
(---------) - 1 = -5.72% (---------) - 1 = 11.15%
$1,000 $1,000
Oppenheimer Strategic Bond Fund
One Year Inception
$ 962.23 1 $1,003.16 .6003
(---------) - 1 = -3.78% (---------) - 1 = 0.19%
$1,000 $1,000
Oppenheimer Money Fund
One Year Five Year
$1,042.01 1 $1,279.54 .2
(---------) - 1 = 4.20% (---------) - 1 = 5.05%
$1,000 $1,000
Inception
$1,781.34 .1026
(---------) - 1 = 6.10%
$1,000
Oppenheimer Variable Account Funds
Page 10
April 25, 1995
2. Cumulative Total Returns for the Periods Ended 12/31/94:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Examples at NAV:
Oppenheimer Bond Fund
One Year Five Year
$ 980.62 - $1,000 $1,498.60 - $1,000
------------------ = -1.94% ------------------ = 49.86%
$1,000 $1,000
Inception
$2,482.50 - $1,000
------------------ = 148.25%
$1,000
Oppenheimer High Income Fund
One Year Five Year
$ 968.22 - $1,000 $2,021.36 - $1,000
------------------ = -3.18% ------------------ = 102.14%
$1,000 $1,000
Inception
$2,772.24 - $1,000
------------------ = 177.22%
$1,000
Oppenheimer Growth Fund
One Year Five Year
$1,009.67 - $1,000 $1,429.06 - $1,000
------------------ = 0.97% ------------------ = 42.91%
$1,000 $1,000
Inception
$2,872.62 - $1,000
------------------ = 187.26%
$1,000
Oppenheimer Variable Account Funds
Page 11
April 25, 1995
2. Cumulative Total Returns for the Periods Ended 12/31/94 (Continued):
Examples at NAV:
Oppenheimer Capital Appreciation Fund
One Year Five Year
$ 924.08 - $1,000 $1,747.67 - $1,000
------------------ = -7.59% ------------------ = 74.77%
$1,000 $1,000
Inception
$2,843.35 - $1,000
------------------ = 184.34%
$1,000
Oppenheimer Multiple Strategies Fund
One Year Five Year
$ 980.53 - $1,000 $1,427.90 - $1,000
------------------ = -1.95% ------------------ = 42.79%
$1,000 $1,000
Inception
$2,099.12 - $1,000
------------------ = 109.91%
$1,000
Oppenheimer Global Securities Fund
One Year Inception
$ 942.77 - $1,000 $1,548.31 - $1,000
------------------ = -5.72% ------------------ = 54.83%
$1,000 $1,000
Oppenheimer Strategic Bond Fund
One Year Inception
$ 962.23 - $1,000 $1,003.16 - $1,000
------------------ = -3.78% ------------------ = 0.32%
$1,000 $1,000
Oppenheimer Variable Account Funds
Page 12
April 25, 1995
2. Cumulative Total Returns for the Periods Ended 12/31/94 (Continued):
Examples at NAV:
Oppenheimer Money Fund
One Year Five Year
$1,042.01 - $1,000 $1,279.54 - $1,000
------------------ = 4.20% ------------------ = 27.95%
$1,000 $1,000
Inception
$1,781.34 - $1,000
------------------ = 78.13%
$1,000
Oppenheimer Variable Account Funds
Page 13
April 25, 1995
3. Standardized Yield for the 30-Day Period Ended 12/31/94:
The Fund's standardized yields are 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 net asset value (excluding contingent deferred
sales charge) per share on the last day of the period.
Examples at NAV:
Oppenheimer Bond Fund
$956,614.69 - $90,000.00 6
2{(------------------------ + 1) - 1} = 8.07%
12,153,596 x $10.78
Oppenheimer High Income Fund
$839,129.34 - $68,000.00 6
2{(------------------------ + 1) - 1} = 10.00%
9,651,505 x $9.79
Oppenheimer Strategic Bond Fund
$167,980.40 - $9,000.00 6
2{(----------------------- + 1) - 1} = 10.00%
4,233,706 x $4.60
Oppenheimer Variable Account Funds
Page 14
April 25, 1995
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/94:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = ( a x b ) / c
The symbols above represent the following factors:
a = The last declared dividend during the period.
b = Number of quarters in the year.
c = The Fund's net asset value (excluding sales charge) per share
on the last day of the period.
