Registration No. 2-93177
File No. 811-4108
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [ x ]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 34 [ x ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ x ]
Amendment No. 30 [ x ]
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Oppenheimer Variable Account Funds
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(Exact Name of Registrant as Specified in Charter)
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6803 South Tucson Way, Englewood, Colorado 80112
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(Address of Principal Executive Offices) (Zip Code)
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303-768-3200
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Registrant's Telephone Number, including Area Code)
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Andrew J. Donohue, Esq.
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OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(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, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On May 1, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On _______________ pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Money Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Money Fund/VA is a money market mutual fund. Its goal is to
seek the maximum current income from investments in money market securities that
is consistent with low capital risk and the maintenance of liquidity.
Shares of the Fund are sold only as the underlying investment for variable
life insurance policies, variable annuity contracts and other insurance company
separate accounts. A prospectus for the insurance product you have selected
accompanies this Prospectus and explains how to select shares of the Fund as an
investment under that insurance product.
This Prospectus contains important information about the Fund's objective,
its investment policies, strategies and risks. Please read this Prospectus (and
your insurance product prospectus) carefully before you invest and keep them for
future reference about your account.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the Fund's securities nor has it determined that this
Prospectus is accurate or complete. It is a criminal offense to represent
otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund seeks maximum current income
from investment in money market securities consistent with low capital risk and
the maintenance of liquidity.
What Does the Fund Invest In? The Fund is a money market fund. It invests in a
variety of high-quality money market securities to seek current income. Money
market securities are short-term debt instruments issued by the U.S. government,
domestic and foreign corporations or financial institutions and other entities.
They include, for example, bank obligations, repurchase agreements, commercial
paper, other corporate debt obligations and government debt obligations maturing
in 397 days or less.
Who Is the Fund Designed For? The Fund's shares are available only as an
underlying investment option for certain variable annuities, variable life
insurance policies and insurance company separate accounts. The Fund is an
option under those insurance products for investors who want to earn income at
current money market rates while preserving the value of their investment,
because the Fund is managed to keep its share price stable at $1.00. The Fund
does not invest for the purpose of seeking capital appreciation or gains.
Main Risks of Investing in the Fund
All investments carry risks to some degree. Funds that invest in debt
obligations for income may be subject to credit risks and interest rate risks.
However, the Fund is a money market fund that seeks income by investing in
short-term debt securities that must meet strict credit and maturity standards
set by its Board of Trustees following special rules for money market funds
under federal law. Those rules require the Fund to maintain
o high credit quality in its portfolio,
o a short average portfolio maturity to reduce the effects of changes in
interest rates on the value of the Fund's securities and
diversification of the Fund's investments among issuers to reduce the effects of
a default by any one issuer on the value of the Fund's shares.
Even so, there are risks that one or more of the Fund's investments could
have its credit rating downgraded, or the issuer could default, or that interest
rates could rise sharply, causing the value of the investment (and the Fund's
share price) to fall. If insurance products holding Fund shares redeem them at a
rate greater than anticipated by the Manager, the Fund might have to sell
portfolio securities prior to their maturity at a loss. As a result, there is a
risk that the Fund's shares could fall below $1.00 per share. Income on
short-term securities tends to be lower than income on longer term debt
securities, so the Fund's yield will likely be lower than the yield on
longer-term fixed income funds.
The Fund's investment manager, OppenheimerFunds, Inc., tries to reduce risks by
diversifying investments and by carefully researching securities before they are
purchased. However, an investment in the Fund is not a complete investment
program. The rate of the Fund's income will vary from day to day, generally
reflecting changes in overall short-term interest rates. There is no assurance
that the Fund will achieve its investment objective.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
The Fund's Past Performance
The bar chart and table below show how the Fund's returns may vary over time, by
showing changes in the Fund's performance1 from year to year for the last ten
calendar years and its average annual total returns for the 1-, 5- and 10- year
periods. Variability of returns is one measure of the risks of investing in a
money market fund. The Fund's past investment performance is not necessarily an
indication of how the Fund will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for annual total return data for bar chart.]
For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not
annualized) was 1.17%. Charges imposed by the separate accounts that invest in
the Fund are not included in the calculations of return in this bar chart, and
if those charges were included, the returns would be less than those shown.
During the period shown in the bar chart, the highest return (not annualized)
for a calendar quarter was 2.38% (2nd Q '89) and the lowest return for a
calendar quarter was 0.77% (2nd Q'93).
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Average Annual Total
Returns for the periods
ended December 31, 1998 1 Year 5 Years 10 Years
Oppenheimer Money 5.25% 5.10% 5.61%
Fund/VA
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The returns in the table measure the performance of a hypothetical account
without deducting charges imposed by the separate accounts that invest in the
Fund and assume that all distributions have been reinvested in additional
shares.
The Fund's total returns should not be expected to be the same as the returns
of other Oppenheimer funds, even if both funds have the
same portfolio managers and/or similar names
The total returns are not the Fund's current yield. The Fund's current yield
more closely reflects the Fund's current earnings.
To obtain the Fund's current 7-day yield, call the Transfer Agent toll-free
at 1-888-470-0861.
_________________
1 The Fund has two classes of shares. This Prospectus offers only the class of
shares that has no name designation, and the performance shown is for that
class. The other class of shares, Class 2, are not offered in this Prospectus.
About the Fund's Investments
The Fund's Principal Investment Policies. The Fund invests in short-term money
market securities meeting quality standards established for money market funds
under the Investment Company Act. The allocation of the Fund's portfolio among
the different types of permitted investments will vary over time based on the
Manager's evaluation of investment opportunities. The Fund's portfolio might not
always include all of the different types of investments described below. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
|X| What Types of Money Market Securities Does the Fund Invest In? The
following is a brief description of the types of money market securities the
Fund can invest in. Money market securities are high-quality, short-term debt
instruments that may be issued by the U.S. government, corporations, banks or
other entities. They may have fixed, variable or floating interest rates. All of
the Fund's investments must meet the special quality requirements set under the
Investment Company Act and described briefly below.
|_| U.S. Government Securities. These are obligations issued or guaranteed
by the U.S. government or any of its agencies or federally-chartered
corporations referred to as instrumentalities. Some are direct obligations of
the U.S. Treasury, such as Treasury bills, notes and bonds, and are supported by
the full faith and credit of the United States. That means the U.S. government
pledges its taxing power to make timely payments in interest and to repay
principal on the obligation. Other U.S. government securities, such as
pass-through certificates issued by the Government National Mortgage Association
(Ginnie Mae), are also supported by the full faith and credit of the U.S.
government.
Some U.S. government securities are supported by the right of the issuer to
borrow from the U.S. Treasury, such as obligations of Federal National Mortgage
Corporation (Fannie Mae). Others may be supported only by the credit of the
instrumentality, such as obligations of Federal Home Loan Mortgage Corporation
(Freddie Mac). The Fund's investing in U.S. government securities does not mean
that its share price or returns are guaranteed or backed by the U.S. government.
|_| Bank Obligations. The Fund can invest in time deposits, certificates of
deposit and bankers' acceptances. These investments must be:
-- obligations of a domestic bank having total assets of at least $1
billion, or
-- U.S. dollar-denominated obligations of a foreign bank with total
assets of at least U.S. $1 billion.
|_| Commercial Paper. Commercial paper is a short-term, unsecured
promissory note of a domestic or foreign company.
|_| Corporate Obligations. The Fund can invest in other short-term
corporate debt obligations, besides commercial paper.
|_| Other Money Market Obligations. The Fund can invest in other money
market obligations that are subject to repurchase agreements or guaranteed
as to their principal and interest by a domestic bank or by a corporation
whose commercial paper may be purchased by the Fund. The bank must meet
credit criteria set by the Fund's Board of Trustees.
The Fund can buy other money market instruments that its Board of
Trustees approves from time to time. They must be U.S. dollar-denominated
short-term investments that the Manager has determined to have minimal
credit risks. They also must be of "high quality" as determined by a
national rating organization. To a limited extent the Fund may buy an
unrated security that the Manager determines to have met those
qualifications.
The Fund can also purchase floating or variable rate demand notes,
asset-backed securities, and bank loan participation agreements. The Fund's
investments in them may be subject to restrictions adopted by the Board
from time to time.
|X| What are the Fund's Credit Quality and Maturity Standards? Debt
instruments, including money market instruments, are subject to credit
risk, which is the risk that the issuer might not make timely payments of
interest on the security nor repay principal when it is due. The Fund may
buy only those securities that meet standards set in the Investment Company
Act for money market funds. The Fund's Board has adopted procedures to
evaluate securities that are being considered for the Fund's portfolio and
the Manager has the responsibility to implement those procedures when
selecting investments for the Fund.
In general, those procedures require that securities be rated in one
of the two highest short-term rating categories of two national rating
organizations. At least 95% of the Fund's assets must be invested in
securities of issuers with the highest credit rating. No more than 5% of
the Fund's assets can be invested in securities with the second highest
credit rating. In some cases, the Fund can buy securities rated by one
rating organization or unrated securities that the Manager judges to be
comparable in quality to the two highest rating categories.
The procedures also limit the percentage of the Fund's assets
that can be invested in the securities of any one issuer (other than
the U.S. government, its agencies and instrumentalities), to spread
the Fund's investment risks. A security's maturity must not exceed 397
days. Finally, the Fund must maintain an average portfolio maturity of
not more than 90 days, to reduce interest rate risks.
|X| Special Portfolio Diversification Requirements. To enable a
variable annuity or variable life insurance contract based on an
insurance company separate account to qualify for favorable tax
treatment under the Internal Revenue Code, the underlying investments
must follow special diversification requirements that limit the
percentage of assets that can be invested in securities of particular
issuers. The Fund's investment program is managed to meet those
requirements, in addition to other diversification requirements under
the Internal Revenue Code and the Investment Company Act that apply to
publicly-sold mutual funds.
Failure by the Fund to meet those special requirements could
cause earnings on a contract owner's interest in an insurance company
separate account to be taxable income. Those diversification
requirements might also limit, to some degree, the Fund's investment
decisions in a way that could reduce its performance.
|X| Can the Fund's Investment Objective and Policies Change? The
Fund's Board of Trustees can 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 Fund's investment objective is a
fundamental policy. Investment restrictions that are fundamental
policies are listed in the Statement of Additional Information. An
investment policy is not fundamental unless this Prospectus or the
Statement of Additional Information says that it is.
Other Investment Strategies. To seek its objective, the Fund can also use the
investment techniques and strategies described below. The Manager might not
always use all of the different types of techniques and investments described
below. These techniques involve certain risks but are also subject to the Fund's
credit and maturity standards. The Statement of Additional Information contains
more information about some of these practices, including limitations on their
use that are designed to reduce some of the risks.
|X| Floating Rate/Variable Rate Notes. The Fund can purchase
notes that have floating or variable interest rates. Variable rates
are adjustable at stated periodic intervals. Floating rates are
adjusted automatically according to a specified market index for such
investments, such as the prime rate of a bank. If the maturity of a
note is more than 397 days, the Fund can buy it if it has a demand
feature. That feature must permit the Fund to recover the principal
amount of the note on not more than thirty days' notice at any time,
or at specified times not exceeding 397 days from the date of
purchase.
|X| Obligations of Foreign Banks and Foreign Branches of U.S.
Banks. The Fund can invest in U.S. dollar-denominated securities of
foreign banks having total assets at least equal to U.S. $1 billion.
It can also buy U.S. dollar-denominated securities of foreign branches
of U.S. banks. These securities have additional investment risks
compared to obligations of domestic branches of U.S. banks. Risks that
may affect the foreign bank's ability to pay its debt include:
|_| political and economic developments in the country in which
the bank or branch is located,
|_| imposition of withholding taxes on interest income payable on
the securities,
|_| government seizure or nationalization of foreign deposits,
|_| the establishment of exchange control regulations and
|_| the adoption of other governmental restrictions that might
limit the repayment of principal and/or payment of interest on those
securities.
Additionally, not all of the U.S. and state banking laws and
regulations that apply to domestic banks and that are designed to
protect depositors and investors apply to foreign branches of domestic
banks. None of those U.S. and state regulations apply to foreign
banks.
|X| Bank Loan Participation Agreements. The Fund may invest in bank loan
participation agreements. They represent an undivided interest in a loan made by
the issuing bank in the proportion the Fund's interest bears to the total
principal amount of the loan. In evaluating the risk of these investments, the
Fund looks to the creditworthiness of the borrower that is obligated to make
principal and interest payments on the loan.
|X| Asset-Backed Securities. The Fund can invest in asset-backed
securities. These are fractional interests in pools of consumer loans or other
trade receivables, such as credit card or auto loan receivables, which are the
obligations of a number of different parties. The income from the underlying
pool is passed through to holders, such as the Fund.
These securities may be supported by a credit enhancement, such as a letter
of credit, a guarantee (by a bank or broker) or a preference right. However, the
credit enhancement may apply only to a fraction of the security's value. If the
issuer of the security has no security interest in the assets that back the
pool, there is a risk that the Fund could lose money if the issuer defaults on
its obligation to pay interest and repay the principal.
|X| Repurchase Agreements. The Fund can enter into repurchase agreements.
In a repurchase transaction, the Fund buys a security and simultaneously sells
it to the vendor for delivery at a future date. The Fund's repurchase agreements
must be fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Fund might incur costs in disposing of the
collateral and might experience losses if there is any delay in its ability to
do so. There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of 7 days or less. It cannot invest more than
10% of its net assets in repurchase agreements maturing in more than 7 days.
|X| Illiquid and Restricted Securities. Investments may be illiquid because
there is no active trading market for them, making it difficult to value them or
dispose of them promptly at an acceptable price. Restricted securities may have
a contractual limit on resale or may require registration under federal
securities laws before they can be sold publicly. The Fund will not invest more
than 10% of its net assets in illiquid or restricted securities. That limit may
not apply to certain restricted securities that are eligible for resale to
qualified institutional purchasers. The Manager monitors holdings of illiquid
securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity. Difficulty in selling a security may result in a
loss to the Fund or additional costs.
Year 2000 Risks. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Fund invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Fund and other
investors. That failure could have a negative impact on handling securities
trades, pricing and accounting services. Data processing errors by government
issuers of securities could result in economic uncertainties, and those issuers
might incur substantial costs in attempting to prevent or fix such errors, all
of which could have a negative effect on the Fund's investments and returns.
The Manager, the Distributor and the Transfer Agent have been working on
necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted in time for that event, although there
cannot be assurance of success. Additionally, the services they provide depend
on the interaction of their computer systems with those of insurance companies
with separate accounts that invest in the Fund, brokers, information services,
the Fund's Custodian and other parties. Therefore, any failure of the computer
systems of those parties to deal with the year 2000 might also have a negative
effect on the services they provide to the Fund. The extent of that risk cannot
be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the
Fund's 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
an Investment Advisory Agreement that states the Manager's responsibilities. The
Agreement sets the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The Manager
(including subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999,
and with more than 4 million shareholder accounts. The Manager is located at Two
World Trade Center, 34th Floor, New York, New York 10048-0203.
|X| Portfolio Manager. The portfolio managers of the Fund are Arthur J.
Zimmer and Carol E. Wolf. They are the persons principally responsible for the
day-to-day management of the Fund's portfolio. Mr. Zimmer has had that
responsibility since June 1998, and Ms.Wolf since July 1998. Each is also a Vice
President of the Fund. Mr. Zimmer is a Senior Vice President and Ms. Wolf is a
Vice President of the Manager. Each serves as an officer and portfolio manager
for other Oppenheimer funds and has been an officer of the Manager since 1990.
|X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays
the Manager an advisory fee at an annual rate that declines on additional assets
as the Fund grows: 0.450% of the first $500 million of average annual net
assets, 0.425% of the next $500 million, 0.400% of the next $500 million, and
0.375% of average annual net assets in excess of $1.5 billion. The Fund's
management fee for its last fiscal year ended December 31, 1998, was 0.45% of
the Fund's average annual net assets.
|X| Possible Conflicts of Interest. The Fund offers its shares to separate
accounts of different insurance companies that are not affiliated with each
other, as an investment for their variable annuity, variable life and other
investment product contracts. While the Fund does not foresee any disadvantages
to contract owners from these arrangements, it is possible that the interests of
owners of different contracts participating in the Fund through different
separate accounts might conflict. For example, a conflict could arise because of
differences in tax treatment.
The Fund's Board has procedures to monitor the portfolio for possible
conflicts to determine what action should be taken. If a conflict occurs, the
Board might require one or more participating insurance company separate
accounts to withdraw their investments in the Fund. That could force the Fund to
sell securities at disadvantageous prices, and orderly portfolio management
could be disrupted. Also, the Board might refuse to sell shares of the Fund to a
particular separate account, or could terminate the offering of the Fund's
shares if required to do so by law or if it would be in the best interests of
the shareholders of the Fund to do so.
Investing in the Fund
How to Buy, and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased only by separate
investment accounts of participating insurance companies as an underlying
investment for variable life insurance policies, variable annuity contracts or
other investment products. Individual investors cannot buy shares of the Fund
directly. Please refer to the accompanying prospectus of the participating
insurance company for information on how to select the Fund as an investment
option for that variable life insurance policy, variable annuity or other
investment product. The Fund reserves the right to refuse any purchase order
when the Manager believes it would be in the Fund's best interests to do so.
Information about your investment in the Fund through your variable annuity
contract, variable life insurance policy or other plan can be obtained only from
your participating insurance company or its servicing agent. The Fund's Transfer
Agent does not hold or have access to those records. Instructions for buying or
selling share of the Fund should be given to your insurance company or its
servicing agent, not directly to the Fund or its Transfer Agent.
|X| At What Price Are Shares Sold? Shares are sold at their offering price,
which is the net asset value per share. The net asset value will normally remain
at $1.00 per share. However, there are no guarantees that the Fund will be able
to maintain a net asset value of $1.00 per share. The Fund does not impose any
sales charge on purchases of its shares. If there are any charges imposed under
the variable annuity, variable life or other contract through which Fund shares
are purchased, they are described in the accompanying prospectus of the
participating insurance company.
The net asset value per share is determined as of the close of The New York
Stock Exchange on each day that the exchange is open for trading (referred to in
this Prospectus as a "regular business day"). The Exchange normally closes at
4:00 P.M., New York time, but may close earlier on some days. All references to
time in this Prospectus mean "New York time."
The net asset value per share is determined by dividing the value of the
Fund's net assets attributable to a class of shares by the number of shares of
that class that are outstanding. Under a policy adopted by the Fund's Board of
Trustees, the Fund uses the amortized cost method to value its securities to
determine the Fund's net asset value.
The offering price that applies to an order from a participating insurance
company is based on the next calculation of the net asset value per share that
is made after the insurance company (as the Fund's designated agent to receive
purchase orders) receives a purchase order from its contract owners to purchase
Fund shares on a regular business day, provided that the Fund receives the order
from the insurance company by 9:30 A.M. on the next regular business day at the
offices of its Transfer Agent in Denver, Colorado.
|X| Classes of Shares. The Fund offers two different classes of shares. The
class of shares offered by this Prospectus has no "name" designation. The other
class is designated as Class 2. The different classes of shares represent
investments in the same portfolio of securities but are expected to be subject
to different expenses.
This prospectus may not be used to offer or sell Class 2 shares. A
description of the Service Plans that affect only Class 2 shares of the Fund is
contained in the Fund's prospectus that offers Class 2 shares. That prospectus
may be obtained without charge by contacting any participating insurance company
that offers Class 2 shares of the Fund as an investment for its separate
accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc., by
calling toll-free at 1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the participating insurance
companies that hold Fund shares in their separate accounts for the benefit of
variable annuity contracts, variable life insurance policies or other investment
products can place orders to redeem shares. Contract holders and policy holders
should not directly contact the Fund or its transfer agent to request a
redemption of Fund shares. Contract owners should refer to the withdrawal or
surrender instructions in the accompanying prospectus of the participating
insurance company.
The share price that applies to a redemption order is the next net asset
value per share that is determined after the participating insurance company (as
the Fund's designated agent) receives a redemption request on a regular business
day from its contract or policy holder, provided that the Fund receives the
order from the insurance company, generally by 9:30 a.m. the next regular
business day at the office of its Transfer Agent in Denver, Colorado. The Fund
normally sends payment by Federal Funds wire to the insurance company's account
the day after the Fund receives the order (and no later than 7 days after the
Fund's receipt of the order). Under unusual circumstances determined by the
Securities and Exchange Commission, payment may be delayed or suspended.
