SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / X /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X/ No fee required.
/ / Fee Computed on table below per Exchange Act Rules 14a
-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: 1
- --------------------
1 - Set forth the amount on which the filing fee is calculated and
state how it was determined.
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
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OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Growth & Income Fund
6803 South Tucson Way, Englewood, Colorado 80112
NOTICE OF MEETING OF SHAREHOLDERS TO BE HELD
April 23, 1997
TO THE SHAREHOLDERS OF
OPPENHEIMER GROWTH & INCOME FUND:
Notice is hereby given that a Meeting of the Shareholders of
Oppenheimer Growth & Income Fund (the "Fund"), a series of
Oppenheimer Variable Account Funds (the "Trust"), will be held at
6803 South Tucson Way, Englewood, Colorado 80112, on April 23,
1997, at 10:00 A.M., Denver time, or any adjournments thereof, for
the following purposes:
(a) To approve the Fund's current Investment Advisory
Agreement between the Trust and OppenheimerFunds,
Inc. (the "Manager") (Proposal No. 1);
(b) To transact such other business as may properly
come before the meeting, or any adjournments
thereof.
Shareholders of record at the close of business on February 28,
1997, are entitled to notice of and to vote at the meeting. The
Proposal is more fully discussed in the Proxy Statement. Please
read it carefully before telling us, through your proxy, how you
wish your shares to be voted. The Board of Trustees of the Fund
recommends a vote in favor of the Proposal. WE URGE YOU TO SIGN,
DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of
Trustees,
Andrew J. Donohue, Secretary
March 7, 1997
Shareholders who do not expect to attend the meeting are requested
to indicate voting instructions on the enclosed proxy and to date,
sign and return it in the accompanying postage-paid envelope. To
avoid unnecessary duplicate mailings, we ask your cooperation in
promptly mailing your proxy no matter how large or small your
holdings may be.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Growth & Income Fund
6803 South Tucson Way, Englewood, Colorado 80112
PROXY STATEMENT
MEETING OF SHAREHOLDERS
TO BE HELD April 23, 1997
This proxy statement is furnished to the shareholders of
Oppenheimer Growth & Income Fund (the "Fund"), a series of
Oppenheimer Variable Account Funds (the "Trust"), in connection
with the solicitation by the Fund's Board of Trustees of proxies to
be used at a meeting (the "Meeting") of Shareholders to be held at
6803 South Tucson Way, Englewood, Colorado 80112, at 10:00 A.M.,
Denver time, on April 23, 1997, or any adjournments thereof. It is
expected that the mailing of this proxy statement will be made on
or about March 21, 1997. For a free copy of the annual report
covering the operations of the Fund for the fiscal year ending
December 31, 1996, call the OppenheimerFunds LifeTrust Service
Center at 1-800-258-4511.
The enclosed form of proxy, if properly executed and returned,
will be voted (or withheld from voting) in accordance with the
choices specified thereon and will be included in determining
whether there is a quorum to conduct the meeting. The proxy will
be voted in favor of the Proposal unless a choice is indicated to
vote against or to abstain from voting on that Proposal. If a
shareholder executes and returns a proxy but fails to indicate how
the votes should be cast, the proxy will be voted in favor of the
Proposal. The proxy may be revoked at any time prior to the voting
thereof by (1) writing to the Secretary of the Fund at 6803 South
Tucson Way, Englewood, Colorado 80112 (if received in time to be
acted upon); (2) attending the meeting and voting in person; or (3)
signing and returning a new proxy (if returned and received in time
to be voted). The cost of the printing and distribution of the
proxy materials is an expense of the Fund.
Shares Outstanding and Entitled to Vote. As of February 28, 1997,
the record date, there were 3,487,779.851 shares of the Fund issued
and outstanding. All shares of the Fund have equal voting rights,
and the holders of shares are entitled to one vote for each share
(and a fractional vote for a fractional share) held of record at
the close of business on the record date. As of the record date,
all of the outstanding shares of the Fund were held by Separate
Accounts ("Accounts") of Massachusetts Mutual Life Insurance
Company ("MassMutual") and MML Bay State Life Insurance Company
("Bay State"), both located in Springfield, MA. Shares of the Fund
held in each Account will be voted based on instructions received
from the owners of such Accounts ("Account Owners") having a voting
interest in the Fund. Shares for which no instructions are
received in time to be voted and shares which are not attributable
to Account Owners will be voted by MassMutual or Bay State,
whichever is record holder, in the same proportion as shares of
that Account for which instructions are received in time to be
voted.