Examples:
Oppenheimer Bond Fund Oppenheimer High Income Fund
$0.2100 x 4 / $10.78 = 7.79% $0.2200 x 4 / $9.79 = 8.99%
Oppenheimer Strategic Bond Fund
$0.1050 x 4 / $4.60 = 9.13%
Oppenheimer Variable Account Funds
Page 15
April 25, 1995
5. YIELD AND EFFECTIVE YIELD FOR 7-DAY PERIOD ENDED 12/31/94:
Calculations of the Fund's "Yield" and "Compounded Effective Yield" set
forth
in the section entitled "Yield Information" in the Statement of Additional
Information were made as follows:
Oppenheimer Money Fund
Date Daily Accrual Per Share (in $)
12/25/94 .0001504
12/26/94 .0001504
12/27/94 .0001491
12/28/94 .0001561
12/29/94 .0001488
12/30/94 .0001452
12/31/94 .0001452
Seven Day
Total: .0010452
Current Yield: $0.0010452/7 x 365 = 5.45%
365/7
Effective Yield: (.0010452 + 1) - 1 = 5.60%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER STRATEGIC BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 21584405
<INVESTMENTS-AT-VALUE> 20527457
<RECEIVABLES> 539774
<ASSETS-OTHER> 15259
<OTHER-ITEMS-ASSETS> 198422
<TOTAL-ASSETS> 21280912
<PAYABLE-FOR-SECURITIES> 937797
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22800
<TOTAL-LIABILITIES> 960597
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22014634
<SHARES-COMMON-STOCK> 4418161
<SHARES-COMMON-PRIOR> 1929958
<ACCUMULATED-NII-CURRENT> 111729
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (769757)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1036291)
<NET-ASSETS> 20320315
<DIVIDEND-INCOME> 32822
<INTEREST-INCOME> 1387029
<OTHER-INCOME> 0
<EXPENSES-NET> 133694
<NET-INVESTMENT-INCOME> 1286157
<REALIZED-GAINS-CURRENT> (796115)
<APPREC-INCREASE-CURRENT> 1120872
<NET-CHANGE-FROM-OPS> (630830)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1161570
<DISTRIBUTIONS-OF-GAINS> 16802
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3749500
<NUMBER-OF-SHARES-REDEEMED> 1508782
<SHARES-REINVESTED> 247485
<NET-CHANGE-IN-ASSETS> 10433797
<ACCUMULATED-NII-PRIOR> 6384
<ACCUMULATED-GAINS-PRIOR> 23918
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 105760
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 133694
<AVERAGE-NET-ASSETS> 15389000
<PER-SHARE-NAV-BEGIN> 5.12
<PER-SHARE-NII> .36
<PER-SHARE-GAIN-APPREC> (.55)
<PER-SHARE-DIVIDEND> .32
<PER-SHARE-DISTRIBUTIONS> .01
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.60
<EXPENSE-RATIO> .87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER GLOBAL SECURITIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 303776414
<INVESTMENTS-AT-VALUE> 297097313
<RECEIVABLES> 2538088
<ASSETS-OTHER> 9748
<OTHER-ITEMS-ASSETS> 436640
<TOTAL-ASSETS> 300081789
<PAYABLE-FOR-SECURITIES> 919245
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1320623
<TOTAL-LIABILITIES> 2239868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 304182420
<SHARES-COMMON-STOCK> 19743343
<SHARES-COMMON-PRIOR> 5917113
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 1069
<ACCUMULATED-NET-GAINS> 1503327
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (7842757)
<NET-ASSETS> 297841921
<DIVIDEND-INCOME> 2456123
<INTEREST-INCOME> 658349
<OTHER-INCOME> 0
<EXPENSES-NET> 1952398
<NET-INVESTMENT-INCOME> 1162074
<REALIZED-GAINS-CURRENT> 385837
<APPREC-INCREASE-CURRENT> (24015375)
<NET-CHANGE-FROM-OPS> (22467464)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 516871
<DISTRIBUTIONS-OF-GAINS> 127540
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22151454
<NUMBER-OF-SHARES-REDEEMED> 8503911
<SHARES-REINVESTED> 178687
<NET-CHANGE-IN-ASSETS> 201417410
<ACCUMULATED-NII-PRIOR> 339434
<ACCUMULATED-GAINS-PRIOR> 2325694
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1517234
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1952398
<AVERAGE-NET-ASSETS> 215545000
<PER-SHARE-NAV-BEGIN> 16.30
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> (.96)