Dividends and Taxes
Dividends. The Fund intends to declare dividends from net investment income each
regular business day and to pay those dividends monthly on a date selected by
the Board of Trustees. To maintain a net asset value of $1.00 per share, the
Fund might withhold dividends or make distributions from capital or capital
gains. Daily dividends will not be declared or paid on newly purchased shares
until Federal Funds are available to the Fund from the purchase payment for such
shares.
All dividends (and any capital gains distributions) will be reinvested
automatically in additional Fund shares at net asset value for the participating
insurance company's separate account (unless the participating insurance company
elects to have dividends or distributions paid in cash).
Capital Gains. The Fund normally holds its securities to maturity and therefore
will not usually pay capital gains distributions. Although the Fund does not
seek capital gains, it could realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term or
long-term capital gains in March of each year. The Fund may make supplemental
distributions of dividends and capital gains following the end of its fiscal
year.
Taxes. For a discussion of the tax status of a variable annuity contract or
variable life insurance policy or other insurance investment product, please
refer to the accompanying prospectus of your participating insurance company.
Because shares of the Fund may be purchased only through variable annuity
contracts, variable life insurance policies or other insurance company separate
accounts, dividends paid by the Fund from net investment income and
distributions (if any) of its net realized short-term or long-term capital gains
will be taxable, if at all, to the participating insurance company.
This information is only a summary of certain federal income tax
information about an investment in Fund shares. You should consult with your tax
advisor or your participating insurance company about the effect of an
investment in the Fund under your contract or policy.
Financial Highlights
The Financial Highlights Table is presented to help you understand the Fund's
financial performance for the past 5 fiscal years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report, along with the Fund's financial statements, is included
in the Statement of Additional Information, which is available on request.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS Year Ended December 31,
1998
1997 1996 1995 1994
=======================================================================================================================
<S> <C>
<C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $1.00
$1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations--net
investment income and net realized gain .05
.05 .05 .06 .04
Dividends and distributions to shareholders (.05)
(.05) (.05) (.06) (.04)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00
$1.00 $1.00 $1.00 $1.00
======
====== ====== ====== ======
=======================================================================================================================
Total Return(1) 5.25%
5.31% 5.13% 5.62% 4.25%
=======================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $151,799
$126,782 $129,719 $65,386 $89,671
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $137,633
$133,707 $99,263 $75,136 $90,264
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.12%
5.19% 5.01% 5.52% 4.18%
Expenses 0.50%
0.48% 0.49% 0.51% 0.43%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns are not
annualized for periods of less than one full year. Total returns reflect changes
in net investment income only. 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.
For More Information About Oppenheimer Money Fund/VA:
The following additional information about the Fund is available without
charge upon request:
Statement of Additional Information
This document includes additional information about the Fund's investment
policies, risks, and operations. It is incorporated
by reference into this Prospectus (which means it is legally part of this
Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is available
in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report
includes a discussion of market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other information about the Fund:
By Telephone:
Call OppenheimerFunds Services toll-free:
1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional Information and other
Fund documents and reports by visiting the SEC's Public Reference Room in
Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by
writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund or to make
any representations about the Fund other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any state
or other jurisdiction where it is unlawful to make such an offer.
SEC File No. 811-4108
PR0660.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Money Fund/VA
(a series of Oppenheimer Variable
Account Funds)
Graphic material included in the Prospectus of Oppenheimer Money Fund/VA
(the "Fund") under the heading "Annual Total Return (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund depicting the
annual total returns of a hypothetical investment in shares of the Fund for each
of the ten most recent calendar years, without deducting separate account
expenses. Set forth below are the relevant data that will appear on the bar
chart:
Calendar
Year
Ended Annual Total Returns
12/31/89 9.56%
12/31/90 7.84%
12/31/91 6.18%
12/31/92 4.03%
12/31/93 3.16%
12/31/94 4.21%
12/31/95 5.62%
12/31/96 5.13%
12/31/97 5.32%
12/31/98 5.25%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer High Income Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer High Income Fund/VA is a mutual fund that seeks a high level of
current income. The Fund invests primarily in lower-grade, high-yield debt
securities.
Shares of the Fund are sold only as the underlying investment for variable
life insurance policies, variable annuity contracts and other insurance company
separate accounts. A prospectus for the insurance product you have selected
accompanies this Prospectus and explains how to select shares of the Fund as an
investment under that insurance product.
This Prospectus contains important information about the Fund's objective,
its investment policies, strategies and risks. Please read this Prospectus (and
your insurance product prospectus) carefully before you invest and keep them for
future reference about your account.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the Fund's securities nor has it determined that this
Prospectus is accurate or complete. It is a criminal offense to represent
otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund seeks a high level of current
income from investment in high-yield fixed income securities.
What Does the Fund Invest In? The Fund invests mainly in a variety of high-yield
fixed-income securities of domestic and foreign issuers. The Fund's investments
typically include:
o lower-grade, high-yield domestic and foreign corporate bonds and notes
(these are the main focus of the Fund's portfolio), mortgage-related securities
and asset-backed securities, preferred stocks,
o "structured" notes, foreign government bonds and notes, and
o "zero-coupon" and "step" bonds.
The Fund can invest without limit in high-yield, lower grade fixed-income
securities, commonly called "junk bonds." Lower-grade securities are below
investment-grade securities, and are rated "Baa" by Moody's Investors Service or
below "BBB" by Standard & Poor's or have comparable ratings by other
nationally-recognized rating organizations (or, in the case of unrated
securities, have comparable ratings assigned by the Fund's investment manager,
OppenheimerFunds, Inc.).
The Fund's foreign investments can include securities of issuers in
developed markets as well as emerging markets, which have special risks. The
Fund can also invest in loan participations and can use hedging instruments and
certain derivative investments, primarily mortgage-related securities and
"structured" notes, to try to increase income or to try to manage investment
risks. These investments are more fully explained in "About the Fund's
Investments," below.
|X| How Does the Manager Decide What Securities to Buy or Sell? In selecting
securities for the Fund, the Fund's portfolio managers analyze the overall
investment opportunities and risks in different market sectors, industries and
countries. The portfolio managers' overall strategy is to build a broadly
diversified portfolio of debt securities to help moderate the special risks of
investing in lower-grade, high yield debt instruments. The portfolio managers
currently focus on the factors below (some of which may vary in particular cases
and may change over time), looking for:
|_| Securities offering high current income,
|_| Issuers in industries that are currently undervalued,
|_| Issuers with strong cash flows,
|_| Changes in the business cycle that might affect corporate profits.
The Fund's diversification strategies, both with respect to securities
issued by different companies and within different industries, are intended to
reduce the volatility of the Fund's share prices while providing opportunities
for high current income.
Who Is the Fund Designed For? The Fund's shares are available only as an
investment option under certain variable annuity contracts, variable life
insurance policies and investment plans offered through insurance company
separate accounts of participating insurance companies, for investors seeking
high current income from a portfolio emphasizing lower-grade domestic and
foreign debt securities. Those investors should be willing to assume the special
risks of lower-grade debt securities. Since the Fund's income level will
fluctuate, it is not designed for investors needing an assured level of current
income. Also, the Fund does not seek capital appreciation. The Fund is designed
as a long-term investment. However, the Fund is not a complete investment
program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's investments in debt
securities are subject to changes in their value from a number of factors. They
include changes in general bond market movements in the U.S. and abroad (this is
referred to as "market risk"), or the change in value of particular bonds
because of an event affecting the issuer (this is known as "credit risk"). The
Fund can also invest in foreign debt securities. Therefore, it will be subject
to the risks of economic, political or other events that can affect the values
of securities of issuers in particular foreign countries. These risks are
heightened in the case of emerging market debt securities. Changes in interest
rates can also affect debt securities prices (this is known as "interest rate
risk").
These risks collectively form the risk profile of the Fund, and can affect
the value of the Fund's investments, its investment performance and its price
per share. These risks mean that you can lose money by investing in the Fund.
When you redeem your shares, they may be worth more or less than what you paid
for them.
The Fund's investment Manager, OppenheimerFunds, Inc., tries to reduce
risks by carefully researching securities before they are purchased, and in some
cases by using hedging techniques. The Fund attempts to reduce its exposure to
market risks by diversifying its investments, that is, by not holding a
substantial percentage of securities of any one issuer and by not investing too
great a percentage of the Fund's assets in any one issuer. Also, the Fund does
not concentrate 25% or more of its investments in the securities of any one
foreign government or in the debt and equity securities of companies in any one
industry.
However, changes in the overall market prices of securities and the income
they pay can occur at any time. The share price and yield of the Fund will
change daily based on changes in market prices of securities and market
conditions, and in response to other economic events. There is no assurance that
the Fund will achieve its investment objective.
|X| Credit Risk. Debt securities are subject to credit risk. Credit risk
relates to the ability of the issuer of a security to make interest and
principal payments on the security as they become due. If the issuer fails to
pay interest, the Fund's income might be reduced, and if the issuer fails to
repay principal, the value of that security and of the Fund's shares might be
reduced. The Fund's investments in debt securities, particularly high-yield,
lower-grade debt securities, are subject to risks of default.
|_| Special Risks of Lower-Grade Securities. Because the Fund can invest
without limit in securities below investment grade to seek high income and
emphasizes these securities in its investment program, the Fund's credit risks
are greater than those of funds that buy only investment-grade bonds.
Lower-grade debt securities may be subject to greater market fluctuations and
greater risks of loss of income and principal than investment-grade debt
securities. Securities that are (or that have fallen) below investment grade are
exposed to a greater risk that the issuers of those securities might not meet
their debt obligations. These risks can reduce the Fund's share prices and the
income it earns.
|X| Interest Rate Risks. The values of debt securities, including
government securities, are subject to change when prevailing interest rates
change. When interest rates fall, the values of already-issued debt securities
generally rise. When interest rates rise, the values of already-issued debt
securities generally fall, and they may sell at a discount from their face
amount. The magnitude of these fluctuations will often be greater for
longer-term debt securities than shorter-term debt securities. The Fund's share
prices can go up or down when interest rates change because of the effect of the
changes on the value of the Fund's investments in debt securities.
|X| Risks of Foreign Investing. The Fund can invest its assets without
limit in foreign debt securities and can buy securities of governments and
companies in both developed markets and emerging markets. The Fund normally
invests part of its assets in foreign securities. While foreign securities offer
special investment opportunities, there are also special risks that can reduce
the Fund's share prices and returns.
The change in value of a foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of securities denominated in that
foreign currency. Currency rate changes can also affect the distributions the
Fund makes from the income it receives from foreign securities as foreign
currency values change against the U.S. dollar. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S. companies
are subject to.
The value of foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in governmental economic or
monetary policy in the U.S. or abroad, or other political and economic factors.
|X| Prepayment Risk. Prepayment risk occurs when the mortgages underlying a
mortgage-related security are prepaid at a rate faster than anticipated (usually
when interest rates fall) and the issuer of the security can prepay the
principal prior to the security's maturity. Mortgage-related securities that are
subject to prepayment risk, including the mortgage-related securities that the
Fund buys, generally offer less potential for gains when prevailing interest
rates decline, and have greater potential for loss than other debt securities
when interest rates rise.
The impact of prepayments on the price of a security may be difficult to
predict and may increase the volatility of the price. The Fund might have to
reinvest the proceeds of prepaid securities in new securities offering lower
yields. Additionally, the Fund can buy mortgage-related securities at a premium.
Accelerated prepayments on those securities could cause the Fund to lose the
portion of its principal investment represented by the premium the Fund paid.
|X| There are Special Risks in Using Derivative Investments. The Fund can
use derivatives to seek increased income or to try to hedge investment risks. In
general terms, a derivative investment is an investment contract whose value
depends on (or is derived from) the value of an underlying asset, interest rate
or index. Options, futures, interest rate swaps, structured notes and
mortgage-related securities are examples of derivatives the Fund can use.
If the issuer of the derivative does not pay the amount due, the Fund can
lose money on the investment. Also, the underlying security or investment on
which the derivative is based, and the derivative itself, might not perform the
way the Manager expected it to perform. If that happens, the Fund's share price
could decline or the Fund could get less income than expected. The Fund has
limits on the amount of particular types of derivatives it can hold. However,
using derivatives can cause the Fund to lose money on its investment and/or
increase the volatility of its share prices.
How Risky is the Fund Overall? In the short term, the values of debt securities
can fluctuate substantially because of interest rate changes. Foreign debt
securities, particularly those of issuers in emerging markets, and high yield
securities can be volatile, and the price of the Fund's shares can go up and
down substantially because of events affecting foreign markets or issuers or
events affecting the high yield market. The Fund's security diversification
strategy may help cushion the Fund's shares prices from that volatility, but
debt securities are subject to other credit and interest rate risks that can
affect their values and the share prices of the Fund. The Fund generally has
more risks than bond funds that focus on U. S. government securities and
investment-grade bonds but may be less volatile than funds that focus solely on
investments in a single foreign sector, such as emerging markets.
An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of investing in
the Fund, by showing changes in the Fund's performance1 from year to year for
the last ten calendar years and by showing how the average annual total returns
of the Fund's shares compare to those of a broad-based market index. The Fund's
past investment performance is not necessarily an indication of how the Fund
will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
________________________
1 The Fund has two classes of shares. This Prospectus offers only the class of
shares that has no name designation, and the performance shown is for that
class. The other class of shares, Class 2 shares, is not offered in this
Prospectus.
<PAGE>
For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not
annualized) was 3.51%. Charges imposed by the separate accounts that invest in
the Fund are not included in the calculations of return in this bar chart, and
if those charges were included, the returns would be less than those shown.
During the period shown in the bar chart, the highest return (not annualized)
for a calendar quarter was 13.07% (1st Q '91) and the lowest return (not
annualized) for a calendar quarter was -7.12% (3rd Q '98).
Average Annual Total Returns
for the periods ended 1 Year 5 Years 10 Years
December 31, 1998
Oppenheimer High Income 0.31% 8.62% 12.71%
Fund/VA
Merrill Lynch High Yield 3.66%b 9.01% 11.08%
Master Index
The Fund's returns in the table measure the performance of a hypothetical
account without deducting charges imposed by the separate accounts that invest
in the Fund and assume that all dividends and capital gains distributions have
been reinvested in additional shares. Because the Fund invests mainly in high
yield corporate bonds, the Fund's performance is compared to the Merrill Lynch
High Yield Master Index, an unmanaged index of U.S. corporate and government
bonds that is a measure of the performance of the high-yield corporate bond
market. However, it must be remembered that the index performance reflects the
reinvestment of income but does not consider the effects of transaction costs.
Also, the Fund may have investments that vary from the index.
The Fund's total returns should not be expected to be the same as the returns of
other Oppenheimer funds, even if both funds have the same portfolio managers
and/or similar names.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of the Fund's portfolio
among the different types of permitted investments will vary over time based
upon the evaluation of economic and market trends by the Manager. The Fund's
portfolio might not always include all of the different types of investments
described below. The Statement of Additional Information contains more details
about the Fund's investment policies and risks.
A debt security is essentially a loan by the buyer to the issuer of the
debt security. The issuer promises to pay back the principal amount of the loan
and normally pays interest, at a fixed or variable rate, on the debt while it is
outstanding. The debt securities the Fund buys may be rated by nationally
recognized rating organizations or they may be unrated securities assigned an
equivalent rating by the Manager. While the Fund's investments may be investment
grade or below investment grade in credit quality, it is expected to invest
mainly in lower-grade securities, commonly called "junk bonds." They typically
offer higher yields than investment-grade bonds, because investors assume
greater risks of default of these securities. The ratings definitions of the
principal national rating organizations is included in Appendix A to the
Statement of Additional Information.
The Fund has no limit on the range of maturity of the debt securities
it can buy, and therefore may hold obligations with short, medium or
long-term maturities. However, longer term securities typically offer
higher yields than shorter-term securities and therefore the Fund will
focus on longer-term debt to seek higher income. However, longer-term
securities fluctuate more in price when interest rates change than
shorter-term securities.
The Fund can invest some of its assets in other types of securities,
including common stocks and other equity securities of foreign and U.S.
companies. However, the Fund does not anticipate having significant
investments in those types of securities as part of its normal portfolio
strategy.
|X| High-Yield, Lower-Grade Fixed-Income Securities of U.S. Issuers.
There are no restrictions on the amount of the Fund's assets that can be
invested in debt securities below investment grade. The Fund can invest in
securities rated as low as "C" or "D", in unrated bonds or bonds which are
in default at the time the Fund buys them. While securities rated "Baa" by
Moody's or "BBB" by S&P are considered "investment grade," they have some
speculative characteristics.
The Manager does not rely solely on ratings issued by rating
organizations when selecting investments for the Fund. The Fund can buy
unrated securities that offer high current income. The Manager may assign a
rating to an unrated security that is equivalent to the rating of a rated
security that the Manager believes offers comparable yields and risks.
While investment-grade securities are subject to risks of non-payment
of interest and principal, generally, higher yielding lower-grade bonds,
whether rated or unrated, have greater risks than investment-grade
securities. They may be subject to greater market fluctuations and risk of
loss of income and principal than investment-grade securities. There may be
less of a market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that the
issuer's earnings may be insufficient to make the payments of interest and
principal due on the bonds.
These risks mean that the Fund may not achieve the expected income
from lower-grade securities, and that the Fund's net asset value per share
may be affected by declines in value of these securities.
|X| CMOs and Mortgage-Backed Securities. The Fund can invest a
substantial portion of its assets in mortgage-backed securities issued by
private issuers, which do not offer the credit backing of U.S. government
securities. Primarily these include multi-class debt or pass-through
certificates secured by mortgage loans. They may be issued by banks,
savings and loans, mortgage bankers and other non-governmental issuers.
Private issuer mortgage-backed securities are subject to the credit risks
of the issuers (as well as the interest rate risks and prepayment risks of
CMOs, discussed above), although in some cases they may be supported by
insurance or guarantees.
|X| Mortgage-Related U.S. Government Securities. The Fund can buy
interests in pools of residential or commercial mortgages, in the form of
collateralized mortgage obligations ("CMOs") and other "pass-through"
mortgage securities. CMOs that are U.S. government securities have
collateral to secure payment of interest and principal. They may be issued
in different series each having different interest rates and maturities.
The collateral is either in the form of mortgage pass-through certificates
issued or guaranteed by a U.S. agency or instrumentality or mortgage loans
insured by a U.S. government agency. The Fund can have substantial amounts
of its assets invested in mortgage-related U.S. government securities.
The prices and yields of CMOs are determined, in part, by assumptions
about the cash flows from the rate of payments of the underlying mortgages.
Changes in interest rates may cause the rate of expected prepayments of
those mortgages to change. In general, prepayments increase when general
interest rates fall and decrease when interest rates rise.
If prepayments of mortgages underlying a CMO occur faster than
expected when interest rates fall, the market value and yield of the CMO
could be reduced. Additionally, the Fund may have to reinvest the
prepayment proceeds in other securities paying interest at lower rates,
which could reduce the Fund's yield.
If interest rates rise rapidly, prepayments may occur at slower rates
than expected, which could have the effect of lengthening the expected
maturity of a short or medium-term security. That could cause its value to
fluctuate more widely in response to changes in interest rates. In turn,
this could cause the value of the Fund's shares to fluctuate more.
|X| Asset-Backed Securities. The Fund can buy asset-backed securities,
which are fractional interests in pools of loans collateralized by the
loans or other assets or receivables. They are issued by trusts and special
purpose corporations that pass the income from the underlying pool to the
buyer of the interest. These securities are subject to the risk of default
by the issuer as well as by the borrowers of the underlying loans in the
pool.
|X| Foreign Debt Securities. The Fund can buy debt securities issued
by foreign governments and companies, as well as "supra-national" entities,
such as the World Bank. The Fund will not invest 25% or more of its total
assets in debt securities of any one foreign government or in debt
securities of companies in any one industry. The Fund has no requirements
as to the maturity range of the foreign debt securities it can buy, or as
to the market capitalization range of the issuers of those securities.
The Fund's foreign debt investments can be denominated in U.S. dollars
or in foreign currencies. The Fund will buy foreign currency only in
connection with the purchase and sale of foreign securities and not for
speculation.
|_| Special Risks of Emerging and Developing Markets. Securities of
issuers in emerging and developing markets may offer special investment
opportunities but present risks not found in more mature markets. Those
securities may be more difficult to sell at an acceptable price and their
prices may be more volatile than securities of issuers in more developed
markets. They may be very speculative. Settlements of trades may be subject
to greater delays so that the Fund may not receive the proceeds of a sale
of a security on a timely basis.