APPROVAL OF CURRENT INVESTMENT ADVISORY AGREEMENT
Oppenheimer Variable Account Funds (the "Trust") has an
Investment Advisory Agreement (the "Agreement") with
OppenheimerFunds, Inc., Two World Trade Center, 34th Floor, New
York, NY 10048-0203, (the "Manager") on behalf of the Fund dated
May 1, 1995. At a meeting held December 17, 1996, the Agreement
was most recently approved by the Trust's Board of Trustees,
including a majority of the Trustees who are not "interested
persons," (as defined in the Investment Company Act), of the Trust
or the Manager ("disinterested Trustees"). The Manager, as the
Fund's only shareholder, approved the Agreement on May 1, 1995.
The Agreement is being submitted to the Fund's public shareholders
for the first time. A copy of the Agreement, attached to this
proxy statement as Exhibit A has not been modified or amended since
it was last approved by the sole shareholder and the Board
recommends approval of the Agreement without any amendments. In
the Agreement, the Manager is referred to by its prior name,
"Oppenheimer Management Corporation."
Rate of Compensation Under the Proposed Agreement. Under the
Agreement, the Manager supervises the investment operations of the
Fund and the composition of its portfolio and furnishes the Fund
advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities. The management
fee payable monthly under the Agreement to the Manager is computed
on the average net assets of the Fund as of the close of business
each day at the following annual rate: .75% on the first $200
million of average annual net assets, .72% on the next $200
million, .69% on the next $200 million, .66% on the next $200
million and .60% of average annual net assets in excess of $800
million. During the fiscal year ended December 31, 1996, the Fund
paid a management fee of $160,819 to the Manager under the
Agreement. The Manager also acts as investment adviser to other
funds that have similar or comparable investment objectives. A list
of those funds and the net assets and advisory fee rates paid by
those funds is contained in Exhibit B to this Proxy Statement.
The Agreement requires the Manager, at its expense, to
provide the Fund with adequate office space, facilities and
equipment as well as to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
administration for the 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 the Fund. Expenses not expressly assumed by the
Manager under the Agreement are paid by the Fund. The Agreement
lists examples of expenses paid by the Fund, 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 certificate issuance costs, certain printing
and registration costs, and non-recurring expenses, including
litigation.
The Agreement contains no expense limitation. However,
independently of the Agreement, the Manager has undertaken that the
total expenses of the Fund in any fiscal year (including the
management fee but excluding taxes, interest, brokerage fees and
any extraordinary non-recurring expenses, such as litigation)
shall not exceed 2.5% of the first $30 million of the Fund's net
assets, plus 2% of the next $70 million, plus 1.5% of net assets in
excess of $100 million. The Manager has reserved the right to
change or eliminate this expense limitation at any time. The
Manager has advised the Trust that it may withdraw the expense
limit undertaking in the near future, regardless of whether this
Proposal is approved. During the Fund's most recent fiscal year
ended December 31, 1996 the Fund's expenses did not exceed the
voluntary expense limit undertaking .
The Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of
its duties or reckless disregard of its obligations under the
Agreement, the Manager is not liable for any loss sustained by the
Trust or the Fund in connection with matters to which the Agreement
relates. The Agreement permits the Manager to act as investment
adviser for any other person, firm or corporation and to use the
name "Oppenheimer" in connection with other investment companies
for which it may act as investment adviser. If the Manager shall
no longer act as investment adviser to the Fund, the right of the
Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
Brokerage Provisions of the Agreement. One of the duties of the
Manager under the Agreement is to arrange the portfolio
transactions for the Fund. The Agreement contains provisions
relating to the employment of broker-dealers ("brokers") to effect
the Fund's portfolio transactions. In doing so, the Manager is
authorized by the Agreement to employ such 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 Fund 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 be aware of the current rates of
eligible brokers and to minimize the commissions paid to the extent
consistent with the interest and policies of the Fund as
established by its 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 Agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the
Fund 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. Subject to the foregoing considerations, the Manager may
also consider sales of shares of the Fund and other investment
companies managed by the Manager or its affiliates as a factor in
the selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the Agreement, 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 Agreement and the procedures and
rules described above. In either case, 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 or for certain fixed-income
agency transactions in the secondary market, and are otherwise paid
only if it appears likely that a better price or execution can be
obtained. When the Fund engages 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 Fund seeks 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 Fund
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 permits the Manager
to use concessions on fixed price offerings to obtain research in
the same manner as is permitted for agency transactions. The Board
also permits the Manager to use stated commissions on secondary
fixed-income agency trades to obtain research where the broker has
represented to the Manager that: (i) the trade is not from or for
the broker's own inventory, (ii) the trade was executed by the
broker on an agency basis at the stated commission, and (iii) the
trade is not a riskless principal transaction.