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .25
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.09
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER GROWTH FUND (VA)
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 53046300
<INVESTMENTS-AT-VALUE> 60267367
<RECEIVABLES> 3208903
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 298128
<TOTAL-ASSETS> 3507031
<PAYABLE-FOR-SECURITIES> 469945
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21279
<TOTAL-LIABILITIES> 491224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54399542
<SHARES-COMMON-STOCK> 3579510
<SHARES-COMMON-PRIOR> 3202704
<ACCUMULATED-NII-CURRENT> 814551
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 848014
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7221067
<NET-ASSETS> 63283174
<DIVIDEND-INCOME> 835252
<INTEREST-INCOME> 334611
<OTHER-INCOME> 0
<EXPENSES-NET> 344887
<NET-INVESTMENT-INCOME> 824976
<REALIZED-GAINS-CURRENT> 1441127
<APPREC-INCREASE-CURRENT> (1915053)
<NET-CHANGE-FROM-OPS> 351050
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 516871
<DISTRIBUTIONS-OF-GAINS> 127540
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2577268
<NUMBER-OF-SHARES-REDEEMED> 2236767
<SHARES-REINVESTED> 36305
<NET-CHANGE-IN-ASSETS> 6582126
<ACCUMULATED-NII-PRIOR> 524266
<ACCUMULATED-GAINS-PRIOR> (483393)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307904
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 344887
<AVERAGE-NET-ASSETS> 59953000
<PER-SHARE-NAV-BEGIN> 17.70
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> (.09)
<PER-SHARE-DIVIDEND> .15
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.68
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER CAPITAL APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 166985520
<INVESTMENTS-AT-VALUE> 182918438
<RECEIVABLES> 6943336
<ASSETS-OTHER> 8710
<OTHER-ITEMS-ASSETS> 23807
<TOTAL-ASSETS> 189894291
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4077624
<TOTAL-LIABILITIES> 4077624
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 170177063
<SHARES-COMMON-STOCK> 7157574
<SHARES-COMMON-PRIOR> 4325853
<ACCUMULATED-NII-CURRENT> 711671
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1048111)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15932918
<NET-ASSETS> 185773541
<DIVIDEND-INCOME> 376542
<INTEREST-INCOME> 1275631
<OTHER-INCOME> 0
<EXPENSES-NET> 883139
<NET-INVESTMENT-INCOME> 769034
<REALIZED-GAINS-CURRENT> (1045951)
<APPREC-INCREASE-CURRENT> (10016034)
<NET-CHANGE-FROM-OPS> (10292951)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 218275
<DISTRIBUTIONS-OF-GAINS> 17112748
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7912557
<NUMBER-OF-SHARES-REDEEMED> 5695411
<SHARES-REINVESTED> 614575
<NET-CHANGE-IN-ASSETS> 48888438
<ACCUMULATED-NII-PRIOR> 234158
<ACCUMULATED-GAINS-PRIOR> 17043751
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 803231
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 883139
<AVERAGE-NET-ASSETS> 153832000
<PER-SHARE-NAV-BEGIN> 31.64
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> (2.22)
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 3.53
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.95
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 137008816
<INVESTMENTS-AT-VALUE> 132512297
<RECEIVABLES> 2701111
<ASSETS-OTHER> 7049
<OTHER-ITEMS-ASSETS> 170380
<TOTAL-ASSETS> 135390837
<PAYABLE-FOR-SECURITIES> 280624
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42829
<TOTAL-LIABILITIES> 323453
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 140125237
<SHARES-COMMON-STOCK> 12527081
<SHARES-COMMON-PRIOR> 9601796
<ACCUMULATED-NII-CURRENT> 1832232
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2398141)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4491944)
<NET-ASSETS> 135067384
<DIVIDEND-INCOME> 14021
<INTEREST-INCOME> 9585487