These countries might have less developed trading markets and
exchanges. Emerging market countries may have less developed legal and
accounting systems, and investments may be subject to greater risks of
government restrictions on withdrawing the sales proceeds of securities
from the country. Economies of developing countries may be more dependent
on relatively few industries that may be highly vulnerable to local and
global changes. Governments may be more unstable and present greater risks
of nationalization or restrictions on foreign ownership of stocks of local
companies.
|X| "Structured" Notes. The Fund can buy "structured" notes, which are
specially-designed derivative debt investments. Their principal payments or
interest payments are linked to the value of an index (such as a currency
or securities index) or commodity. The terms of the instrument may be
"structured" by the purchaser (the Fund) and the borrower issuing the note.
The principal and/or interest payments depend on the performance of
one or more other securities or indices, and the values of these notes will
therefore fall or rise in response to the changes in the values of the
underlying security or index. They are subject to both credit and interest
rate risks and therefore the Fund could receive more or less than it
originally invested when the notes mature, or it might receive less
interest than the stated coupon payment if the underlying investment or
index does not perform as anticipated. Their values may be very volatile
and they may have a limited trading market, making it difficult for the
Fund to sell its investment at an acceptable price.
|X| Special Portfolio Diversification Requirements. To enable a
variable annuity or variable life insurance contract based on an insurance
company separate account to qualify for favorable tax treatment under the
Internal Revenue Code, the underlying investments must follow special
diversification requirements that limit the percentage of assets that can
be invested in securities of particular issuers. The Fund's investment
program is managed to meet those requirements, in addition to other
diversification requirements under the Internal Revenue Code and the
Investment Company Act that apply to publicly-sold mutual funds.
Failure by the Fund to meet those special requirements could cause
earnings on a contract owner's interest in an insurance company separate
account to be taxable income. Those diversification requirements might also
limit, to some degree, the Fund's investment decisions in a way that could
reduce its performance.
|X| Can the Fund's Investment Objective and Policies Change? The
Fund's Board of Trustees can change non-fundamental investment 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 Fund's investment objective is a fundamental
policy. Investment restrictions that are fundamental policies are listed in
the Statement of Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of Additional
Information says that it is.
|X| Portfolio Turnover. The Fund may engage in short-term trading to
try to achieve its objective and is expected to have a portfolio turnover
rate over 100% annually. Portfolio turnover affects brokerage and
transaction costs the Fund pays. The Financial Highlights table below shows
the Fund's portfolio turnover rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund can also use
the investment techniques and strategies described below. The Manager might
not always use all of the different types of techniques and investments
described below. These techniques involve certain risks, although some are
designed to help reduce investment or market risks.
|X| U.S. Government Securities. The Fund can invest in securities
issued or guaranteed by the U.S. Treasury or other government agencies or
federally-chartered corporate entities referred to as "instrumentalities."
These are referred to as "U.S. government securities" in this Prospectus.
|_| U.S. Treasury Obligations. These include Treasury bills (which
have maturities of one year or less when issued), Treasury notes (which
have maturities of from one to ten years), and Treasury bonds (which have
maturities of more than ten years). Treasury securities are backed by the
full faith and credit of the United States as to timely payments of
interest and repayments of principal. The Fund can also buy U. S. Treasury
securities that have been "stripped" of their coupons by a Federal Reserve
Bank, zero-coupon U.S. Treasury securities described below, and Treasury
Inflation-Protection Securities ("TIPS").
|_| Obligations of U.S. Government Agencies or Instrumentalities.
These include direct obligations and mortgage-related securities that have
different levels of credit support from the U.S. government. Some are
supported by the full faith and credit of the U.S. government, such as
Government National Mortgage Association pass-through mortgage certificates
(called "Ginnie Maes"). Some are supported by the right of the issuer to
borrow from the U.S. Treasury under certain circumstances, such as Federal
National Mortgage Association bonds ("Fannie Maes"). Others are supported
only by the credit of the entity that issued them, such as Federal Home
Loan Mortgage Corporation obligations ("Freddie Macs").
|X| Zero-Coupon and "Stripped" Securities. Some of the government and
corporate debt securities the Fund buys are zero-coupon bonds that pay no
interest. They are issued at a substantial discount from their face value.
"Stripped" securities are the separate income or principal components of a
debt security. Some CMOs or other mortgage-related securities may be
stripped, with each component having a different proportion of principal or
interest payments. One class might receive all the interest and the other
all the principal payments.
Zero-coupon and stripped securities are subject to greater
fluctuations in price from interest rate changes than conventional
interest-bearing securities. The Fund may have to pay out the imputed
income on zero-coupon securities without receiving the actual cash
currently. Interest-only securities are particularly sensitive to changes
in interest rates.
The values of interest-only mortgage-related securities are also very
sensitive to prepayments of underlying mortgages. Principal-only securities
are also sensitive to changes in interest rates. When prepayments tend to
fall, the timing of the cash flows to these securities increases, making
them more sensitive to changes in interest rates. The market for some of
these securities may be limited, making it difficult for the Fund to
dispose of its holdings at an acceptable price. The Fund can invest up to
50% of its total assets in zero-coupon securities issued by either the U.S.
Treasury or companies.
|X| Participation Interests in Loans. These securities represent an
undivided fractional interest in a loan obligation by a borrower. They are
typically purchased from banks or dealers that have made the loan or are
members of the loan syndicate. The loans may be to foreign or U.S.
companies. The Fund does not invest more than 5% of its net assets in
participation interests of any one borrower. They are subject to the risk
of default by the borrower. If the borrower fails to pay interest or repay
principal, the Fund can lose money on its investment.
|X| Preferred Stock. Unlike common stock, preferred stock typically
has a stated dividend rate. Preferred stock dividends may be cumulative
(they remain a liability of the company until they are paid) or
non-cumulative. When interest rates rise, the value of preferred stock
having a fixed dividend rate tends to fall. The right to payment of
dividends on preferred stock is generally subordinate to the rights of a
corporation's debt securities.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can
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 might be a risk of loss to the Fund
if the value of the security declines prior to the settlement date. No
income accrues to the Fund on a when-issued security until the Fund
receives the security on settlement of the trade.
|X| Illiquid and Restricted Securities. Investments may be illiquid
because there is no active trading market for them, 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 its resale or which
cannot be sold publicly until it is registered under the Securities Act of
1933. The Fund will not invest more than 15% of its net assets in illiquid
or restricted securities. Certain restricted securities that are eligible
for resale to qualified institutional purchasers may not be subject to that
limit. The Manager monitors holdings of illiquid securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate
liquidity.
|X| Derivative Investments. The Fund can invest in a number of
different kinds of "derivative" investments. In the broadest sense,
exchange-traded options, futures contracts, structured notes, CMOs and
other hedging instruments the Fund can use may be considered "derivative
investments." In addition to using hedging instruments, the Fund can use
other derivative investments because they offer the potential for increased
income.
Markets underlying securities and indices may move in a direction not
anticipated by the Manager. Interest rate and stock market changes in the
U.S. and abroad may also influence the performance of derivatives. As a
result of these risks the Fund could realize less principal or income from
the investment than expected. Certain derivative investments held by the
Fund may be illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of futures
contracts, put and call options, forward contracts and options on futures
and broadly-based securities indices. These are all referred to as "hedging
instruments." The Fund does not use hedging instruments for speculative
purposes, and has limits on its use of them. The Fund is not required to
use hedging instruments in seeking its goal.
The Fund could buy and sell options, futures and forward contracts for
a number of purposes. It might do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or to
establish a position in the securities market as a temporary substitute for
purchasing individual securities. It might do so to try to manage its
exposure to changing interest rates.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. For example, if a covered call written by the Fund is exercised
on an investment that has increased in value, the Fund will be required to
sell the investment at the call price and will not be able to realize any
profit if the investment has increased in value above the call price. In
writing a put, there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price.
If the Manager used a hedging instrument at the wrong time or judged
market conditions incorrectly, the strategy could reduce the Fund's return.
The 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.
Temporary Defensive Investments. For cash management purposes, the Fund may
hold cash equivalents such as commercial paper, repurchase agreements,
Treasury bills and other short-term U.S. government securities. In times of
adverse or unstable market or economic conditions, the Fund can invest up
to 100% of its assets in temporary defensive investments. These would
ordinarily be U. S. government securities, highly-rated commercial paper,
bank deposits or repurchase agreements. To the extent the Fund invests
defensively in these securities, it might not achieve its investment
objective.
Year 2000 Risks. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Fund invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Fund and
other investors. That failure could have a negative impact on handling
securities trades, pricing and accounting services. Data processing errors
by government issuers of securities could result in economic uncertainties,
and those issuers might incur substantial costs in attempting to prevent or
fix such errors, all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have been working
on necessary changes to their computer systems to deal with the year 2000
and expect that their systems will be adapted in time for that event,
although there cannot be assurance of success. Additionally, the services
they provide depend on the interaction of their computer systems with those
of insurance companies with separate accounts that invest in the Fund,
brokers, information services, the Fund's Custodian and other parties.
Therefore, any failure of the computer systems of those parties to deal
with the year 2000 might also have a negative effect on the services they
provide to the Fund. The extent of that risk cannot be ascertained at this
time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds, Inc.,
chooses the Fund's 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 an Investment Advisory Agreement that states the
Manager's responsibilities. The Agreement sets the fees paid by the Fund to
the Manager and describes the expenses that the Fund is responsible to pay
to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including subsidiaries) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $100 billion as
of March 31, 1999, and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor, New York, New
York 10048-0203.
|X| Portfolio Managers. The portfolio managers of the Fund are Thomas
P. Reedy and David P. Negri. They are the persons principally responsible
for the day-to-day management of the Fund's portfolio, Mr. Reedy since
January 1998 and Mr. Negri since May 1999. Both are Vice Presidents of the
Fund, and Mr. Reedy is Vice President and Mr. Negri is Senior Vice
President of the Manager. They also serve as officers and portfolio
managers for other Oppenheimer funds. Mr. Negri has been employed by the
Manager since June 1989, Mr. Reedy since 1993.
|X| Advisory Fees. Under the Investment Advisory Agreement, the Fund
pays the Manager an advisory fee at an annual rate that declines on
additional assets as the Fund grows: 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% on the next $200
million and 0.50% of average annual net assets over $1 billion. The Fund's
management fee for its last fiscal year ended December 31, 1998, was 0.74%
of the Fund's average annual net assets.
|X| Possible Conflicts of Interest. The Fund offers its shares to
separate accounts of different insurance companies that are not affiliated
with each other, as an investment for their variable annuity, variable life
and other investment product contracts. While the Fund does not foresee any
disadvantages to contract owners from these arrangements, it is possible
that the interests of owners of different contracts participating in the
Fund through different separate accounts might conflict. For example, a
conflict could arise because of differences in tax treatment.
The Fund's Board has procedures to monitor the portfolio for possible
conflicts to determine what action should be taken. If a conflict occurs,
the Board might require one or more participating insurance company
separate accounts to withdraw their investments in the Fund. That could
force the Fund to sell securities at disadvantageous prices, and orderly
portfolio management could be disrupted. Also, the Board might refuse to
sell shares of the Fund to a particular separate account, or could
terminate the offering of the Fund's shares if required to do so by law or
if it would be in the best interests of the shareholders of the Fund to do
so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased only by
separate investment accounts of participating insurance companies as an
underlying investment for variable life insurance policies, variable
annuity contracts or other investment products. Individual investors cannot
buy shares of the Fund directly. Please refer to the accompanying
prospectus of the participating insurance company for information on how to
select the Fund as an investment option for that variable life insurance
policy, variable annuity or other investment product. The Fund reserves the
right to refuse any purchase order when the Manager believes it would be in
the Fund's best interests to do so.
Information about your investment in the Fund through your variable annuity
contract, variable life insurance policy or other plan can be obtained only from
your participating insurance company or its servicing agent. The Fund's Transfer
Agent does not hold or have access to those records. Instructions for buying or
selling shares of the Fund should be given to your insurance company or its
servicing agent, not directly to the Fund or its Transfer Agent.
|X| At What Price Are Shares Sold? Shares are sold at their offering
price, which is the net asset value per share. The Fund does not impose any
sales charge on purchases of its shares. If there are any charges imposed
under the variable annuity, variable life or other contract through which
Fund shares are purchased, they are described in the accompanying
prospectus of the participating insurance company.
The net asset value per share is determined as of the close of The New
York Stock Exchange on each day that the exchange is open for trading
(referred to in this Prospectus as a "regular business day"). The Exchange
normally closes at 4:00 P.M., New York time, but may close earlier on some
days. All references to time in this Prospectus mean "New York time."
The net asset value per share is determined by dividing the value of
the Fund's net assets attributable to a class of shares by the number of
shares of that class that are outstanding. The Fund's Board of Trustees has
established procedures to value the Fund's securities to determine the
Fund's net asset value, in general based on market values. The Board has
adopted special procedures for valuing illiquid and restricted securities
and securities for which market values cannot be readily obtained. Because
some foreign securities trade in markets and on exchanges that operate on
weekends and U.S. holidays, the values of some of the Fund's foreign
investments might change significantly on days when shares of the Fund
cannot be purchased or redeemed.
The offering price that applies to an order from a participating
insurance company is based on the next calculation of the net asset value
per share that is made after the insurance company (as the Fund's
designated agent to receive purchase orders) receives a purchase order from
its contract owners to purchase Fund shares on a regular business day,
provided that the Fund receives the order from the insurance company,
generally by 9:30 A.M. on the next regular business day at the offices of
its Transfer Agent in Denver, Colorado.
|X| Classes of Shares. The Fund offers two different classes of
shares. The class of shares offered by this Prospectus has no "name"
designation. The other class is designated as Class 2. The different
classes of shares represent investments in the same portfolio of securities
but are expected to be subject to different expenses and will likely have
different share prices.
This Prospectus may not be used to offer or sell Class 2 shares. A
description of the Service Plans that affect only Class 2 shares of the
Fund is contained in the Fund's prospectus that offers Class 2 shares. That
prospectus may be obtained without charge by contacting any participating
insurance sponsor that offers Class 2 shares of the Funds as an investment
for its separate accounts. You can also obtain a copy from OppenheimerFunds
Distributor, Inc., by calling toll-free 1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the participating
insurance companies that hold Fund shares in their separate accounts for
the benefit of variable annuity contracts, variable life insurance policies
or other investment products can place orders to redeem shares. Contract
holders and policy holders should not directly contact the Fund or its
transfer agent to request a redemption of Fund shares. Contract owners
should refer to the withdrawal or surrender instructions in the
accompanying prospectus of the participating insurance company.
The share price that applies to a redemption order is the next net
asset value per share that is determined after the participating insurance
company (as the Fund's designated agent) receives a redemption request on a
regular business day from its contract or policy holder, provided that the
Fund receives the order from the insurance company by 9:30 A.M. the next
regular business day at the office of its Transfer Agent in Denver,
Colorado. The Fund normally sends payment by Federal Funds wire to the
insurance company's account the day after the Fund receives the order (and
no later than 7 days after the Fund's receipt of the order). Under unusual
circumstances determined by the Securities and Exchange Commission, payment
may be delayed or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for each class
of shares from net investment income on an annual basis, and to pay those
dividends in March on a date selected by the Board of Trustees. The Fund
has no fixed dividend rate and cannot guarantee that it will pay any
dividends.
All dividends (and any capital gains distributions will be reinvested
automatically in additional Fund shares at net asset value for the account
of the participating insurance company (unless the insurance company elects
to have dividends or distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term
or long-term capital gains in March of each year. The Fund may make
supplemental distributions of dividends and capital gains following the end
of its fiscal year. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.
Taxes. For a discussion of the tax status of a variable annuity contract, a
variable life insurance policy or other investment product of a
participating insurance company, please refer to the accompanying
prospectus of your participating insurance company. Because shares of the
Fund may be purchased only through insurance company separate accounts for
variable annuity contracts, variable life insurance policies or other
investment products, dividends paid by the Fund from net investment income
and distributions (if any) of net realized short-term and long-term capital
gains will be taxable, if at all, to the participating insurance company.
This information is only a summary of certain federal income tax
information about an investment in Fund shares. You should consult with
your tax advisor or your participating insurance company representative
about the effect of an investment in the Fund under your contract or
policy.
Financial Highlights
The Financial Highlights Table is presented to help you understand the
Fund's financial performance for the past 5 fiscal years. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by Deloitte
& Touche LLP, the Fund's independent auditors, whose report, along with the
Fund's financial statements, is included in the Statement of Additional
Information, which is available on request.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights Year Ended December 31,
1998
1997 1996 1995 1994
================================================================================================================
<S> <C>
<C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $11.52
$11.13 $10.63 $9.79 $11.02
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .95
.94 .97 .98 .94
Net realized and unrealized gain (loss) (.90)
.37 .58 .94 (1.27)
-------
- ------- ------- ------- ------
Total income (loss) from investment operations .05
1.31 1.55 1.92 (.33)
- ----------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.25)
(.91) (1.05) (1.08) (.66)
Distributions from net realized gain (.30)
(.01) -- -- (.24)
-------
- -------- ------- ------- ------
Total dividends and distributions to shareholders (.55)
(.92) (1.05) (1.08) (.90)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.02
$11.52 $11.13 $10.63 $9.79
=======
======= ======= ======= ======
================================================================================================================
Total Return, at Net Asset Value(1) 0.31%
12.21% 15.26% 20.37% (3.18)%
================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $328,563
$291,323 $191,293 $133,451 $95,698
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $322,748
$223,617 $157,203 $115,600 $101,096
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.65%
8.88% 9.18% 9.81% 9.15%
Expenses 0.78%
0.82% 0.81% 0.81% 0.67%
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 161.4%
167.6% 125.0% 107.1% 110.1%
</TABLE>
1. 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 returns are not annualized for periods of less than one full
year. Total return information does not reflect expenses that apply at the
separate account level or to related insurance products. Inclusion of these
charges would reduce the total return figures for all periods shown. 2. 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.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended December 31, 1998 were $537,018,561 and
$428,828,226, respectively.
For More Information About Oppenheimer High Income Fund/VA:
The following additional information about the Fund is available without
charge upon request:
Statement of Additional Information
This document includes additional information about the Fund's investment
policies, risks, and operations. It is incorporated by reference into this
Prospectus (which means it is legally part of this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is
available in the Fund's Annual and Semi-Annual Reports to shareholders. The
Annual Report includes a discussion of market conditions and investment
strategies that significantly affected the Fund's performance during its
last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other information about the Fund:
By Telephone:
Call OppenheimerFunds Services toll-free:
1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional Information and
other Fund documents and reports by visiting the SEC's Public Reference
Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web
site at http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund or to
make any representations about the Fund other than what is contained in
this Prospectus. This Prospectus is not an offer to sell shares of the
Fund, nor a solicitation of an offer to buy shares of the Fund, to any
person in any state or other jurisdiction where it is unlawful to make such
an offer.
SEC File No. 811-4108
PR0640.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer High Income Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of Oppenheimer
High Income Fund/VA (the "Fund") under the heading "Annual Total
Return (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund
depicting the annual total returns of a hypothetical $10,000
investment in shares of the Fund for each of the ten most recent
calendar years, without deducting separate account expenses. Set
forth below are the relevant data that will appear on the bar
chart:
Calendar
Year
Ended Annual Total Returns
12/31/89 4.84%
12/31/90 4.65%
12/31/91 33.91%
12/31/92 17.92%
12/31/93 26.34%
12/31/94 -3.18%
12/31/95 20.37%
12/31/96 15.25%
12/31/97 12.22%
12/31/98 0.31%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Bond Fund/VA
A Series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Bond Fund/VA is a mutual fund that seeks a high level of
current income as its primary goal. As a secondary goal, the Fund seeks
capital appreciation when consistent with its goal of high current income.
The Fund invests mainly in investment grade debt securities.
Shares of the Fund are sold only as the underlying investment for
variable life insurance policies, variable annuity contracts and other
insurance company separate accounts. A prospectus for the insurance product
you have selected accompanies this Prospectus and explains how to select
shares of the Fund as an investment under that insurance product. This
Prospectus contains important information about the Fund's objective, its
investment policies, strategies and risks. Please read this Prospectus (and
your insurance product prospectus) carefully before you invest and keep
them for future reference about your account.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the Fund's securities nor has it determined that
this Prospectus is accurate or complete. It is a criminal offense to
represent otherwise.
Contents
About the Fund
The Fund's Objectives and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objectives and Investment Strategies
What Are the Fund's Investment Objectives? The Fund's main objective is to
seek a high level of current income. As a secondary objective, the Fund
seeks capital appreciation when consistent with its primary objective.