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 Manager and the Transfer Agent. Subject to the authority of
the Board of Trustees, the Manager is responsible for the day-to-
day management of the Fund's business, pursuant to its investment
advisory agreement with the Fund. OppenheimerFunds Services, a
division of the Manager, P.O. Box 5270, Denver, CO 80217, serves as
the transfer agent for the Fund on an "at-cost" basis, for which it
did not receive any payment from the Fund during the fiscal year
ended December 31, 1996.
The Manager (including a subsidiary) currently manages
investment companies, including other Oppenheimer funds, with
assets of more than $62 billion as of December 31, 1996, and with
more than 3 million shareholder accounts. The Manager is a wholly-
owned subsidiary of Oppenheimer Acquisition Corp. ("OAC"), a
holding company controlled by Massachusetts Mutual Life Insurance
Company ("MassMutual"). The Manager and OAC are located at Two
World Trade Center, New York, New York 10048. MassMutual is
located at 1295 State Street, Springfield, Massachusetts 01111.
OAC acquired the Manager on October 22, 1990. As indicated below,
the common stock of OAC is owned by (i) certain officers and/or
directors of the Manager, (ii) MassMutual and (iii) another
investor. No institution or person holds 5% or more of OAC's
outstanding common stock except MassMutual. MassMutual has engaged
in the life insurance business since 1851.
The common stock of OAC is divided into three classes. At
December 31, 1996, MassMutual held (i) all of the 2,160,000 shares
of Class A voting stock, (ii) 716,943 shares of Class B voting
stock, and (iii) 1,353,873 shares of Class C non-voting stock. This
collectively represented 86.2% of the outstanding common stock and
94.2% of the voting power of OAC as of that date. Certain officers
and/or directors of the Manager held (i) 407,866 shares of the
Class B voting stock, representing 8.3% of the outstanding common
stock and 4.1% of the voting power, and (ii) options acquired
without cash payment which, when they become exercisable, allow the
holders to purchase up to 684,407 shares of Class C non-voting
stock. That group includes persons who serve as officers of the
Fund (Ms. Macaskill and Messrs. Donohue, Bowen, Levine, Doll,
Milnamow, Zack, Bishop and Farrar) and Mr. Swain, who serves as a
Trustee of the Fund. Holders of OAC Class B and Class C common
stock may put (sell) their shares and vested options to OAC or
MassMutual at a formula price (based on earnings of the Manager).
MassMutual may exercise call (purchase) options on all outstanding
shares of both such classes of common stock and vested options at
the same formula price. During the fiscal year ended December 31,
1996, the only transaction by a person who serves as a Trustee of
the Fund were by Mr. Sam Freedman, who surrendered to OAC 45,474
stock appreciation rights issued in tandem with the Class C OAC
options, for a cash payment of $4,497,833.34. Mr. Freedman no
longer holds any OAC stock appreciation rights or other financial
interests in the Manager or any of its affiliates.
The names and principal occupations of the executive officers
and directors of the Manager are as follows: Bridget A. Macaskill,
President, Chief Executive Officer and a director; Donald W. Spiro,
Chairman Emeritus; Robert G. Galli and James C. Swain, Vice
Chairmen; Robert C. Doll, Executive Vice President and a director;
Tilghman G. Pitts III, Executive Vice President and a director;
Andrew J. Donohue, Executive Vice President, General Counsel and a
director; O. Leonard Darling, Paula Gabriele, Barbara Hennigar,
James Ruff, Loretta McCarthy and Nancy Sperte, Executive Vice
Presidents; George C. Bowen, Senior Vice President and Treasurer;
Peter M. Antos, Victor Babin, Robert A. Densen, Ronald H. Fielding,
Robert E. Patterson, Richard Rubinstein, Arthur Steinmetz, Ralph
Stellmacher, John Stoma, Jerry A. Webman, William L. Wilby and
Robert G. Zack, Senior Vice Presidents. These officers are located
at one of the four offices of the Manager: Two World Trade Center,
New York, NY 10048-0203; 6803 South Tucson Way, Englewood, CO
80112; 350 Linden Oaks, Rochester, NY 14625-2807 and One Financial
Plaza, 755 Main Street, Hartford, CT 06103.