<OTHER-INCOME> 0
<EXPENSES-NET> 698586
<NET-INVESTMENT-INCOME> 8900922
<REALIZED-GAINS-CURRENT> (11194886)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (2293964)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6580907
<DISTRIBUTIONS-OF-GAINS> 2106023
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5002623
<NUMBER-OF-SHARES-REDEEMED> 2744016
<SHARES-REINVESTED> 666678
<NET-CHANGE-IN-ASSETS> 23221263
<ACCUMULATED-NII-PRIOR> 61656
<ACCUMULATED-GAINS-PRIOR> (208860)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 630514
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 698586
<AVERAGE-NET-ASSETS> 121884000
<PER-SHARE-NAV-BEGIN> 11.65
<PER-SHARE-NII> .76
<PER-SHARE-GAIN-APPREC> (.98)
<PER-SHARE-DIVIDEND> .62
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.78
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER HIGH INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 97920437
<INVESTMENTS-AT-VALUE> 94228680
<RECEIVABLES> 3679357
<ASSETS-OTHER> 1251
<OTHER-ITEMS-ASSETS> 426475
<TOTAL-ASSETS> 98335763
<PAYABLE-FOR-SECURITIES> 1190212
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1447242
<TOTAL-LIABILITIES> 2637454
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 101247704
<SHARES-COMMON-STOCK> 9779151
<SHARES-COMMON-PRIOR> 8442958
<ACCUMULATED-NII-CURRENT> 1981784
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3843420)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3687759)
<NET-ASSETS> 95698309
<DIVIDEND-INCOME> 418776
<INTEREST-INCOME> 9509093
<OTHER-INCOME> 0
<EXPENSES-NET> 673881
<NET-INVESTMENT-INCOME> 9253988
<REALIZED-GAINS-CURRENT> (12318761)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (3064773)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1795672
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9936582
<NUMBER-OF-SHARES-REDEEMED> 9441490
<SHARES-REINVESTED> 841101
<NET-CHANGE-IN-ASSETS> (2686976)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1876672
<OVERDISTRIB-NII-PRIOR> 525482
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 617198
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 673881
<AVERAGE-NET-ASSETS> 101096000
<PER-SHARE-NAV-BEGIN> 11.02
<PER-SHARE-NII> .94
<PER-SHARE-GAIN-APPREC> (1.27)
<PER-SHARE-DIVIDEND> .66
<PER-SHARE-DISTRIBUTIONS> .24
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.79
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER MONEY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 89427110
<INVESTMENTS-AT-VALUE> 89427110
<RECEIVABLES> 462256
<ASSETS-OTHER> 5623
<OTHER-ITEMS-ASSETS> 32522
<TOTAL-ASSETS> 89927511
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 256594
<TOTAL-LIABILITIES> 256594
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 89694620
<SHARES-COMMON-STOCK> 89694620
<SHARES-COMMON-PRIOR> 61220647
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (23703)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 89670917
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4161100
<OTHER-INCOME> 0
<EXPENSES-NET> 386636
<NET-INVESTMENT-INCOME> 3774464
<REALIZED-GAINS-CURRENT> (5168)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3769296
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3793971
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 175917558
<NUMBER-OF-SHARES-REDEEMED> 151084269
<SHARES-REINVESTED> 3640684
<NET-CHANGE-IN-ASSETS> 28449298
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 972
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 341324
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 386636
<AVERAGE-NET-ASSETS> 90264
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000752737
<NAME> OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 285911280
<INVESTMENTS-AT-VALUE> 287971910
<RECEIVABLES> 5396409
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