What Does the Fund Invest In? Normally, the Fund invests at least 65% of its
total assets in investment-grade debt securities, U.S. Government securities and
money market instruments. The investment-grade debt securities the Fund invests
in can include the following types of obligations, which in general are referred
to as "bonds":
o short-, medium- and long-term foreign and U.S. government bonds and notes,
o domestic and foreign corporate debt obligations,
o collateralized mortgage obligations (CMOs),
o other mortgage-related securities and asset-backed securities,
o participation interests in loans,
o "structured" notes, and
o other debt obligations.
The Fund's investments in U.S. government securities include
securities issued or guaranteed by the U.S. government or its agencies or
federally-chartered corporate entities referred to as "instrumentalities."
These include mortgage-related U.S. government securities and CMOs.
There is no set percentage allocation of the Fund's assets among the
types of securities the Fund buys to meet the 65% investment requirement,
but currently the Fund focuses mainly on U.S. government securities, CMOs,
and investment-grade debt securities to do so because they currently offer
higher yields than money market instruments. However, if market conditions
change, the Fund's portfolio managers may change the relative allocation of
the Fund's assets.
The Fund has no limitations on the range of maturities of the debt
securities in which it can invest and therefore may hold bonds with short-,
medium- or long-term maturities. The Fund's investments in debt securities
can include "zero coupon" securities and securities that have been
"stripped" of their interest coupons. The Fund can invest up to 35% of its
total assets in high yield debt securities and other debt securities that
are below investment grade (commonly referred to as "junk bonds") and other
investments such as preferred stock.
The Fund can also use hedging instruments and certain derivative
investments, primarily CMOs and "structured" notes, to try to enhance
income or to try to manage investment risks. These investments are
more fully explained in "About the Fund's Investments," below.
|X| How Does the Manager Decide What Securities to Buy or Sell?
In selecting securities for the Fund, the Fund's portfolio managers
analyze the overall investment opportunities and risks in different
sectors of the debt security markets by focusing on business cycle
analysis and relative values between the corporate and government
sectors. The portfolio managers' overall strategy is to build a
broadly diversified portfolio of debt securities. The portfolio
managers currently focus on the factors below (some of which may vary
in particular cases and may change over time), looking for:
|_| High current income from different types of corporate and government
debt securities,
|_| Investment-grade securities, primarily to help reduce credit risk,
|_| Broad portfolio diversification to help reduce the volatility of the
Fund's share prices,
|_| Relative values among the debt securities market sectors.
Who Is the Fund Designed For? The Fund's shares are available only as an
investment option under certain variable annuity contracts, variable life
insurance policies and investment plans offered through insurance company
separate accounts of participating insurance companies, for investors
seeking high current income from a fund that invests mainly in
investment-grade debt securities, but which can also hold
below-investment-grade securities to seek higher income. Those investors
should be willing to assume the credit risks of a fund that typically
invests a significant amount of its assets in debt securities and the
changes in share prices that can occur when interest rates rise. Since the
Fund's income level will fluctuate, it is not designed for investors
needing an assured level of current income. The Fund is not a complete
investment program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments are subject to changes in their value from a number of
factors. They include changes in general bond market movements in the
U.S. and abroad (this is referred to as "market risk", or the change
in value of particular bonds because of an event affecting the issuer
(this is known as "credit risk"). Changes in interest rates can also
affect securities prices (this is known as "interest rate risk").
These risks collectively form the risk profile of the Fund, and
can affect the value of the Fund's investments, its investment
performance and its price per share. These risks mean that you can
lose money by investing in the Fund. When you redeem your shares, they
may be worth more or less than what you paid for them.
The Fund's investment Manager, OppenheimerFunds, Inc., tries to
reduce risks by carefully researching securities before they are
purchased, and in some cases by using hedging techniques. The Fund
attempts to reduce its exposure to credit risks by limiting its
investments in below-investment grade securities, as explained above.
The Fund attempts to reduce its exposure to market risks by
diversifying its investments, that is, by not holding a substantial
percentage of the securities of any one issuer and by not investing
too great a percentage of the Fund's assets in any one issuer. Also,
the Fund does not concentrate 25% or more of its investments in the
securities of any one foreign government or in the debt and equity
securities of companies in any one industry.
However, changes in the overall market prices of securities and
the income they pay can occur at any time. The share price and yield
of the Fund will change daily based on changes in market prices of
securities and market conditions, and in response to other economic
events. There is no assurance that the Fund will achieve its
investment objective.
|X| Credit Risk. Debt securities are subject to credit risk.
Credit risk relates to the ability of the issuer of a security to make
interest and principal payments on the security as they become due. If
the issuer fails to pay interest, the Fund's income might be reduced,
and if the issuer fails to repay principal, the value of that security
and of the Fund's shares might be reduced. While the Fund's
investments in U.S. government securities are subject to little credit
risk, debt securities issued by domestic and foreign corporations and
by foreign governments are subject to risks of default.
Securities that are (or that have fallen) below investment grade
are exposed to a greater risk that the issuers of those securities
might not meet their debt obligations. Those risks can reduce the
Fund's share prices and the income it earns.
|_| Special Risks of Lower-Grade Securities. Because the Fund can
invest up to 35% of its total assets in securities below investment
grade to seek higher income, the Fund's credit risks are greater than
those of funds that buy only investment grade securities. Lower-grade
debt securities may be subject to greater market fluctuations and
greater risks of loss of income and principal than investment-grade
debt securities. Securities that are (or that have fallen) below
investment grade are exposed to a greater risk than the issuers of
those securities might not meet their debt obligations. Those risks
can reduce the Fund's share prices and the income it earns.
|X| Interest Rate Risks. The values of debt securities, including
U.S. government securities prior to maturity, are subject to change
when prevailing interest rates change. When interest rates fall, the
values of already-issued debt securities generally rise. When interest
rates rise, the values of already-issued debt securities generally
fall, and they may sell at a discount from their face amount. The
magnitude of these fluctuations will often be greater for longer-term
debt securities than shorter-term debt securities. However, interest
rate changes may have different effects on the values of
mortgage-related securities because of prepayment risks, discussed
below. The Fund's share prices can go up or down when interest rates
change because of the effect of the changes on the value of the Fund's
investments in debt securities.
|X| Prepayment Risk. Prepayment risk occurs when the mortgages
underlying a mortgage-related security are prepaid at a rate faster
than anticipated (usually when interest rates fall) and the issuer of
a security can prepay the principal prior to the security's maturity.
Mortgage-related securities that are subject to prepayment risk,
including the CMOs and other mortgage-related securities that the Fund
buys, generally offer less potential for gains when prevailing
interest rates decline, and have greater potential for loss when
interest rates rise.
The impact of prepayments on the price of a security may be
difficult to predict and may increase the volatility of the price.
Additionally, the Fund may buy mortgage-related securities at a
premium. Accelerated prepayments on those securities could cause the
Fund to lose the portion of its principal investment represented by
the premium the Fund paid.
|X| Risks of Foreign Investing. The Fund can invest its assets
without limit in foreign debt securities and can buy securities of
governments and companies in both developed markets and emerging
markets. While foreign securities offer special investment
opportunities, there are also special risks that can reduce the Fund's
share prices and returns.
The change in value of a foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of securities denominated in that
foreign currency. Currency rate changes can also affect the distributions the
Fund makes from the income it receives from foreign securities as foreign
currency values change against the U.S. dollar. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S. companies
are subject to.
The value of foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in governmental economic or
monetary policy in the U.S. or abroad, or other political and economic factors.
|X| There are Special Risks in Using Derivative Investments. The Fund can
use derivatives to seek increased income or to try to hedge investment risks. In
general terms, a derivative investment is an investment contract whose value
depends on (or is derived from) the value of an underlying asset, interest rate
or index. Options, futures, interest rate swaps, structured notes and CMOs are
examples of derivatives the Fund can use.
If the issuer of the derivative does not pay the amount due, the Fund can
lose money on the investment. Also, the underlying security or investment on
which the derivative is based, and the derivative itself, might not perform the
way the Manager expected it to perform. If that happens, the Fund's share price
could decline or the Fund could get less income than expected. The Fund has
limits on the amount of particular types of derivatives it can hold. However,
using derivatives can cause the Fund to lose money on its investment and/or
increase the volatility of its share prices.
How Risky is the Fund Overall? Debt securities are subject to credit and
interest rate risks that can affect their values and the share prices of
the Fund. Prepayment risks of mortgage-backed securities can cause the Fund
to reinvest the proceeds of its investments in lower-yielding securities.
The Fund generally has more risks than bond funds that focus on U.S.
government securities but the Fund's emphasis on investment-grade
securities may make its share prices less volatile than high yield bond
funds or funds that focus on foreign bonds.
An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of investing in
the Fund, by showing changes in the Fund's performance1 from year to year for
the last ten calendar years and by showing how the average annual total returns
of the Fund's shares compare to those of a broad-based market index. The Fund's
past investment performance is not necessarily an indication of how the Fund
will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
For the period from 1/1/99 through 3/31/99, the Fund's cumulative return
(not annualized) was -0.32%. Charges imposed by the separate accounts that
invest in the Fund are not included in the calculations of return in this
bar chart, and if those charges were included, the returns would be less
than those shown.
During the period shown in the bar chart, the highest return (not
annualized) for a calendar quarter was 6.49% (2nd Q '89) and the lowest
return (not annualized) for a calendar quarter was -1.90% (1st Q '94).
Average Annual Total Returns
for the periods ended 1 Year 5 Years 10 Years
December 31, 1998
Oppenheimer Bond 6.80% 7.01% 9.28%
Fund/VA
Lehman Brothers Corporate 8.47% 7.74% 9.86%
Bond Index
The Fund's returns in the table measure the performance of a hypothetical
account without deducting charges imposed by the separate accounts that
invest in the Fund and assume that all dividends and capital gains
distributions have been reinvested in additional shares. Because the Fund
invests primarily in investment grade corporate and government debt
securities, the Fund's performance is compared to the Lehman Brothers
Corporate Bond Index, an unmanaged index of non-convertible investment
grade corporate debt of U.S. issuers that is a measure of the general
domestic bond market. However, it must be remembered that the index
performance reflects the reinvestment of income but does not consider the
effects of transaction costs. Also, the Fund may have investments that vary
from the index.
The Fund's total returns should not be expected to be the same as the
returns of other Oppenheimer funds, even if both funds have the same
portfolio managers and/or similar names.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of the Fund's
portfolio among the different types of permitted investments will vary over
time based upon the evaluation of economic and market trends by the
Manager. The Fund's portfolio might not always include all of the different
types of investments described below. The Statement of Additional
Information contains more detailed information about the Fund's investment
policies and risks.
A debt security is essentially a loan by the buyer to the issuer of the
debt security. The issuer promises to pay back the principal amount of the loan
and normally pays interest, at a fixed or variable rate, on the debt while it is
outstanding. The debt securities the Fund buys may be rated by nationally
recognized rating organizations or they may be unrated securities assigned an
equivalent rating by the Manager. While the Fund's investments may be above or
below investment grade in credit quality, the Fund invests primarily in
investment-grade debt securities. However, the Fund can invest up to 35% of its
net assets in below investment-grade debt securities, commonly called 'junk
bonds.'
______________
1 The Fund has two classes of shares. This Prospectus offers only the class
of shares that has no class name designation, and the performance shown is
for that class. The other class of shares, Class 2, is not offered in this
Prospectus.
They typically offer higher yields than investment-grade bonds, because
investors assume the greater risks of default of those securities. The
ratings definitions of the principal national rating organizations is
included in Appendix A to the Statement of Additional Information.
Investment-grade debt securities are those rated in one of the four highest
categories by Standard & Poor's Corporation, Moody's Investors Service, Inc.,
Fitch IBCA, Inc. or other national rating organizations. They can also be
unrated or "split-rated" (rated as investment grade by one rating organization
but below investment grade by another), if determined by the Manager to be of
comparable quality to rated investment-grade securities. The Fund is not
obligated to dispose of securities when issuers are in default or if the rating
of the security is reduced below investment grade.
The Fund can invest some of its assets in other types of securities,
including common stocks, preferred stocks, and other equity securities of
foreign and U.S. companies. However, the Fund does not anticipate having
significant investments in those types of securities as part of its normal
portfolio strategy.
The Fund could pursue its secondary objective of capital appreciation by
investing in securities convertible into common stock. Convertible securities
might allow the Fund to participate in the increase in value of the issuer's
underlying common stock, by exercising the conversion right. Normally the Fund
would not hold the common stock for investment, although it can hold common
stock as part of the value of its net assets that is not normally expected to be
invested in debt securities. Typically, convertible securities also pay income
until they are converted. There may be other investment strategies that could
offer the Fund opportunities for capital appreciation, such as investing in
defaulted securities, but these are not expected to be a significant part of the
Fund's investment program.
U.S. Government Securities. The Fund can invest in securities issued
or guaranteed by the U.S. Treasury or other government agencies or
federally-chartered corporate entities referred to as
"instrumentalities." These are referred to as "U.S. government
securities" in this Prospectus.
|X| U.S. Treasury Obligations. These include Treasury bills (which
have maturities of one year or less when issued), Treasury notes (which
have maturities of from one to ten years when issued), and Treasury bonds
(which have maturities of more than ten years when issued). Treasury
securities are backed by the full faith and credit of the United States as
to timely payments of interest and repayments of principal. The Fund can
also buy U. S. Treasury securities that have been "stripped" of their
coupons by a Federal Reserve Bank, zero-coupon U.S. Treasury securities
described below, and Treasury Inflation-Protection Securities ("TIPS").
|X| Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These include direct obligations and mortgage-related
securities that have different levels of credit support from the U.S.
government. Some are supported by the full faith and credit of the U.S.
government, such as Government National Mortgage Association pass-through
mortgage certificates (called "Ginnie Maes"). Some are supported by the
right of the issuer to borrow from the U.S. Treasury under certain
circumstances, such as Federal National Mortgage Association bonds ("Fannie
Maes"). Others are supported only by the credit of the entity that issued
them, such as Federal Home Loan Mortgage Corporation obligations ("Freddie
Macs").
|_| Mortgage-Related U.S. Government Securities. The Fund can buy
interests in pools of residential or commercial mortgages, in the form of
collateralized mortgage obligations ("CMOs") and other "pass-through"
mortgage securities. CMOs that are U.S. government securities have
collateral to secure payment of interest and principal. They may be issued
in different series each having different interest rates and maturities.
The collateral is either in the form of mortgage pass-through certificates
issued or guaranteed by a U.S. agency or instrumentality or mortgage loans
insured by a U.S. government agency. The Fund can have substantial amounts
of its assets invested in mortgage-related U.S. government securities.
The prices and yields of CMOs are determined, in part, by assumptions
about the cash flows from the rate of payments of the underlying mortgages.
Changes in interest rates may cause the rate of expected prepayments of
those mortgages to change. In general, prepayments increase when general
interest rates fall and decrease when interest rates rise.
If prepayments of mortgages underlying a CMO occur faster than
expected when interest rates fall, the market value and yield of the
CMO could be reduced. Additionally, the Fund may have to reinvest the
prepayment proceeds in other securities paying interest at lower
rates, which could reduce the Fund's yield.
If interest rates rise rapidly, prepayments may occur at slower rates
than expected, which could have the effect of lengthening the expected
maturity of a short or medium-term security. That could cause its
value to fluctuate more widely in response to changes in interest
rates. In turn, this could cause the value of the Fund's shares to
fluctuate more. The prices of longer-term debt securities tend to
fluctuate more than those of shorter-term debt securities. That
volatility will affect the Fund's share prices.
High-Yield, Lower-Grade Debt Securities. The Fund can purchase a
variety of lower-grade, high-yield debt securities of U.S. and foreign
issuers, including bonds, debentures, notes, preferred stocks, loan
participation interests, structured notes, asset-backed securities,
among others, to seek high current income. These securities are
sometimes called "junk bonds." The Fund has no requirements as to the
maturity of the debt securities it can buy, or as to the market
capitalization range of the issuers of those securities. Up to 35% of
the Fund's assets can be invested in debt securities below investment
grade under normal market conditions.
Lower-grade debt securities are those rated below "Baa" by
Moody's Investors Service, Inc. or lower than "BBB" by Standard &
Poor's Rating Service or that have similar ratings by other
nationally-recognized rating organizations. The Fund can invest in
securities rated as low as "C" or "D", in unrated bonds or bonds which
are in default at the time the Fund buys them. While securities rated
"Baa" by Moody's or "BBB" by S&P are considered "investment grade,"
they have some speculative characteristics.
The Manager does not rely solely on ratings issued by rating
organizations when selecting investments for the Fund. The Fund
can buy unrated securities that offer high current income. The
Manager may assign a rating to an unrated security that is
equivalent to the rating of a rated security that the Manager
believes offers comparable yields and risks.
While investment-grade securities are subject to risks of
non-payment of interest and principal, in general higher-yielding
lower-grade bonds, whether rated or unrated, have greater risks
than investment-grade securities. They may be subject to greater
market fluctuations and risk of loss of income and principal than
investment-grade securities. There may be less of a market for
them and therefore they may be harder to sell at an acceptable
price. There is a relatively greater possibility that the
issuer's earnings may be insufficient to make the payments of
interest and principal due on the bonds. These risks mean that
the Fund may not achieve the expected income from lower-grade
securities, and that the Fund's net asset value per share may be
affected by declines in value of these securities.
|X| Private-Issuer Mortgage-Backed Securities. The Fund can
invest a substantial portion of its assets in mortgage-backed
securities issued by private issuers, which do not offer the
credit backing of U.S. government securities. Primarily these
include multi-class debt or pass-through certificates secured by
mortgage loans. They may be issued by banks, savings and loans,
mortgage bankers and other non-governmental issuers. Private
issuer mortgage-backed securities are subject to the credit risks
of the issuers (as well as the interest rate risks and prepayment
risks of CMOs that are U.S. government securities, discussed
above), although in some cases they may be supported by insurance
or guarantees.
|X| Asset-Backed Securities. The Fund can buy asset-backed
securities, which are fractional interests in pools of loans
collateralized by the loans or other assets or receivables. They
are issued by trusts and special purpose corporations that pass
the income from the underlying pool to the buyer of the interest.
These securities are subject to the risk of default by the issuer
as well as by the borrowers of the underlying loans in the pool.
Foreign Debt Securities. The Fund can buy debt securities issued by
foreign governments and companies, as well as "supra-national"
entities, such as the World Bank. They can include bonds, debentures,
and notes, including derivative investments called "structured" notes,
described below. The Fund will not invest 25% or more of its total
assets in debt securities of any one foreign government or in debt
securities of companies in any one industry. The Fund has no
requirements as to the maturity range of the foreign debt securities
it can buy, or as to the market capitalization range of the issuers of
those securities.
Foreign government debt securities might not be supported by
the full faith and credit of the issuing government. The Fund's
foreign debt investments can be denominated in U.S. dollars or in
foreign currencies. The Fund will buy foreign currency only in
connection with the purchase and sale of foreign securities and
not for speculation.
|X| Special Risks of Emerging and Developing Markets.
Securities of issuers in emerging and developing markets may
offer special investment opportunities but present risks not
found in more mature markets. Those securities may be more
difficult to sell at an acceptable price and their prices may be
more volatile than securities of issuers in more developed
markets. Settlements of trades may be subject to greater delays
so that the Fund may not receive the proceeds of a sale of a
security on a timely basis. These investments may be very
speculative.
These countries might have less developed trading markets
and exchanges. Emerging market countries may have less developed
legal and accounting systems and investments may be subject to
greater risks of government restrictions on withdrawing the sales
proceeds of securities from the country. Economies of developing
countries may be more dependent on relatively few industries that
may be highly vulnerable to local and global changes. Governments
may be more unstable and present greater risks of nationalization
or restrictions on foreign ownership of stocks of local
companies.
The Fund can buy "Brady Bonds," which are U.S.-dollar
denominated debt securities collateralized by zero-coupon U.S.
Treasury securities. They are typically issued by emerging
markets countries and are considered speculative securities with
higher risks of default.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance contract
based on an insurance company separate account to qualify for
favorable tax treatment under the Internal Revenue Code, the
underlying investments must follow special diversification
requirements that limit the percentage of assets that can be
invested in securities of particular issuers. The Fund's
investment program is managed to meet those requirements, in
addition to other diversification requirements under the Internal
Revenue Code and the Investment Company Act that apply to
publicly-sold mutual funds.
Failure by the Fund to meet those special requirements could
cause earnings on a contract owner's interest in an insurance
company separate account to be taxable income. Those
diversification requirements might also limit, to some degree,
the Fund's investment decisions in a way that could reduce its
performance.