Considerations by the Board of Trustees. The Agreement was first
approved and adopted by the Trustees when the Fund was being
organized in 1995 as the ninth series of the Trust. At that time,
the Manager had advised the Trustees that the investment advisory
fee rate was fair and reasonable. After their deliberations, the
Trustees had concluded that the terms and conditions of the
Agreement, the serviced to be provided by the Manager, and the
investment advisory fee rate were reasonable.
In connection with the annual review by the Board of Trustees
in December 1996 to determine if the Agreement should be approved
and renewed, the Board and the Independent Trustees considered and
reviewed materials prepared for this purpose by an independent
consultant engaged to assist the Independent Trustees for this
purpose. The Board also considered materials provided by the
Manager. As a result of its deliberations, the Board of Trustees,
including the Independent Trustees, concluded to approve and renew
the Agreement without amendment for an additional one year period.
The materials reviewed and considered by the Board at the
December 1996 meeting included information on: the nature, quality
and extent of services rendered by the Manager to the Fund; an
analysis of the Fund's investment advisory fee, investment
performance, expense ratios and expenses of the Fund as compared in
each case to comparable mutual funds; the investment performance of
other mutual funds for which the Manager acts as investment
adviser; information on the portfolio manager for the Fund and his
experience and qualifications; the profitability of the Manager
from its investment advisory operations for the Fund and other
mutual funds for which it or its affiliates are the investment
adviser; the financial condition and resources of the Manager and
its parent, OAC; the benefits which the Managerf obtains from its
relationship with the Fund; and economies of scale made available
to the Fund by the Manager. The Board also considered the terms
and conditions of the Agreement, and considered alternatives to the
use of the Manager, and concluded that the performance of the
Manager in rendering the services pursuant to the Agreement have
been satisfactory.
The Board of Trustees, including the Independent Trustees,
considered all of the above matters in reaching its decision to
approve the Agreement and to renew it for an additional year. The
Board did not single out any one factor or group of factors as
being more important than other factors, but considered such
matters together in arriving at its decision.
Determination by the Independent Trustees and the Board of
Trustees. After completion of its review, the Independent Trustees
recommended that the Board of Trustees approve, and the Board
unanimously approved, the Agreement.
Vote Required. An affirmative vote of the holders of a "majority"
(as defined in the Investment Company Act) of the outstanding
voting securities of the Fund is required for approval of the
Agreement for the Fund. Such "majority" vote is defined in the
Investment Company Act as the vote of the holders of the lesser of:
(i) 67% or more of the voting securities present or represented by
proxy at the shareholder meeting, if the holders of more than 50%
of the outstanding voting securities are present or represented by
proxy, or (ii) more than 50% of the outstanding voting securities.
The Board of Trustees recommends a vote in favor of approving the
Investment Advisory Agreement.
RECEIPT OF SHAREHOLDER PROPOSALS
The Trust is not required to hold shareholder meetings on a
regular basis. Special meetings of shareholders may be called from
time to time by either the Trust or the shareholders (under special
conditions described in the Trust's Statement of Additional
Information). Under the proxy rules of the Securities and
Exchange Commission, shareholder proposals which meet certain
conditions may be included in the Trust's proxy statement and proxy
for a particular meeting. Those rules require that for future
meetings, the shareholder must be a record or beneficial owner of
Trust shares with a value of at least $1,000 at the time the
proposal is submitted and for one year prior thereto, and must
continue to own such shares through the date on which the meeting
is held. Another requirement relates to the timely receipt by the
Trust of any such proposal. Under those rules, a proposal
submitted for inclusion in the Trust's proxy material for the next
meeting after the meeting to which this proxy statement relates
must be received by the Trust a reasonable time before the
solicitation is made. The fact that the Trust receives a proposal
from a qualified shareholder in a timely manner does not ensure its
inclusion in the proxy material, since there are other requirements
under the proxy rules for such inclusion.
OTHER BUSINESS
Management of the Trust knows of no business other than the
matters specified above that will be presented at the Meeting.
Since matters not known at the time of the solicitation may come
before the Meeting, the proxy as solicited confers discretionary
authority with respect to such matters as properly come before the
Meeting, including any adjournment or adjournments thereof, and it
is the intention of the persons named as attorneys-in-fact in the
proxy to vote the proxy in accordance with their judgment on such
matters.