Can the Fund's Investment Objective and Policies Change? The Fund's
Board of Trustees can change non-fundamental investment 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 Fund's investment objective is a
fundamental policy. Investment restrictions that are fundamental
policies are listed in the Statement of Additional Information. An
investment policy is not fundamental unless this Prospectus or the
Statement of Additional Information says that it is.
Portfolio Turnover. The Fund may engage in short-term trading to try
to achieve its objective. Portfolio turnover affects brokerage and
transaction costs the Fund pays. The Financial Highlights table below
shows the Fund's portfolio turnover rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund can also
use the investment techniques and strategies described below. The Fund
might not always use all of the different types of techniques and
investments described below. These techniques involve certain risks,
although some are designed to help reduce investment or market risks.
|X| Zero-Coupon and "Stripped" Securities. Some of the
government and corporate debt securities the Fund buys are
zero-coupon bonds that pay no interest. They are issued at a
substantial discount from their face value. "Stripped" securities
are the separate income or principal components of a debt
security. Some CMOs or other mortgage-related securities may be
stripped, with each component having a different proportion of
principal or interest payments. One class might receive all the
interest and the other all the principal payments.
Zero-coupon and stripped securities are subject to greater
fluctuations in price from interest rate changes than
conventional interest-bearing securities. The Fund may have to
pay out the imputed income on zero-coupon securities without
receiving the actual cash currently. Interest-only securities are
particularly sensitive to changes in interest rates.
The values of interest-only mortgage-related securities are
also very sensitive to prepayments of underlying mortgages.
Principal-only securities are also sensitive to changes in
interest rates. When prepayments tend to fall, the timing of the
cash flows to these securities increases, making them more
sensitive to changes in interest rates. The market for some of
these securities may be limited, making it difficult for the Fund
to dispose of its holdings at an acceptable price. The Fund can
invest up to 50% of its total assets in zero-coupon securities
issued by either the U.S. Treasury or companies.
|X| Participation Interests in Loans. These securities
represent an undivided fractional interest in a loan obligation
by a borrower. They are typically purchased from banks or dealers
that have made the loan or are members of the loan syndicate. The
loans may be to foreign or U.S. companies. The Fund does not
invest more than 5% of its net assets in participation interests
of any one borrower. They are subject to the risk of default by
the borrower. If the borrower fails to pay interest or repay
principal, the Fund can lose money on its investment.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The
Fund can 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 might be a risk of loss to the Fund if the value
of the security declines prior to the settlement date. No income
accrues to the Fund on a when-issued security until the Fund
receives the security on settlement of the trade.
|X| Illiquid and Restricted Securities. Investments may be
illiquid because there is no active trading market for them,
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 its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933.
The Fund will not invest more than 15% of its net assets in
illiquid or restricted securities. Certain restricted securities
that are eligible for resale to qualified institutional
purchasers may not be subject to that limit. The Manager monitors
holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a number
of different kinds of "derivative" investments. In the broadest
sense, exchange-traded options, futures contracts, structured
notes, CMOs and other hedging instruments the Fund can use may be
considered "derivative investments." In addition to using hedging
instruments, the Fund can use other derivative investments
because they offer the potential for increased income.
Markets underlying securities and indices may move in a
direction not anticipated by the Manager. Interest rate and stock
market changes in the U.S. and abroad may also influence the
performance of derivatives. As a result of these risks the Fund
could realize less principal or income from the investment than
expected. Certain derivative investments held by the Fund may be
illiquid.
|_| "Structured" Notes. The Fund can buy "structured" notes,
which are specially-designed derivative debt investments. Their
principal payments or interest payments are linked to the value
of an index (such as a currency or securities index) or
commodity. The terms of the instrument may be "structured" by the
purchaser (the Fund) and the borrower issuing the note.
The principal and/or interest payments depend on the
performance of one or more other securities or indices, and the
values of these notes will therefore fall or rise in response to
the changes in the values of the underlying security or index.
They are subject to both credit and interest rate risks and
therefore the Fund could receive more or less than it originally
invested when the notes mature, or it might receive less interest
than the stated coupon payment if the underlying investment or
index does not perform as anticipated. Their values may be very
volatile and they may have a limited trading market, making it
difficult for the Fund to sell its investment at an acceptable
price.
|X| Hedging. The Fund can buy and sell certain kinds of
futures contracts, put and call options, forward contracts and
options on futures and broadly-based securities indices. These
are all referred to as "hedging instruments." The Fund does not
use hedging instruments for speculative purposes, and has limits
on its use of them. The Fund is not required to use hedging
instruments in seeking its goal.
The Fund could buy and sell options, futures and forward
contracts for a number of purposes. It might do so to try to
manage its exposure to the possibility that the prices of its
portfolio securities may decline, or to establish a position in
the securities market as a temporary substitute for purchasing
individual securities. It might do so to try to manage its
exposure to changing interest rates.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. For example, if a covered call
written by the Fund is exercised on an investment that has
increased in value, the Fund will be required to sell the
investment at the call price and will not be able to realize any
profit if the investment has increased in value above the call
price. In writing a put, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous
price.
If the Manager used a hedging instrument at the wrong time
or judged market conditions incorrectly, the strategy could
reduce the Fund's return. The 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.
Temporary Defensive Investments. For cash management purposes, the
Fund may hold cash equivalents such as commercial paper, repurchase
agreements, Treasury bills and other short-term U.S. government
securities. In times of adverse or unstable market or economic
conditions, the Fund can invest up to 100% of its assets in temporary
defensive investments. These would ordinarily be U. S. government
securities, highly-rated commercial paper, bank deposits or repurchase
agreements. To the extent the Fund invests defensively in these
securities, it might not achieve its primary investment objective,
high current income.
Year 2000 Risks. Because many computer software systems in use today
cannot distinguish the year 2000 from the year 1900, the markets for
securities in which the Fund invests could be detrimentally affected
by computer failures beginning January 1, 2000. Failure of computer
systems used for securities trading could result in settlement and
liquidity problems for the Fund and other investors. That failure
could have a negative impact on handling securities trades, pricing
and accounting services. Data processing errors by government issuers
of securities could result in economic uncertainties, and those
issuers might incur substantial costs in attempting to prevent or fix
such errors, all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have
been working on necessary changes to their computer systems to
deal with the year 2000 and expect that their systems will be
adapted in time for that event, although there cannot be
assurance of success. Additionally, the services they provide
depend on the interaction of their computer systems with those of
insurance companies with separate accounts that invest in the
Fund, brokers, information services, the Fund's Custodian and
other parties. Therefore, any failure of the computer systems of
those parties to deal with the year 2000 might also have a
negative effect on the services they provide to the Fund. The
extent of that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds, Inc.,
chooses the Fund's 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 an Investment Advisory
Agreement that states the Manager's responsibilities. The Agreement
sets forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds, with
assets of more than $100 billion as of March 31, 1999, and with
more than 4 million shareholder accounts. The Manager is located
at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
|X| Portfolio Managers. The portfolio managers of the Fund
are David P. Negri and John S. Kowalik. They have been the
persons principally responsible for the day-to-day management of
the Fund's portfolio, in Mr. Negri's case since January 1990 and
in Mr. Kowalik's case since July 1998. Each is a Vice President
of the Fund and Senior Vice President of the Manager. Each serves
as an officer and portfolio manager for other Oppenheimer funds.
Mr. Negri has been employed as a portfolio manager by the Manager
since July 1988. Mr. Kowalik joined the Manager in July 1998 and
was previously Managing Director and Senior Portfolio Manager at
Prudential Global Advisers (from 1989 to June 1998).
|X| Advisory Fees. Under the Investment Advisory Agreement,
the Fund pays the Manager an advisory fee at an annual rate that
declines on additional assets as the Fund grows: 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% on the next $200 million and 0.50% of
average annual net assets over $1 billion. The Fund's management
fee for its last fiscal year ended March 31, 1998, was 0.72% of
the Fund's average annual net assets.
-- Possible Conflicts of Interest. The Fund offers its
shares to separate accounts of different insurance companies that
are not affiliated with each other, as an investment for their
variable annuity, variable life and other investment product
contracts. While the Fund does not foresee any disadvantages to
contract owners from these arrangements, it is possible that the
interests of owners of different contracts participating in the
Fund through different separate accounts might conflict. For
example, a conflict could arise because of differences in tax
treatment.
The Fund's Board has procedures to monitor the portfolio for
possible conflicts to determine what action should be taken. If a
conflict occurs, the Board might require one or more
participating insurance company separate accounts to withdraw
their investments in the Fund. That could force the Fund to sell
securities at disadvantageous prices, and orderly portfolio
management could be disrupted. Also, the Board might refuse to
sell shares of the Fund to a particular separate account, or
could terminate the offering of the Fund's shares if required to
do so by law or if it would be in the best interests of the
shareholders of the Fund to do so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased only by
separate investment accounts of participating insurance companies as
an underlying investment for variable life insurance policies,
variable annuity contracts or other investment products. Individual
investors cannot buy shares of the Fund directly. Please refer to the
accompanying prospectus of the participating insurance company for
information on how to select the Fund as an investment option for that
variable life insurance policy, variable annuity or other investment
product. The Fund reserves the right to refuse any purchase order when
the Manager believes it would be in the Fund's best interests to do
so.
Information about your investment in the Fund through your variable
annuity contract, variable life insurance policy or other plan can be
obtained only from your participating insurance company or its
servicing agent. The Fund's Transfer Agent does not hold or have
access to those records. Instructions for buying or selling shares of
the Fund should be given to your insurance company or its servicing
agent, not directly to the Fund or its Transfer Agent.
-- At What Price Are Shares Sold? Shares are sold at their offering
price, which is the net asset value per share. The Fund does not
impose any sales charge on purchases of its shares. If there are any
charges imposed under the variable annuity, variable life or other
contract through which Fund shares are purchased, they are described
in the accompanying prospectus of the participating insurance company.
The net asset value per share is determined as of the close
of The New York Stock Exchange on each day that the exchange is
open for trading (referred to in this Prospectus as a "regular
business day"). The Exchange normally closes at 4:00 P.M., New
York time, but may close earlier on some days. All references to
time in this Prospectus mean "New York time."
The net asset value per share is determined by dividing the
value of the Fund's net assets attributable to a class of shares
by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the
Fund's securities to determine the Fund's net asset value, in
general based on market values. The Board has adopted special
procedures for valuing illiquid and restricted securities and
securities for which market values cannot be readily obtained.
Because some foreign securities trade in markets and on exchanges
that operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on days
when shares of the Fund cannot be purchased or redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next calculation
of the net asset value per share that is made after the insurance
company (as the Fund's designated agent to receive purchase
orders) receives a purchase order from its contract owners to
purchase Fund shares on a regular business day, provided that the
Fund receives the order from the insurance company, generally by
9:30 A.M. on the next regular business day at the offices of its
Transfer Agent in Denver, Colorado.
-- Classes of Shares. The Fund offers two different classes of shares.
The class of shares offered by this Prospectus has no class name
designation. The other class is designated as Class 2. The different
classes of shares represent investments in the same portfolio of
securities but are expected to have different expenses and share
prices.
This Prospectus may not be used to offer or sell Class 2
shares. A description of the Service Plans that affect only Class
2 shares of the Fund is contained in the Fund's Prospectus that
offers Class 2 shares. That Prospectus, when available, may be
obtained without charge by contacting any participating insurance
company that offers Class 2 shares of the Fund as an investment
for its separate accounts. You can also obtain a copy from
OppenheimerFunds Distributor, Inc. by calling toll-free
1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the participating
insurance companies that hold Fund shares in their separate accounts
for the benefit of variable annuity contracts, variable life insurance
policies or other investment products can place orders to redeem
shares. Contract holders and policy holders should not directly
contact the Fund or its transfer agent to request a redemption of Fund
shares. Contract owners should refer to the withdrawal or surrender
instructions in the accompanying prospectus of the participating
insurance company.
The share price that applies to a redemption order is the next net
asset value per share that is determined after the participating
insurance company (as the Fund's designated agent) receives a
redemption request on a regular business day from its contract or
policy holder, provided that the Fund receives the order from the
insurance company, generally by 9:30 A.M. the next regular business
day at the office of its Transfer Agent in Denver, Colorado. The Fund
normally sends payment by Federal Funds wire to the insurance
company's account the day after the Fund receives the order (and no
later than 7 days after the Fund's receipt of the order). Under
unusual circumstances determined by the Securities and Exchange
Commission, payment may be delayed or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for each
class of shares from net investment income, if any, on an annual
basis, and to pay those dividends in March on a date selected by the
Board of Trustees. The Fund has no fixed dividend rate and cannot
guarantee that it will pay any dividends.
All dividends (and any capital gains distributions will be
reinvested automatically in additional Fund shares at net asset
value for the account of the participating insurance company
(unless the insurance company elects to have dividends or
distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out of any
net short-term or long-term capital gains in March of each year. The
Fund may make supplemental distributions of dividends and capital
gains following the end of its fiscal year. There can be no assurance
that the Fund will pay any capital gains distributions in a particular
year.
Taxes. For a discussion of the tax status of a variable annuity
contract, a variable life insurance policy or other investment product
of a participating insurance company, please refer to the accompanying
prospectus of your participating insurance company. Because shares of
the Fund may be purchased only through insurance company separate
accounts for variable annuity contracts, variable life insurance
policies or other investment products, dividends paid by the Fund from
net investment income and distributions (if any) of net realized
short-term and long-term capital gains will be taxable, if at all, to
the participating insurance company.
This information is only a summary of certain federal income
tax information about an investment in Fund shares. You should
consult with your tax advisor or your participating insurance
company representative about the effect of an investment in the
Fund under your contract or policy.
<PAGE>
Financial Highlights
The Financial Highlights Table is presented to help you understand the
Fund's financial performance for the past 5 fiscal years. Certain
information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has
been audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report, along with the Fund's financial statements, is
included in the Statement of Additional Information, which is
available on request.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31,
1998
1997 1996 1995 1994
================================================================================================================================
<S> <C>
<C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $11.91
$11.63 $11.84 $10.78 $11.65
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income
.72 .76 .69 .72 .76
Net realized and unrealized gain (loss)
.07 .28 (.15) 1.07 (.98)
------
- ------ ------ ------ ------
Total income (loss) from investment
operations
.79 1.04 .54 1.79 (.22)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income
(.20) (.72) (.74) (.73) (.62)
Distributions from net realized gain
(.18) (.04) (.01) -- (.03)
------
- ------ ------ ------ ------
Total dividends and distributions
to shareholders
(.38) (.76) (.75) (.73) (.65)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.32
$11.91 $11.63 $11.84 $10.78
======
====== ====== ====== ======
================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1)
6.80% 9.25% 4.80% 17.00% (1.94)%
================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $655,543
$520,078 $426,439 $211,232 $135,067
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $586,242
$449,760 $296,253 $170,929 $121,884
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income
6.31% 6.72% 6.72% 6.91% 7.30%
Expenses
0.74% 0.78% 0.78% 0.80% 0.57%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 75.8%
116.9% 82.3% 79.4% 35.1%
</TABLE>
1. 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 returns are not annualized
for periods of less than one full year. Total return information does
not reflect expenses that apply at the separate account level or to
related insurance products. Inclusion of these charges would reduce
the total return figures for all periods shown.
2. 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. Purchases and sales of
investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $523,613,491 and $403,984,377,
respectively.
For More Information About Oppenheimer Bond Fund/VA:
The following additional information about Oppenheimer Bond Fund/VA is
available without charge upon request:
Statement of Additional Information This document includes additional
information about the Fund's investment policies, risks, and
operations. It is incorporated by reference into this Prospectus
(which means it is legally part of this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is
available in the Fund's Annual and Semi-Annual Reports to
shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual
and Semi-Annual Reports, and other information about the Fund: By
Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional Information
and other Fund documents and reports by visiting the SEC's Public
Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon
payment of a duplicating fee by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund
or to make any representations about the Fund other than what is
contained in this Prospectus. This Prospectus is not an offer to sell
shares of the Fund, nor a solicitation of an offer to buy shares of
the Fund, to any person in any state or other jurisdiction where it is
unlawful to make such an offer.
SEC File No. 811-4108
PR0630.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Bond Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of Oppenheimer
Bond Fund/VA (the "Fund") under the heading "Annual Total Return
(as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund
depicting the annual total returns of a hypothetical $10,000
investment in shares of the Fund for each of the ten most recent
calendar years, without deducting separate account expenses. Set
forth below are the relevant data that will appear on the bar
chart:
Calendar
Year
Ended Annual Total Returns
12/31/89 13.32%
12/31/90 7.92%
12/31/91 17.63%
12/31/92 6.50%
12/31/93 13.04%
12/31/94 -1.94%
12/31/95 17.00%
12/31/96 4.80%
12/31/97 9.26%
12/31/98 6.80%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Strategic Bond Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Strategic Bond Fund/VA is a mutual fund that seeks a high
level of current income principally derived from interest on debt
securities. The Fund invests mainly in three market sectors: debt
securities of foreign government and companies, U.S. government
securities, and lower-rated high yield securities of U.S. companies.
Shares of the Fund are sold only as the underlying investment for
variable life insurance policies, variable annuity contracts and other
insurance company separate accounts. A prospectus for the insurance
product you have selected accompanies this Prospectus and explains how
to select shares of the Fund as an investment under that insurance
product. This Prospectus contains important information about the
Fund's objective, its investment policies, strategies and risks.
Please read this Prospectus (and your insurance product prospectus)
carefully before you invest and keep them for future reference about
your account.
As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved the Fund's securities nor has it
determined that this Prospectus is accurate or complete. It is a
criminal offense to represent otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund seeks a high level
of current income principally derived from interest on debt securities
and seeks to enhance that income by writing covered call option on
debt securities.
What Does the Fund Invest In? The Fund invests mainly in debt
securities of issuers in three market sectors: foreign governments and
companies, U.S. government securities and lower-grade high-yield
securities of U.S. companies. Those debt securities typically include:
o short-, medium- and long-term foreign and U.S. government bonds and
notes,
o collateralized mortgage obligations (CMOs),
o other mortgage-related securities and asset-backed securities,
o participation interests in loans,
o "structured" notes,
o lower-grade, high-yield domestic and foreign corporate debt
obligations, and o "zero-coupon" or "stripped" securities.
Under normal market conditions, the Fund invests in each of
those three market sectors. However, the Fund is not obligated to
do so, and the amount of its assets in each of the three sectors
will vary over time. The Fund can invest up to 100% of its assets
in any one sector at any time, if the Fund's investment Manager,
OppenheimerFunds, Inc., believes that in doing so the Fund can
achieve its objective without undue risk.
The Fund's foreign investments can include debt securities
of issuers in developed markets as well as emerging markets,
which have special risks. The Fund can also use hedging
instruments and certain derivative investments, primarily CMOs
and "structured" notes, to try to enhance income or to try to
manage investment risks. These investments are more fully
explained in "About the Fund's Investments," below.
|X| How Does the Manager Decide What Securities to Buy or Sell? In
selecting securities for the Fund, the Fund's portfolio managers
analyze the overall investment opportunities and risks in individual
national economies. The portfolio managers' overall strategy is to
build a broadly diversified portfolio of debt securities to help
moderate the special risks of investing in high yield debt instruments
and foreign securities. The managers may try to take advantage of the
lack of correlation of price movements that may occur among the three
sectors from time to time. The portfolio managers currently focus on
the factors below (some of which may vary in particular cases and may
change over time), looking for:
|_| Securities offering high current income,
|_| Overall diversification for the portfolio by seeking securities
whose markets and prices tend to move in different directions,
|_| Relative values among the three major market sectors in which the
Fund invests.
Who Is the Fund Designed For? The Fund's shares are available only as
an investment option under certain variable annuity contracts,
variable life insurance policies and investment plans offered through
insurance company separate accounts of participating insurance
companies, for investors seeking high current income from a fund that
ordinarily will have substantial investments in both domestic and
foreign debt securities. Those investors should be willing to assume
the risks of short-term share price fluctuations that are typical for
a fund that invests in debt securities, particularly high-yield and
foreign securities, which have special risks. Since the Fund's income
level will fluctuate, it is not designed for investors needing an
assured level of current income. Also, the Fund does not seek capital
appreciation. The Fund is designed as a long-term investment for
investors seeking an investment with an overall sector diversification
strategy. However, the Fund is not a complete investment program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments are subject to changes in their value from a number
of factors. They include changes in general bond market movements
in the U.S. and abroad (this is referred to as "market risk"), or
the change in value of particular bonds because of an event
affecting the issuer (this is known as "credit risk"). The Fund
can focus significant amounts of its investments in foreign debt
securities. Therefore, it will be subject to the risks that
economic, political or other events can have on the values of
securities of issuers in particular foreign countries. These
risks are heightened in the case of emerging market debt
securities. Changes in interest rates can also affect securities
prices (this is known as "interest rate risk").
These risks collectively form the risk profile of the Fund,
and can affect the value of the Fund's investments, its
investment performance and its price per share. These risks mean
that you can lose money by investing in the Fund. When you redeem
your shares, they may be worth more or less than what you paid
for them.
The Manager tries to reduce risks by carefully researching
securities before they are purchased, and in some cases by using
hedging techniques. The Fund attempts to reduce its exposure to
market risks by diversifying its investments, that is, by not
holding a substantial percentage of the securities of any one
issuer and by not investing too great a percentage of the Fund's
assets in any one issuer. Also, the Fund does not concentrate 25%
or more of its investments in the securities of any one foreign
government or in the debt and equity securities of companies in
any one industry.
However, changes in the overall market prices of securities
and the income they pay can occur at any time. The share price
and yield of the Fund will change daily based on changes in
market prices of securities and market conditions, and in
response to other economic events. There is no assurance that the
Fund will achieve its investment objective.
|X| Credit Risk. Debt securities are subject to credit risk.
Credit risk relates to the ability of the issuer of a security to
make interest and principal payments on the security as they
become due. If the issuer fails to pay interest, the Fund's
income might be reduced, and if the issuer fails to repay
principal, the value of that security and of the Fund's shares
might be reduced. While the Fund's investments in U.S. government
securities are subject to little credit risk, the Fund's other
investments in debt securities, particularly high-yield,
lower-grade debt securities, are subject to risks of default.
|_| Special Risks of Lower-Grade Securities. Because the
Fund can invest without limit in securities below investment
grade to seek high current income, the Fund's credit risks are
greater than those of funds that buy only investment-grade bonds.
Lower-grade debt securities may be subject to greater market
fluctuations and greater risks of loss of income and principal
than investment-grade debt securities. Securities that are (or
that have fallen) below investment grade are exposed to a greater
risk that the issuers of those securities might not meet their
debt obligations. These risks can reduce the Fund's share prices
and the income it earns.
|X| Risks of Foreign Investing. The Fund can invest its
assets without limit in foreign debt securities and can buy
securities of governments and companies in both developed markets
and emerging markets. The Fund normally invests significant
amounts of its assets in foreign securities. While foreign
securities offer special investment opportunities, there are also
special risks that can reduce the Fund's share prices and
returns.
The change in value of a foreign currency against the U.S.
dollar will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Currency rate
changes can also affect the distributions the Fund makes from the
income it receives from foreign securities as foreign currency
values change against the U.S. dollar. Foreign investing can
result in higher transaction and operating costs for the Fund.
Foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to.
The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy
in the U.S. or abroad, or other political and economic factors.
|_| Special Risks of Emerging and Developing Markets.
Securities of issuers in emerging and developing markets may
offer special investment opportunities but present risks not
found in more mature markets. Those securities may be more
difficult to sell at an acceptable price and their prices may be
more volatile than securities of issuers in more developed
markets. Settlements of trades may be subject to greater delays
so that the Fund may not receive the proceeds of a sale of a
security on a timely basis.
These countries might have less developed trading markets
and exchanges. Emerging market countries may have less developed
legal and accounting systems and investments may be subject to
greater risks of government restrictions on withdrawing the sales
proceeds of securities from the country. Economies of developing
countries may be more dependent on relatively few industries that
may be highly vulnerable to local and global changes. Governments
may be more unstable and present greater risks of nationalization
or restrictions on foreign ownership of stocks of local
companies. These investments may be substantially more volatile
than debt securities of issuers in the U.S. and other developed
countries and may be very speculative.
|X| Interest Rate Risks. The prices of debt securities,
including U.S. government securities, are subject to change when
prevailing interest rates change. When interest rates fall, the
values of already-issued debt securities generally rise. When
interest rates rise, the values of already-issued debt securities
generally fall, and they may sell at a discount from their face
amount. The magnitude of these fluctuations will often be greater
for longer-term debt securities than shorter-term debt
securities. The Fund's share prices can go up or down when
interest rates change because of the effect of the changes on the
value of the Fund's investments in debt securities.
|X| Prepayment Risk. Prepayment risk occurs when the
mortgages underlying a mortgage-related security are prepaid at a
rate faster than anticipated (usually when interest rates rise)
and the issuer of the security can prepay the principal prior to
the security's maturity. Mortgage-related securities that are
subject to prepayment risk, including the CMOs and other
mortgage-related securities that the Fund buys, generally offer
less potential for gains when prevailing interest rates decline,
and have greater potential for loss than other debt securities
when interest rates rise.
The impact of prepayments on the price of a security may be
difficult to predict and may increase the volatility of the
price. The Fund might have to reinvest the proceeds of prepaid
securities in new securities offering lower yields. Additionally,
the Fund can buy mortgage-related securities at a premium.
Accelerated prepayments on those securities could cause the Fund
to lose the portion of its principal investment represented by
the premium the Fund paid.
|X| There are Special Risks in Using Derivative Investments.
The Fund can use derivatives to seek increased income or to try
to hedge investment risks. In general terms, a derivative
investment is an investment contract whose value depends on (or
is derived from) the value of an underlying asset, interest rate
or index. Options, futures, interest rate swaps, structured notes
and CMOs are examples of derivatives the Fund can use.
If the issuer of the derivative does not pay the amount due,
the Fund can lose money on the investment. Also, the underlying
security or investment on which the derivative is based, and the
derivative itself, might not perform the way the Manager expected
it to perform. If that happens, the Fund's share price could
decline or the Fund could get less income than expected. The Fund
has limits on the amount of particular types of derivatives it
can hold. However, using derivatives can cause the Fund to lose
money on its investment and/or increase the volatility of its
share prices.
How Risky is the Fund Overall? In the short term, the values of debt
securities can fluctuate substantially because of interest rate
changes. Foreign debt securities, particularly those of issuers in
emerging markets, and high yield securities can be volatile, and the
price of the Fund's shares can go up and down substantially because of
events affecting foreign markets or issuers or events affecting the
high yield market. The Fund's sector and security diversification
strategy may help cushion the Fund's shares prices from that
volatility, but debt securities are subject to other credit and
interest rate risks that can affect their values and the share prices
of the Fund. The Fund generally has more risks than bond funds that
focus on U. S. government securities and investment-grade bonds but
may be less volatile than funds that focus solely on investments in a
single foreign sector, such as emerging markets.
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks
of investing in the Fund, by showing changes in the Fund's
performance1 from year to year since the Fund's inception and by
showing how the average annual total returns of the Fund's shares
compare to those of broad-based market indices. The Fund's past
investment performance is not necessarily an indication of how
the Fund will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
For the period from 1/1/99 through 3/31/99, the Fund's cumulative
return (not annualized) was 0.14%. Charges imposed by the separate
accounts that invest in the Fund are not included in the calculations
of return in this bar chart, and if those charges were included, the
returns would be less than those shown. During the period shown in the
bar chart, the highest return (not annualized) for a calendar quarter
was 5.90% ( 2nd Q '95) and the lowest return (not annualized) for a
calendar quarter was -3.70% (1st Q '98).
Average Annual Total Returns
for the periods ended 1 Year 5 Years Life of Fund*
December 31, 1998
Oppenheimer Strategic 2.90% 6.83% 6.79%
Bond Fund/VA
Lehman Brothers Aggregate 8.69% 7.27% 7.25%
Bond Index
Salomon Brothers World 15.31% 7.85% 7.87%
Government Bond Index
*The Fund's inception date was 5/3/93. The "life of class" index
performance is shown from 4/30/93.
The Fund's returns in the table measure the performance of a
hypothetical account without deducting charges imposed by the separate
accounts that invest in the Fund and assume that all dividends and
capital gains distributions have been reinvested in additional shares.
Because the Fund invests in a variety of domestic and foreign
corporate and government debt securities, the Fund's performance is
compared to the Lehman Brothers Aggregate Bond Index, an unmanaged
index of U.S. corporate and government bonds, and to the Salomon
Brothers World Government Bond Index, an unmanaged index of debt
securities of major foreign governments. However, it must be
remembered that the index performance reflects the reinvestment of
income but does not consider the effects of transaction costs. Also,
the Fund may have investments that vary from the index.
The Fund's total returns should not be expected to be the same as the
returns of other Oppenheimer funds, even if both funds have the same
portfolio managers and/or similar names.
_______________
1 The Fund has two classes of shares. This Prospectus offers only the
class of shares that has no class name designation, and the
performance shown is for that class. The other class of shares, Class
2, is not offered in this Prospectus.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of the Fund's
portfolio among the different types of permitted investments will vary
over time based upon the evaluation of economic and market trends by
the Manager. At times the Fund might emphasize investments in one or
two sectors because of the Manager's evaluation of the opportunities
for high current income from debt securities in those sectors relative
to other sectors.
A debt security is essentially a loan by the buyer to the
issuer of the debt security. The issuer promises to pay back the
principal amount of the loan and normally pays interest, at a
fixed or variable rate, on the debt while it is outstanding. The
debt securities the Fund buys may be rated by nationally
recognized rating organizations or they may be unrated securities
assigned an equivalent rating by the Manager. The Fund's
investments may be investment grade or below investment grade in
credit quality and the Fund can invest without limit in below
investment-grade debt securities, commonly called "junk bonds."
These typically offer higher yields than investment grade bonds,
because investors assume greater risks of default of these
securities. The ratings definitions of the principal national
rating organizations is included in Appendix A to the Statement
of Additional Information.
The Fund can invest some of its assets in other types of
securities, including common stocks and other equity securities
of foreign and U.S. companies. However, the Fund does not
anticipate having significant investments in those types of
securities as part of its normal portfolio strategy. The Fund's
portfolio might not always include all of the different types of
investments described below. The Statement of Additional
Information contains more detailed information about the Fund's
investment policies and risks.
U.S. Government Securities. The Fund can invest in securities issued
or guaranteed by the U.S. Treasury or other government agencies or
federally-chartered corporate entities referred to as
"instrumentalities." These are referred to as "U.S. government
securities" in this Prospectus.
|X| U.S. Treasury Obligations. These include Treasury bills
(which have maturities of one year or less when issued), Treasury
notes (which have maturities of from one to ten years when
issued), and Treasury bonds (which have maturities of more than
ten years when issued). Treasury securities are backed by the
full faith and credit of the United States as to timely payments
of interest and repayments of principal. The Fund can also buy U.
S. Treasury securities that have been "stripped" of their coupons
by a Federal Reserve Bank, zero-coupon U.S. Treasury securities
described below, and Treasury Inflation-Protection Securities
("TIPS").
|X| Obligations Issued or Guaranteed by U.S. Government
Agencies or Instrumentalities. These include direct obligations
and mortgage-related securities that have different levels of
credit support from the U.S. government. Some are supported by
the full faith and credit of the U.S. government, such as
Government National Mortgage Association pass-through mortgage
certificates (called "Ginnie Maes"). Some are supported by the
right of the issuer to borrow from the U.S. Treasury under
certain circumstances, such as Federal National Mortgage
Association bonds ("Fannie Maes"). Others are supported only by
the credit of the entity that issued them, such as Federal Home
Loan Mortgage Corporation obligations ("Freddie Macs").
|_| Mortgage-Related U.S. Government Securities. The Fund
can buy interests in pools of residential or commercial
mortgages, in the form of collateralized mortgage obligations
("CMOs") and other "pass-through" mortgage securities. CMOs that
are U.S. government securities have collateral to secure payment
of interest and principal. They may be issued in different series
each having different interest rates and maturities. The
collateral is either in the form of mortgage pass-through
certificates issued or guaranteed by a U.S. agency or
instrumentality or mortgage loans insured by a U.S. government
agency. The Fund can have substantial amounts of its assets
invested in mortgage-related U.S. government securities.
The prices and yields of CMOs are determined, in part, by
assumptions about the cash flows from the rate of payments of the
underlying mortgages. Changes in interest rates may cause the
rate of expected prepayments of those mortgages to change. In
general, prepayments increase when general interest rates fall
and decrease when interest rates rise.
If prepayments of mortgages underlying a CMO occur faster
than expected when interest rates fall, the market value and
yield of the CMO could be reduced. When interest rates rise
rapidly, if prepayments occur more slowly than expected, a short-
or medium-term CMO can in effect become a long-term security,
subject to greater fluctuations in value. These prepayment risks
can make the prices of CMOs very volatile when interest rates
change. The prices of longer-term debt securities tend to
fluctuate more than those of shorter-term debt securities. That
volatility will affect the Fund's share prices.
High-Yield, Lower-Grade Debt Securities of U.S. Issuers. The Fund can
purchase a variety of lower-grade, high-yield debt securities of U.S.
issuers, including bonds, debentures, notes, preferred stocks, loan
participation interests, structured notes, asset-backed securities,
among others, to seek high current income. These securities are
sometimes called "junk bonds." The Fund has no requirements as to the
maturity of the debt securities it can buy, or as to the market
capitalization range of the issuers of those securities. There are no
restrictions on the amount of the Fund's assets that can be invested
in debt securities below investment grade.
Lower-grade debt securities are those rated below "Baa" by
Moody's Investors Service, Inc. or lower than "BBB" by Standard &
Poor's Rating Service or that have similar ratings by other
nationally-recognized rating organizations. The Fund can invest
in securities rated as low as "C" or "D", in unrated bonds or
bonds which are in default at the time the Fund buys them. While
securities rated "Baa" by Moody's or "BBB" by S&P are considered
"investment grade," they have some speculative characteristics.
The Manager does not rely solely on ratings issued by rating
organizations when selecting investments for the Fund. The Fund
can buy unrated securities that offer high current income. The
Manager may assign a rating to an unrated security that is
equivalent to the rating of a rated security that the Manager
believes offers comparable yields and risks.
While investment-grade securities are subject to risks of
non-payment of interest and principal, in general,
higher-yielding lower-grade bonds, whether rated or unrated, have
greater risks than investment-grade securities. They may be
subject to greater market fluctuations and risk of loss of income
and principal than investment-grade securities. There may be less
of a market for them and therefore they may be harder to sell at
an acceptable price. There is a relatively greater possibility
that the issuer's earnings may be insufficient to make the
payments of interest and principal due on the bonds. These risks
mean that the Fund may not achieve the expected income from
lower-grade securities, and that the Fund's net asset value per
share may be affected by declines in value of these securities.
|X| Private-Issuer Mortgage-Backed Securities. The Fund can
invest a substantial portion of its assets in mortgage-backed
securities issued by private issuers, which do not offer the
credit backing of U.S. government securities. Primarily these
include multi-class debt or pass-through certificates secured by
mortgage loans. They may be issued by banks, savings and loans,
mortgage bankers and other non-governmental issuers. Private
issuer mortgage-backed securities are subject to the credit risks
of the issuers (as well as the interest rate risks and prepayment
risks of CMOs, discussed above), although in some cases they may
be supported by insurance or guarantees.
|X| Asset-Backed Securities. The Fund can buy asset-backed
securities, which are fractional interests in pools of loans
collateralized by the loans or other assets or receivables. They
are issued by trusts and special purpose corporations that pass
the income from the underlying pool to the buyer of the interest.
These securities are subject to the risk of default by the issuer
as well as by the borrowers of the underlying loans in the pool.
Foreign Debt Securities. The Fund can buy debt securities issued by
foreign governments and companies, as well as "supra-national"
entities, such as the World Bank. They can include bonds, debentures,
and notes, including derivative investments called "structured" notes,
described below. The Fund will not invest 25% or more of its total
assets in debt securities of any one foreign government or in debt
securities of companies in any one industry. The Fund has no
requirements as to the maturity range of the foreign debt securities
it can buy, or as to the market capitalization range of the issuers of
those securities.
The Fund's foreign debt investments can be denominated in
U.S. dollars or in foreign currencies. The Fund will buy foreign
currency only in connection with the purchase and sale of foreign
securities and not for speculation.
Foreign government debt securities might not be supported by
the full faith and credit of the issuing government. The Fund can
buy "Brady Bonds", which are U.S.-dollar denominated debt
securities collateralized by zero-coupon U.S. Treasury
securities. They are typically issued by emerging markets
countries and are considered speculative securities with higher
risks of default.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance contract
based on an insurance company separate account to qualify for
favorable tax treatment under the Internal Revenue Code, the
underlying investments must follow special diversification
requirements that limit the percentage of assets that can be
invested in securities of particular issuers. The Fund's
investment program is managed to meet those requirements, in
addition to other diversification requirements under the Internal
Revenue Code and the Investment Company Act that apply to
publicly-sold mutual funds.
Failure by the Fund to meet those special requirements could
cause earnings on a contract owner's interest in an insurance
company separate account to be taxable income. Those
diversification requirements might also limit, to some degree,
the Fund's investment decisions in a way that could reduce its
performance.
|X| Can the Fund's Investment Objective and Policies Change?
The Fund's Board of Trustees can change non-fundamental
investment 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 Fund's investment objective is a fundamental
policy. Investment restrictions that are fundamental policies are
listed in the Statement of Additional Information. An investment
policy is not fundamental unless this Prospectus or the Statement
of Additional Information says that it is.
|X| Portfolio Turnover. The Fund can engage in short-term
trading to try to achieve its objective. Portfolio turnover
affects brokerage and transaction costs the Fund pays. The
Financial Highlights table at the end of this Prospectus shows
the Fund's portfolio turnover rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund can also
use the investment techniques and strategies described below. The
Manager might not always use all of the different types of techniques
and investments described below. These techniques involve certain
risks, although some are designed to help reduce investment or market
risks.
|X| Zero-Coupon and "Stripped" Securities. Some of the
government and corporate debt securities the Fund buys are
zero-coupon bonds that pay no interest. They are issued at a
substantial discount from their face value. "Stripped" securities
are the separate income or principal components of a debt
security. Some CMOs or other mortgage-related securities may be
stripped, with each component having a different proportion of
principal or interest payments. One class might receive all the
interest and the other all the principal payments.
Zero-coupon and stripped securities are subject to greater
fluctuations in price from interest rate changes than
conventional interest-bearing securities. The Fund may have to
pay out the imputed income on zero-coupon securities without
receiving the actual cash currently. Interest-only securities are
particularly sensitive to changes in interest rates.
The values of interest-only mortgage-related securities are
also very sensitive to prepayments of underlying mortgages.
Principal-only securities are also sensitive to changes in
interest rates. When prepayments tend to fall, the timing of the
cash flows to these securities increases, making them more
sensitive to changes in interest rates. The market for some of
these securities may be limited, making it difficult for the Fund
to dispose of its holdings at an acceptable price. The Fund can
invest up to 50% of its total assets in zero-coupon securities
issued by either the U.S. Treasury or companies.
|X| Participation Interests in Loans. These securities
represent an undivided fractional interest in a loan obligation
by a borrower. They are typically purchased from banks or dealers
that have made the loan or are members of the loan syndicate. The
loans may be to foreign or U.S. companies. The Fund does not
invest more than 5% of its net assets in participation interests
of any one borrower. They are subject to the risk of default by
the borrower. If the borrower fails to pay interest or repay
principal, the Fund can lose money on its investment.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The
Fund can 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 might be a risk of loss to the Fund if the value
of the security declines prior to the settlement date. No income
accrues to the Fund on a when-issued security until the Fund
receives the security on settlement of the trade.
|X| Illiquid and Restricted Securities. Investments may be
illiquid because there is no active trading market for them,
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 its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933.
The Fund will not invest more than 15% of its net assets in
illiquid or restricted securities. Certain restricted securities
that are eligible for resale to qualified institutional
purchasers may not be subject to that limit. The Manager monitors
holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a number
of different kinds of "derivative" investments. In the broadest
sense, exchange-traded options, futures contracts, structured
notes, CMOs and other hedging instruments the Fund can use may be
considered "derivative investments." In addition to using hedging
instruments, the Fund can use other derivative investments
because they offer the potential for increased income.
Markets underlying securities and indices may move in a
direction not anticipated by the Manager. Interest rate and stock
market changes in the U.S. and abroad may also influence the
performance of derivatives. As a result of these risks the Fund
could realize less principal or income from the investment than
expected. Certain derivative investments held by the Fund may be
illiquid.
|_| "Structured" Notes. The Fund can buy "structured" notes,
which are specially-designed derivative debt investments, their
principal payments or interest payments are linked to the value
of an index (such as a currency or securities index) or
commodity. The terms of the instrument may be "structured" by the
purchaser (the Fund) and the borrower issuing the note.