By Order of the Board of Trustees,
/s/ Andrew J. Donohue
-------------------------
Andrew J. Donohue, Secretary
March 7, 1997
<PAGE>
Exhibit A
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, 1996,
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).
<PAGE>
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
--------------------------
Mitchel J. Lindauer
Vice President
<PAGE>
EXHIBIT B
Information on Comparable
Funds Managed by OppenheimerFunds, Inc.
<TABLE>
<CAPTION>
Name of Fund Approximate
Net Assets as Adviosry Fee Rate
of 12/31/96 as % of Average Annual
($ Millions) Net Assets
<S> <C> <C>
Oppenheimer Total Return $1,615.1 .75% of the fist $100 milion of
Fund, Inc. net assets,
.70% of the next $100 million,
.65% of the next $100 million,
.60% of the next $100 million,
.55% of the next $100 million, and
.50% of average annual net assets
in excess of $500 million
Oppenheimer Equity $2,678.3 .75 of the first $100 million of average net
Fund, Inc. assets,
.70% of the next $100 million,
.65% of the next $100 million,
.60% of the next $100 million,
.55% of the next $100 million, and
.50% of average annual net assets
in excess of $500 million
Oppenheimer Main Street
Income & Growth Fund,
a series of Oppenheimer Main
Street Funds, Inc. $6,809.1 .65% of the first $200 million of average annual
net assets,
.60% of the next $150 million,
.55% of the next $150 million, and
.45% of average annual net assets in excess of $500
million
Oppenheimer Multiple
Strategies Fund, another
series of Oppenheimer Variable
Account Funds $484.3 0.75% of the first $200 million of average annual
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 average annual net
assets in excess of $800 million
Oppenheimer Multiple $308.6 0.75% of the first $200 million of average annual
Strategies Fund 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 average annual net assets in excess
of $800 million
Oppenheimer Disciplined
Allocation Fund $241.1 0.625% of the first $300 million of average annual
net assets,
0.500% of the next $100 million,
and 0.450% of average annual net assets in excess
of $400 million
Oppenheimer Strategic Income
& Growth Fund $84.6 0.75% of the first $200 million of average annual
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 average annual net assets in excess
of $1 billion
Oppenheimer Quest Growth &
Income Value Fund* $69.3 0.85% of average annual net assets
Oppenheimer Quest Opportunity
Value Fund* $2087.5 1.00% of the first $400 million of average annual
net assets,
0.90% of the next $400 million of average annual
net assets,
and 0.85% of average annual net assets over $800
million
</TABLE>
_______________
*OppenheimerFunds, Inc. pays a subadvisory fee to OpCap Advisors
for providing day-to-day portfolio management.
<PAGE>
Oppenheimer Growth & Income Fund, a series of Oppenheimer Variable
Account Funds/Proxy for Shareholders Meeting to be held April 23,
1997
The undersigned indirect shareholder of Oppenheimer Growth & Income
Fund (the "Fund"), a series of Oppenheimer Variable Account Funds,
does hereby direct ______________ (the "Insurance Company") to
appoint George C. Bowen, Rendle Myer, Robert Bishop and Scott
Farrar, and each of them, as attorneys-in-fact and proxies of the
Insurance Company, with full power of substitution, to attend the
Meeting of Shareholders of the Fund to be held April 23, 1997, at
6803 South Tucson Way, Englewood, Colorado at 10:00 A.M., Denver
time, and at all adjournments thereof, and to vote the shares held
in the name of the Insurance Company for the undersigned on the
record date for said meeting on the proposal as specified on this
proxy ballot. Said attorneys-in-fact shall vote in accordance with
their best judgment as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHICH
RECOMMENDS A VOTE FOR THE PROPOSAL ON THIS PROXY BALLOT. THE
SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED ON THIS PROXY
BALLOT OR FOR IF NO CHOICE IS INDICATED.
Please mark your proxy, date and sign it, and return it promptly in
the accompanying envelope, which requires no postage if mailed in
the United States.
Approval of the Fund's current Investment Advisory (Proposal No.
1).
FOR____ AGAINST____ ABSTAIN____
Dated: ___________________________, 1997
(Month) (Day)
___________________________________
Signature(s)
___________________________________
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When
signing as custodian, attorney, executor, administrator, trustee,
etc., please give your full title as such. All joint owners should
sign this proxy. If the account is registered in the name of a
corporation, partnership or other entity, a duly authorized
individual must sign on behalf of such entity and give his or her
title.