The principal and/or interest payments depend on the
performance of one or more other securities or indices, and the
values of these notes will therefore fall or rise in response to
the changes in the values of the underlying security or index.
They are subject to both credit and interest rate risks and
therefore the Fund could receive more or less than it originally
invested when the notes mature, or it might receive less interest
than the stated coupon payment if the underlying investment or
index does not perform as anticipated. Their values may be very
volatile and they may have a limited trading market, making it
difficult for the Fund to sell its investment at an acceptable
price.
|X| Hedging. The Fund can buy and sell certain kinds of
futures contracts, put and call options, forward contracts and
options on futures and broadly-based securities indices. These
are all referred to as "hedging instruments." The Fund does not
use hedging instruments for speculative purposes, and has limits
on its use of them. The Fund is not required to use hedging
instruments in seeking its goal, other than writing covered call
options when deemed appropriate by the Manager. Currently, the
Fund does not write call options to a significant extent.
The Fund could buy and sell options, futures and forward
contracts for a number of purposes. It might do so to try to
manage its exposure to the possibility that the prices of its
portfolio securities may decline, or to establish a position in
the securities market as a temporary substitute for purchasing
individual securities. It might do so to try to manage its
exposure to changing interest rates.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. For example, if a covered call
written by the Fund is exercised on an investment that has
increased in value, the Fund will be required to sell the
investment at the call price and will not be able to realize any
profit if the investment has increased in value above the call
price. In writing a put, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous
price.
If the Manager used a hedging instrument at the wrong time
or judged market conditions incorrectly, the strategy could
reduce the Fund's return. The 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.
Temporary Defensive Investments. For cash management purposes, the
Fund may hold cash equivalents such as commercial paper, repurchase
agreements, Treasury bills and other short-term U.S. government
securities. In times of adverse or unstable market or economic
conditions, the Fund can invest up to 100% of its assets in temporary
defensive investments. These would ordinarily be U. S. government
securities, highly-rated commercial paper, bank deposits or repurchase
agreements. To the extent the Fund invests defensively in these
securities, it might not achieve its investment objective.
Year 2000 Risks. Because many computer software systems in use today
cannot distinguish the year 2000 from the year 1900, the markets for
securities in which the Fund invests could be detrimentally affected
by computer failures beginning January 1, 2000. Failure of computer
systems used for securities trading could result in settlement and
liquidity problems for the Fund and other investors. That failure
could have a negative impact on handling securities trades, pricing
and accounting services. Data processing errors by government issuers
of securities could result in economic uncertainties, and those
issuers might incur substantial costs in attempting to prevent or fix
such errors, all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have been working
on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that
event, although there cannot be assurance of success. Additionally,
the services they provide depend on the interaction of their computer
systems with those of insurance companies with separate accounts that
invest in the Fund, brokers, information services, the Fund's
Custodian and other parties. Therefore, any failure of the computer
systems of those parties to deal with the year 2000 might also have a
negative effect on the services they provide to the Fund. The extent
of that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds, Inc.,
chooses the Fund's 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 an Investment Advisory
Agreement that states the Manager's responsibilities. The Agreement
sets forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds, with
assets of more than $100 billion as of March 31, 1999, and with
more than 4 million shareholder accounts. The Manager is located
at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
|X| Portfolio Manager. The portfolio managers of the Fund
are David P. Negri and Arthur P. Steinmetz. They have been the
persons principally responsible for the day-to-day management of
the Fund's portfolio since its inception in May 1993. Both are
Vice Presidents of the Fund and Senior Vice Presidents of the
Manager. They also serve as officers and portfolio managers for
other Oppenheimer funds. Mr. Steinmetz has been employed by the
Manager since 1986, and Mr. Negri, since 1989.
|X| Advisory Fees. Under the Investment Advisory Agreement,
the Fund pays the Manager an advisory fee at an annual rate that
declines on additional assets as the Fund grows: 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% on the next $200 million and 0.50% of
average annual net assets over $1 billion. The Fund's management
fee for its last fiscal year ended December 31, 1998, was 0.74%
of the Fund's average annual net assets.
|X| Possible Conflicts of Interest. The Fund offers its shares to
separate accounts of different insurance companies that are not
affiliated with each other, as an investment for their variable
annuity, variable life and other investment product contracts. While
the Fund does not foresee any disadvantages to contract owners from
these arrangements, it is possible that the interests of owners of
different contracts participating in the Fund through different
separate accounts might conflict. For example, a conflict could arise
because of differences in tax treatment.
The Fund's Board has procedures to monitor the portfolio for
possible conflicts to determine what action should be taken. If a
conflict occurs, the Board might require one or more
participating insurance company separate accounts to withdraw
their investments in the Fund. That could force the Fund to sell
securities at disadvantageous prices, and orderly portfolio
management could be disrupted. Also, the Board might refuse to
sell shares of the Fund to a particular separate account, or
could terminate the offering of the Fund's shares if required to
do so by law or if it would be in the best interests of the
shareholders of the Fund to do so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased only by
separate investment accounts of participating insurance companies as
an underlying investment for variable life insurance policies,
variable annuity contracts or other investment products. Individual
investors cannot buy shares of the Fund directly. Please refer to the
accompanying prospectus of the participating insurance company for
information on how to select the Fund as an investment option for that
variable life insurance policy, variable annuity or other investment
product. The Fund reserves the right to refuse any purchase order when
the Manager believes it would be in the Fund's best interests to do
so.
Information about your investment in the Fund through your variable
annuity contract, variable life insurance policy or other plan can be
obtained only from your participating insurance company or its
servicing agent. The Fund's Transfer Agent does not hold or have
access to those records. Instructions for buying or selling shares of
the Fund should be given to your insurance company or its servicing
agent, not directly to the Fund or its Transfer Agent.
|X| At What Price Are Shares Sold? Shares are sold at their
offering price, which is the net asset value per share. The Fund
does not impose any sales charge on purchases of its shares. If
there are any charges imposed under the variable annuity,
variable life or other contract through which Fund shares are
purchased, they are described in the accompanying prospectus of
the participating insurance company.
The net asset value per share is determined as of the close
of The New York Stock Exchange on each day that the exchange is
open for trading (referred to in this Prospectus as a "regular
business day"). The Exchange normally closes at 4:00 P.M., New
York time, but may close earlier on some days. All references to
time in this Prospectus mean "New York time."
The net asset value per share is determined by dividing the
value of the Fund's net assets attributable to a class of shares
by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the
Fund's securities to determine the Fund's net asset value, in
general based on market values. The Board has adopted special
procedures for valuing illiquid and restricted securities and
securities for which market values cannot be readily obtained.
Because some foreign securities trade in markets and on exchanges
that operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on days
when shares of the Fund cannot be purchased or redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next calculation
of the net asset value per share that is made after the insurance
company (as the Fund's designated agent to receive purchase
orders) receives a purchase order from its contract owners to
purchase Fund shares on a regular business day, provided that the
Fund receives the order from the insurance company, generally by
9:30 A.M. on the next regular business day at the offices of its
Transfer Agent in Denver, Colorado.
|X| Classes of Shares. The Fund offers two different classes
of shares. The class of shares offered by this Prospectus has no
class name designation. The other class is designated as Class 2.
The different classes of shares represent investments in the same
portfolio of securities but are expected to have different
expenses and share prices.
This Prospectus may not be used to offer or sell Class 2
shares. A description of the Service Plans that affect only Class
2 shares of the Fund is contained in the Fund's Prospectus that
offers Class 2 shares. That Prospectus, when available, may be
obtained without charge by contacting any participating insurance
company that offers Class 2 shares of the Fund as an investment
for its separate accounts. You can also obtain a copy from
OppenheimerFunds Distributor, Inc. by calling toll-free
1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the participating
insurance companies that hold Fund shares in their separate accounts
for the benefit of variable annuity contracts, variable life insurance
policies or other investment products can place orders to redeem
shares. Contract holders and policy holders should not directly
contact the Fund or its transfer agent to request a redemption of Fund
shares. Contract owners should refer to the withdrawal or surrender
instructions in the accompanying prospectus of the participating
insurance company.
The share price that applies to a redemption order is the next net
asset value per share that is determined after the participating
insurance company (as the Fund's designated agent) receives a
redemption request on a regular business day from its contract or
policy holder, provided that the Fund receives the order from the
insurance company, generally by 9:30 A.M. the next regular business
day at the office of its Transfer Agent in Denver, Colorado. The Fund
normally sends payment by Federal Funds wire to the insurance
company's account the day after the Fund receives the order (and no
later than 7 days after the Fund's receipt of the order). Under
unusual circumstances determined by the Securities and Exchange
Commission, payment may be delayed or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for each
class of shares from net investment income, if any, on an annual basis
and to pay those dividends in March on a date selected by the Board of
Trustees. The Fund has no fixed dividend rate and cannot guarantee
that it will pay any dividends.
All dividends (and any capital gains distributions will be
reinvested automatically in additional Fund shares at net asset
value for the account of the participating insurance company
(unless the insurance company elects to have dividends or
distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out of any
net short-term or long-term capital gains in March of each year. The
Fund may make supplemental distributions of dividends and capital
gains following the end of its fiscal year. There can be no assurance
that the Fund will pay any capital gains distributions in a particular
year.
Taxes. For a discussion of the tax status of a variable annuity
contract, a variable life insurance policy or other investment product
of a participating insurance company, please refer to the accompanying
prospectus of your participating insurance company. Because shares of
the Fund may be purchased only through insurance company separate
accounts for variable annuity contracts, variable life insurance
policies or other investment products, dividends paid by the Fund from
net investment income and distributions (if any) of net realized
short-term and long-term capital gains will be taxable, if at all, to
the participating insurance company.
This information is only a summary of certain federal income
tax information about an investment in Fund shares. You should
consult with your tax advisor or your participating insurance
company representative about the effect of an investment in the
Fund under your contract or policy.
Financial Highlights
The Financial Highlights Table is presented to help you understand the
Fund's financial performance for the past 5 fiscal years. Certain
information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has
been audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report, along with the Fund's financial statements, is
included in the Statement of Additional Information, which is
available on request.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31,
1998
1997 1996 1995 1994
=============================================================================================================================
<S> <C>
<C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $5.12
$5.09 $4.91 $4.60 $5.12
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income
.39 .39 .38 .38 .35
Net realized and unrealized gain (loss)
(.24) .04 .19 .30 (.54)
-----
- ----- ----- ----- -----
Total income (loss) from investment
operations
.15 .43 .57 .68 (.19)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income
(.09) (.39) (.39) (.37) (.32)
Distributions from net realized gain
(.06) (.01) -- -- (.01)
-----
- ----- ----- ----- -----
Total dividends and distributions
to shareholders
(.15) (.40) (.39) (.37) (.33)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.12
$5.12 $5.09 $4.91 $4.60
=====
===== ===== ===== =====
=============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1)
2.90% 8.71% 12.07% 15.33% (3.78)%
=============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $279,200
$207,839 $118,716 $60,098 $20,320
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $250,227
$159,934 $ 82,604 $37,698 $15,389
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income
8.17% 8.23% 8.48% 9.32% 8.36%
Expenses
0.80% 0.83% 0.85% 0.85% 0.87%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 133.7%
149.7% 144.3% 87.0% 136.6%
</TABLE>
1. 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 returns are not annualized
for periods of less than one full year. Total return information does
not reflect expenses that apply at the separate account level or to
related insurance products. Inclusion of these charges would reduce
the total return figures for all periods shown.
2. 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. Purchases and sales of
investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $358,275,325 and $301,159,735,
respectively.
For More Information About Oppenheimer Strategic Bond Fund/VA:
The following additional information about Oppenheimer Strategic Bond
Fund/VA is available without charge upon request:
Statement of Additional Information
This document includes additional information about the Fund's
investment policies, risks, and operations. It is incorporated by
reference into this Prospectus (which means it is legally part of this
Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is
available in the Fund's Annual and Semi-Annual Reports to
shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual
and Semi-Annual Reports, and other information about the Fund:
By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional Information
and other Fund documents and reports by visiting the SEC's Public
Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon
payment of a duplicating fee by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund
or to make any representations about the Fund other than what is
contained in this Prospectus. This Prospectus is not an offer to sell
shares of the Fund, nor a solicitation of an offer to buy shares of
the Fund, to any person in any state or other jurisdiction where it is
unlawful to make such an offer.
SEC File No. 811-4108
PR0265.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Strategic Bond Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of Oppenheimer
Strategic Bond Fund/VA (the "Fund") under the heading "Annual
Total Return (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund
depicting the annual total returns of a hypothetical $10,000
investment in shares of the Fund for each of the five most recent
calendar years, without deducting separate account expenses. Set
forth below are the relevant data that will appear on the bar
chart:
Calendar
Year
Ended Annual Total Returns
12/31/94 -3.70%
12/31/95 15.33%
12/31/96 12.07%
12/31/97 8.71%
12/31/98 2.90%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Aggressive Growth Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Aggressive Growth Fund/VA is a mutual fund that seeks
capital appreciation by investing in "growth-type" companies. The Fund
invests mainly in common stocks. Shares of the Fund are sold only as
the underlying investment for variable life insurance policies,
variable annuity contracts and other insurance company separate
accounts. A prospectus for the insurance product you have selected
accompanies this Prospectus and explains how to select shares of the
Fund as an investment under that insurance product. This Prospectus
contains important information about the Fund's objective, its
investment policies, strategies and risks. Please read this Prospectus
(and your insurance product prospectus) carefully before you invest
and keep them for future reference about your account.
As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved the Fund's securities nor has it
determined that this Prospectus is accurate or complete. It is a
criminal offense to represent otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund seeks capital
appreciation by investing in "growth-type" companies.
What Does the Fund Invest In? The Fund invests mainly in equity
securities, such as common stocks, and can invest in other equity
securities, such as preferred stocks and securities convertible into
common stock. It invests primarily in U.S. companies, but can also buy
foreign stocks.
The Fund emphasizes investments in companies that the Fund's
investment Manager, OppenheimerFunds, Inc., believes have
potential for increased stock prices relative to the overall
stock market. Growth companies can include established companies
entering a growth cycle in their business, as well as newer
companies.
The Fund can invest in securities of issuers of all market
capitalization ranges, but currently focuses on stocks of "large
capitalization" issuers (which have a market capitalization of
more than $5 billion). The Fund can also use hedging instruments
and certain derivative investments to try to manage investment
risks. These investments are more fully explained in "About the
Fund's Investments," below.
|X| How Does the Manager Decide What Securities to Buy or
Sell? In selecting securities for the Fund, the Fund's portfolio
manager looks for high-growth companies using a "bottom-up" stock
selection process. The "bottom-up" approach focuses on
fundamental analysis of individual issuers before considering
overall economic, market or industry trends. The stock selection
process includes analysis of other business and economic factors
that might contribute to the company's stock appreciation.
The portfolio manager also looks for companies with revenues
growing at above-average rates that might support and sustain
above-average earnings, and companies whose revenue growth is
primarily driven by strength in unit volume sales. While this
process and the inter-relationship of the factors used may change
over time, and its implementation may vary in particular cases,
the portfolio manager currently searches primarily for stocks of
companies having the following characteristics:
|_| What the portfolio manager believes to be a high rate of
sustainable earnings growth;
|_| Undiscovered and undervalued emerging growth characteristics;
|_| Innovate management and strong leadership positions in unique
market niches;
|_| An expectation of better-than-anticipated earnings or positive
earnings forecasts.
If the portfolio manager discerns a slowdown in the
company's internal revenue growth or earnings growth or a
negative movement in the company's fundamental economic
condition, he will consider selling that stock if there are other
investment alternatives that offer what he believes to be better
appreciation possibilities.
Who Is the Fund Designed For? The Fund's shares are available only as
an investment option under certain variable annuity contracts,
variable life insurance policies and investment plans offered through
insurance company separate accounts of participating insurance
companies, for investors seeking capital growth in their investment
over the long term. Those investors should be willing to assume the
greater risks of short-term shares price fluctuations that are typical
for an aggressive growth fund focusing on common stock investments.
The Fund does not seek current income and it is not designed for
investors needing assured levels of current income or preservation of
capital. The Fund is not a complete investment program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments are subject to changes in their value from a number
of factors. They include changes in general stock market
movements (this is referred to as "market risk"). There may be
events or changes affecting particular industries that might be
emphasized in the Fund's portfolio (this is referred to as
"industry risk") or the change in value of particular stocks
because of an event affecting the issuer.
These risks collectively form the risk profile of the Fund,
and can affect the value of the Fund's investments, its
investment performance and its price per share. These risks mean
that you can lose money by investing in the Fund. When you redeem
your shares, they may be worth more or less than what you paid
for them.
The Manager tries to reduce risks by carefully researching
securities before they are purchased. The Fund attempts to reduce
its exposure to market risks by diversifying its investments,
that is, by not holding a substantial percentage of the stock of
any one company and by not investing too great a percentage of
the Fund's assets in any one issuer. Also, the Fund does not
concentrate 25% or more of its investments in any one industry.
However, changes in the overall market prices of securities
and the income they pay can occur at any time. The share price of
the Fund will change daily based on changes in market prices of
securities and market conditions, and in response to other
economic events. There is no assurance that the Fund will achieve
its investment objective.
|X| Risks of Investing in Stocks. Stocks fluctuate in price,
and their short-term volatility at times may be great. Because
the Fund currently focuses its investments primarily in common
stocks and other equity securities for capital appreciation, the
value of the Fund's portfolio will be affected by changes in the
stock markets. Market risk will affect the Fund's net asset value
per share, which will fluctuate as the values of the Fund's
portfolio securities change. A variety of factors can affect the
price of a particular stocks and the prices of individual stocks
do not all move in the same direction uniformly or at the same
time. Different stock markets may behave differently from each
other.
Stocks of growth companies may provide greater opportunities
for capital appreciation but may be more volatile than other
stocks. Additionally, stocks of issuers in a particular industry
may be affected by changes in economic conditions that affect
that industry more than others, or by availability of basic
resources or supplies, or other events. To the extent that the
Fund has greater emphasis on investments in a particular
industry, its share values may fluctuate in response to events
affecting that industry.
Other factors can affect a particular stock's price, such as
poor earnings reports by the issuer, loss of major customers,
major litigation against the issuer, or changes in government
regulations affecting the issuer. The Fund invests in securities
of large companies buy also invests in small and medium-size
companies, which may have more volatile stock prices than large
companies.
|X| Risks in Using Derivative Investments. The Fund can use
derivatives to seek increased returns or to try to hedge
investment risks. In general terms, a derivative investment is
one whose value depends on (or is derived from) the value of an
underlying asset, interest rate or index. Options, futures, and
forward contracts are examples of derivatives the Fund can use.
If the issuer of the derivative does not pay the amount due,
the Fund can lose money on the investment. Also, the underlying
security or investment on which the derivative is based, and the
derivative itself, might not perform the way the Manager expected
it to perform. If that happens, the Fund's share price could
decline or the Fund could get less income than expected. The Fund
has limits on the amount of particular types of derivatives it
can hold. However, using derivatives can cause the Fund to lose
money on its investment and/or increase the volatility of its
share prices.
How Risky is the Fund Overall? In the short term, stock markets can be
volatile, and the price of the Fund's shares can go up and down
substantially. The Fund generally does not use income-oriented
investments to help cushion the Fund's total return from changes in
stock prices, except for defensive purposes. The Fund is an aggressive
investment vehicle, designed for investors willing to assume greater
risks in the hope of achieving greater gains. In the short-term the
Fund may be less volatile than small-cap and emerging markets stock
funds, but it may be subject to greater fluctuations in its share
prices than funds that focus on both stocks and bonds.
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks
of investing in the Fund, by showing changes in the Fund's
performance1 from year to year for the last ten calendar years
and by showing how the average annual total returns of the Fund's
shares compare to those of a broad-based market index. The Fund's
past investment performance is not necessarily an indication of
how the Fund will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
___________________
1 The Fund has two classes of shares. This Prospectus offers only the
class of shares that has no class name designation, and the
performance shown is for that class. The other class of shares, Class
2, is not offered in this Prospectus.
For the period from 1/1/99 through 3/31/99, the Fund's cumulative
return (not annualized) was 9.70%. Charges imposed by the separate
accounts that invest in the Fund are not included in the calculations
of return in this bar chart, and if those charges were included, the
returns would be less than those shown. During the period shown in the
bar chart, the highest return (not annualized) for a calendar quarter
was 24.70% (4th Q '98) and the lowest return (not annualized) for a
calendar quarter was -23.25% (3rd Q '98).
Average Annual Total Returns
for the periods ended 1 Year 5 Years 10 Years
December 31, 1998
Oppenheimer Aggressive 12.36% 13.06% 16.12%
Growth Fund/VA
S&P 500 Index 28.60% 24.05% 19.19%
The Fund's returns in the table measure the performance of a
hypothetical account without deducting charges imposed by the separate
accounts that invest in the Fund and assume that all dividends and
capital gains distributions have been reinvested in additional shares.
Because the Fund invests primarily in stocks, the Fund's performance
is compared to the S&P 500 Index, an unmanaged index of equity
securities that is a measure of the general domestic stock market.
However, it must be remembered that the index performance reflects the
reinvestment of income but does not consider the effects of
transaction costs.
The Fund's total returns should not be expected to be the same as the
returns of other Oppenheimer funds, even if both funds have the same
portfolio managers and/or similar names.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of the Fund's
portfolio among the different types of permitted investments will vary
over time based upon the evaluation of economic and market trends by
the Manager. The Fund's portfolio might not always include all of the
different types of investments described below. The Statement of
Additional Information contains more detailed information about the
Fund's investment policies and risks.
|X| Stock Investments. The Fund invests in securities issued
by companies that the Manager believes have growth potential.
Growth companies can be new or established companies that may be
developing new products or services, that have relatively
favorable prospects, or that are expanding into new and growing
markets. Current examples include companies in the fields of
telecommunications, biotechnology, computer software, and new
consumer products. Growth companies may be providing new products
or services that can enable them to capture a dominant or
important market position. They may have a special area of
expertise or the capability to take advantage of changes in
demographic factors in a more profitable way than larger, more
established companies.
Growth companies tend to retain a large part of their
earnings for research, development or investment in capital
assets. Therefore, they might not emphasize paying dividends, and
may not pay any dividends for some time. They are selected for
the Fund's portfolio because the Manager believes the price of
the stock will increase over the long term, relative to the
overall stock market.
|_| Cyclical Opportunities. The Fund might also seek to take
advantage of changes in the business cycle by investing in
companies that are sensitive to those changes if the Manager
believes they have growth potential. For example, when the
economy is expanding, companies in the consumer durables and
technology sectors might benefit and present long-term growth
opportunities. The Fund focuses on seeking growth over the long
term, but could seek to take tactical advantage of short-term
market movements or events affecting particular issuers or
industries.
|_| Other Equity Securities. While the Fund emphasizes
investments in common stocks, it can also buy preferred stocks,
warrants and securities convertible into common stock. Although
many convertible securities are debt securities, the Manager
considers some of them to be "equity equivalents" because of the
conversion feature, and in that case their rating has less impact
on the investment decision than in the case of other debt
securities. Nevertheless, convertible debt securities are subject
to credit risk (the risk that the issuer will not make timely
payments in interest and principal) and interest rate risk (the
risk that the value of the security will fall if interest rates
rise).
|_| Industry Focus. At times, the Fund may increase the
relative emphasis of its investment in a particular industry.
Stocks of issuers in a particular industry are subject to changes
in economic conditions, government regulations, availability of
basic resources or supplies, or other events that affect that
industry more than others. To the extent that the Fund has
greater emphasis on investments in a particular industry, its
share values may fluctuate in response to events affecting that
industry. To some extent that risk may be limited by the Fund's
policy of not concentrating 25% or more of its assets in
investments in any one industry.
While the Fund emphasizes investments in common stocks, it
may also buy preferred stocks and securities convertible into
common stock. While many convertible securities are debt
securities, the Manager considers some of them to be "equity
equivalents" because of the conversion feature and in those cases
their rating has less impact on the investment decision than in
the case of other debt securities. Nevertheless, convertible debt
securities are subject to both "credit risk" (the risk that the
issuer will not pay interest or repay principal in a timely
manner) and "interest rate risk" (the risk that prices of the
securities will be affected inversely by changes in prevailing
interest rates). If the Fund buys convertible securities (or
other debt securities), it will focus primarily on
investment-grade securities which pose less credit risk than
lower-grade debt securities.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance contract
based on an insurance company separate account to qualify for
favorable tax treatment under the Internal Revenue Code, the
underlying investments must follow special diversification
requirements that limit the percentage of assets that can be
invested in securities of particular issuers. The Fund's
investment program is managed to meet those requirements, in
addition to other diversification requirements under the Internal
Revenue Code and the Investment Company Act that apply to
publicly-sold mutual funds.
Failure by the Fund to meet those special requirements could
cause earnings on a contract owner's interest in an insurance
company separate account to be taxable income. Those
diversification requirements might also limit, to some degree,
the Fund's investment decisions in a way that could reduce its
performance.
|X| Can the Fund's Investment Objective and Policies Change?
The Fund's Board of Trustees can change non-fundamental
investment 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 Fund's investment objective is a fundamental
policy. Investment restrictions that are fundamental policies are
listed in the Statement of Additional Information. An investment
policy is not fundamental unless this Prospectus or the Statement
of Additional Information says that it is.
|X| Portfolio Turnover. The Fund can engage in short-term
trading to try to achieve its objective. Portfolio turnover
affects brokerage costs the Fund pays. The Financial Highlights
table below shows the Fund's portfolio turnover rates during
prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund can also
use the investment techniques and strategies described below. The Fund
might not always use all of the different types of techniques and
investments described below. These techniques involve certain risks,
although some are designed to help reduce investment or market risks.
|X| Investing in Small, Unseasoned Companies. The Fund can
invest without limit in small, unseasoned companies. These are
companies that have been in operation less than three years,
including the operations of any predecessors. These securities
may have limited liquidity, which means that the Fund may not be
able to sell them quickly at an acceptable price. Their prices
may be very volatile, especially in the short-term.
|X| Foreign Investing. The Fund can buy securities in any
country, including developed countries and emerging markets. The
Fund limits its investments in foreign securities to not more
than 25% of its net assets, and it normally does not expect to
invest substantial amounts of its assets in foreign stocks.
|_| Special Risks of Foreign Investing. While foreign
securities offer special investment opportunities, there are also
special risks. The change in value of a foreign currency against
the U.S. dollar will result in a change in the U.S. dollar value
of securities denominated in that foreign currency. Foreign
issuers are not subject to the same accounting and disclosure
requirements that U.S. companies are subject to. The value of
foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions,
changes in governmental economic or monetary policy in the U.S.
or abroad, or other political and economic factors. Securities in
underdeveloped countries may be more difficult to sell and their
prices may be more volatile than securities of issuers in
developed markets.
|X| Illiquid and Restricted Securities. Investments may be
illiquid because there is no active trading market for them,
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 its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933.
The Fund will not invest more than 15% of its net assets in
illiquid or restricted securities. Certain restricted securities
that are eligible for resale to qualified institutional
purchasers may not be subject to that limit. The Manager monitors
holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a number
of different kinds of "derivative" investments. In the broadest
sense, exchange-traded options, futures contracts, and other
hedging instruments the Fund might use may be considered
"derivative investments." In addition to using hedging
instruments, the Fund can use other derivative investments
because they offer the potential for increased principal value.
Markets underlying securities and indices might move in a
direction not anticipated by the Manager. Interest rate and stock
market changes in the U.S. and abroad may also influence the
performance of derivatives. As a result of these risks the Fund
could realize less principal or income from the investment than
expected. Certain derivative investments held by the Fund may be
illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of
futures contracts, put and call options, forward contracts and
options on futures and broadly-based securities indices. These
are all referred to as "hedging instruments." The Fund is not
required to use hedging to seek its objective. The Fund has
limits on its use of hedging instruments and does not use them
for speculative purposes.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. If the Manager used a hedging
instrument at the wrong time or judged market conditions
incorrectly, the strategy could reduce the Fund's return. The
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.
Temporary Defensive Instruments. In times of unstable or adverse
market or economic conditions, the Fund can invest up to 100% of its
assets in temporary defensive investments. Generally, they would be
cash equivalents (such as commercial paper) money market instruments,
short-term debt securities, U.S. government securities, or repurchase
agreements. They could include other investment-grade debt securities.
The Fund might also hold these types of securities pending the
investment of proceeds from the sale of Fund share or portfolio
securities or to meet anticipated redemptions of Fund shares. To the
extent the Fund invests defensively in these securities, it might not
achieve its investment objective of capital appreciation.
Year 2000 Risks. Because many computer software systems in use today
cannot distinguish the year 2000 from the year 1900, the markets for
securities in which the Fund invests could be detrimentally affected
by computer failures beginning January 1, 2000. Failure of computer
systems used for securities trading could result in settlement and
liquidity problems for the Fund and other investors. That failure
could have a negative impact on handling securities trades, pricing
and accounting services. Data processing errors by government issuers
of securities could result in economic uncertainties, and those
issuers might incur substantial costs in attempting to prevent or fix
such errors, all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have
been working on necessary changes to their computer systems to
deal with the year 2000 and expect that their systems will be
adapted in time for that event, although there cannot be
assurance of success. Additionally, the services they provide
depend on the interaction of their computer systems with those of
insurance companies with separate accounts that invest in the
Fund, brokers, information services, the Fund's Custodian and
other parties. Therefore, any failure of the computer systems of
those parties to deal with the year 2000 might also have a
negative effect on the services they provide to the Fund. The
extent of that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds, Inc.,
chooses the Fund's 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 an Investment Advisory
Agreement that states the Manager's responsibilities. The Agreement
sets forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds, with
assets of more than $100 billion as of March 31, 1999, and with
more than 4 million shareholder accounts. The Manager is located
at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
|X| Portfolio Manager. The portfolio manager of the Fund is
Bruce L. Bartlett. He is a Vice President of the Fund and a
Senior Vice President of the Manager. He has been the person
principally responsible for the day-to-day management of the
Fund's portfolio since April, 1998. Mr. Bartlett serves as
portfolio manager and Vice President of other Oppenheimer funds.
Prior to joining the Manager in 1995, Mr. Bartlett was a Vice
President and Senior Portfolio Manager at First of America
Investment Corp.
|X| Advisory Fees. Under the Investment Advisory Agreement,
the Fund pays the Manager an advisory fee at an annual rate that
declines on additional assets as the Fund grows: 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 $700 million, and 0.58% of
average annual net assets over $1.5 billion. The Fund's
management fee for its last fiscal year ended December 31, 1998,
was 0.69% of the Fund's average annual net assets.
|X| Possible Conflicts of Interest. The Fund offers its
shares to separate accounts of different insurance companies that
are not affiliated with each other, as an investment for their
variable annuity, variable life and other investment product
contracts. While the Fund does not foresee any disadvantages to
contract owners from these arrangements, it is possible that the
interests of owners of different contracts participating in the
Fund through different separate accounts might conflict. For
example, a conflict could arise because of differences in tax
treatment.
The Fund's Board has procedures to monitor the portfolio for
possible conflicts to determine what action should be taken. If a
conflict occurs, the Board might require one or more
participating insurance company separate accounts to withdraw
their investments in the Fund. That could force the Fund to sell
securities at disadvantageous prices, and orderly portfolio
management could be disrupted. Also, the Board might refuse to
sell shares of the Fund to a particular separate account, or
could terminate the offering of the Fund's shares if required to
do so by law or if it would be in the best interests of the
shareholders of the Fund to do so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased only by
separate investment accounts of participating insurance companies as
an underlying investment for variable life insurance policies,
variable annuity contracts or other investment products. Individual
investors cannot buy shares of the Fund directly. Please refer to the
accompanying prospectus of the participating insurance company for
information on how to select the Fund as an investment option for that
variable life insurance policy, variable annuity or other investment
product. The Fund reserves the right to refuse any purchase order when
the Manager believes it would be in the Fund's best interests to do
so.
Information about your investment in the Fund through your variable
annuity contract, variable life insurance policy or other plan can be
obtained only from your participating insurance company or its
servicing agent. The Fund's Transfer Agent does not hold or have
access to those records. Instructions for buying or selling shares of
the Fund should be given to your insurance company or its servicing
agent, not directly to the Fund or its Transfer Agent.
|X| At What Price Are Shares Sold? Shares are sold at their offering
price, which is the net asset value per share. The Fund does not
impose any sales charge on purchases of its shares. If there are any
charges imposed under the variable annuity, variable life or other
contract through which Fund shares are purchased, they are described
in the accompanying prospectus of the participating insurance company.
The net asset value per share is determined as of the close
of The New York Stock Exchange on each day that the exchange is
open for trading (referred to in this Prospectus as a "regular
business day"). The Exchange normally closes at 4:00 P.M., New
York time, but may close earlier on some days. All references to
time in this Prospectus mean "New York time."
The net asset value per share is determined by dividing the
value of the Fund's net assets attributable to a class of shares
by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the
Fund's securities to determine the Fund's net asset value, in
general based on market values. The Board has adopted special
procedures for valuing illiquid and restricted securities and
securities for which market values cannot be readily obtained.
Because some foreign securities trade in markets and on exchanges
that operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on days
when shares of the Fund cannot be purchased or redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next calculation
of the net asset value per share that is made after the insurance
company (as the Fund's designated agent to receive purchase
orders) receives a purchase order from its contract owners to
purchase Fund shares on a regular business day, provided that the
Fund receives the order from the insurance company, generally by
9:30 A.M. on the next regular business day at the offices of its
Transfer Agent in Denver, Colorado.
|X| Classes of Shares. The Fund offers two different classes
of shares. The class of shares offered by this Prospectus has no
class name designation. The other class is designated as Class 2.
The different classes of shares represent investments in the same
portfolio of securities but are expected to have different
expenses and share prices.
This Prospectus may not be used to offer Class 2 shares. A
description of the Service Plans that affect only Class 2 shares
of the Fund is contained in the Fund's Prospectus that offers
Class 2 shares. That Prospectus, when available, may be obtained
without charge by contacting any participating insurance company
that offers Class 2 shares of the Fund as an investment for its
separate accounts. You can also obtain a copy from
OppenheimerFunds Distributor, Inc. by calling toll-free
1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the participating
insurance companies that hold Fund shares in their separate accounts
for the benefit of variable annuity contracts, variable life insurance
policies or other investment products can place orders to redeem
shares. Contract holders and policy holders should not directly
contact the Fund or its transfer agent to request a redemption of Fund
shares. Contract owners should refer to the withdrawal or surrender
instructions in the accompanying prospectus of the participating
insurance company.
The share price that applies to a redemption order is the
next net asset value per share that is determined after the
participating insurance company (as the Fund's designated agent)
receives a redemption request on a regular business day from its
contract or policy holder, provided that the Fund receives the
order from the insurance company, generally by 9:30 A.M. the next
regular business day at the office of its Transfer Agent in
Denver, Colorado. The Fund normally sends payment by Federal
Funds wire to the insurance company's account the day after the
Fund receives the order (and no later than 7 days after the
Fund's receipt of the order). Under unusual circumstances
determined by the Securities and Exchange Commission, payment may
be delayed or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for each
class of shares from net investment income, if any, on an annual
basis, and to pay those dividends in March or a date selected by the
Board of Trustees. The Fund has no fixed dividend rate and cannot
guarantee that it will pay any dividends.
All dividends (and any capital gains distributions will be
reinvested automatically in additional Fund shares at net asset
value for the account of the participating insurance company
(unless the insurance company elects to have dividends or
distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out of any
net short-term or long-term capital gains in March of each year. The
Fund may make supplemental distributions of dividends and capital
gains following the end of its fiscal year. There can be no assurance
that the Fund will pay any capital gains distributions in a particular
year.
All dividends (and any capital gains distributions will be reinvested
automatically in additional Fund shares at net asset value for the
account of the participating insurance company (unless the insurance
company elects to have dividends or distributions paid in cash).
Taxes. For a discussion of the tax status of a variable annuity
contract, a variable life insurance policy or other investment product
of a participating insurance company, please refer to the accompanying
prospectus of your participating insurance company. Because shares of
the Fund may be purchased only through insurance company separate
accounts for variable annuity contracts, variable life insurance
policies or other investment products, dividends paid by the Fund from
net investment income and distributions (if any) of net realized
short-term and long-term capital gains will be taxable, if at all, to
the participating insurance company.
This information is only a summary of certain federal income
tax information about an investment in Fund shares. You should
consult with your tax advisor or your participating insurance
company representative about the effect of an investment in the
Fund under your contract or policy.
Financial Highlights
The Financial Highlights Table is presented to help you understand the
Fund's financial performance for the past 5 fiscal years. Certain
information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has
been audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report, along with the Fund's financial statements, is
included in the Statement of Additional Information, which is
available on request.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31,
1998
1997 1996 1995 1994
==============================================================================================================================
<S> <C>
<C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $40.96
$38.71 $34.21 $25.95 $31.64
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.05)
.10 .09 .11 .10
Net realized and unrealized gain (loss) 5.09
4.01 6.59 8.29 (2.22)
------
- ------ ------ ------ ------
Total income (loss) from investment
operations 5.04
4.11 6.68 8.40 (2.12)
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.10)
(.09) (.11) (.09) (.04)
Distributions from net realized gain (1.07)
(1.77) (2.07) (.05) (3.53)
------
- ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.17)
(1.86) (2.18) (.14) (3.57)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $44.83
$40.96 $38.71 $34.21 $25.95
======
====== ====== ====== ======
==============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1) 12.36%
11.67% 20.22% 32.52% (7.59)%
==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $1,077,960
$877,807 $617,392 $325,404 $185,774
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 954,848
$753,852 $467,080 $240,730 $153,832
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.12)%
0.31% 0.32% 0.47% 0.50%
Expenses 0.71%
0.73% 0.75% 0.78% 0.57%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 79.8%
87.6% 100.1% 125.5% 96.5%
</TABLE>
1. 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 returns are not annualized
for periods of less than one full year. Total return information does
not reflect expenses that apply at the separate account level or to
related insurance products. Inclusion of these charges would reduce
the total return figures for all periods shown.
2. 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. Purchases and sales of
investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $781,979,929 and $705,990,510,
respectively.
For More Information About Oppenheimer Aggressive Growth Fund/VA:
The following additional information about Oppenheimer Aggressive Growth
Fund/VA is available without charge upon
request:
Statement of Additional Information
This document includes additional information about the Fund's investment
policies, risks, and operations.
It is incorporated by reference into this Prospectus (which means it is
legally part of this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is
available in the Fund's Annual and Semi-Annual Reports to
shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual
and Semi-Annual Reports, and other information about the Fund:
By Telephone:
Call OppenheimerFunds Services toll-free:
1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional Information
and other Fund documents and reports by visiting the SEC's Public
Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon
payment of a duplicating fee by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund
or to make any representations about the Fund other than what is
contained in this Prospectus. This Prospectus is not an offer to sell
shares of the Fund, nor a solicitation of an offer to buy shares of
the Fund, to any person in any state or other jurisdiction where it is
unlawful to make such an offer.
SEC File No. 811-4108
PR0620.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Aggressive Growth Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of Oppenheimer
Aggressive Growth Fund/VA (the "Fund") under the heading "Annual
Total Return (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund
depicting the annual total returns of a hypothetical $10,000
investment in shares of the Fund for each of the ten most recent
calendar years, without deducting separate account expenses. Set
forth below are the relevant data that will appear on the bar
chart:
Calendar
Year
Ended Annual Total Returns
12/31/89 27.57%
12/31/90 -16.82%
12/31/91 54.72%
12/31/92 15.42%
12/31/93 27.32%
12/31/94 -7.59%
12/31/95 32.52%
12/31/96 20.23%
12/31/97 11.67%
12/31/98 12.36%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Capital Appreciation Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Capital Appreciation Fund/VA is a mutual fund that seeks
capital appreciation as its goal. The Fund invests mainly in common
stocks of well-known, established companies. Prior to May 1, 1999,
this Fund was named "Oppenheimer Growth Fund". Shares of the Fund are
sold only as the underlying investment for variable life insurance
policies, variable annuity contracts and other insurance company
separate accounts. A prospectus for the insurance product you have
selected accompanies this Prospectus and explains how to select shares
of the Fund as an investment under that insurance product. This
Prospectus contains important information about the Fund's objective,
its investment policies, strategies and risks. Please read this
Prospectus (and your insurance product prospectus) carefully before
you invest and keep them for future reference about your account.
As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved the Fund's securities nor has it
determined that this Prospectus is accurate or complete. It is a
criminal offense to represent otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund seeks capital
appreciation by investing in securities of well-known established
companies.
What Does the Fund Invest In? The Fund invests mainly in common stocks
of established and well-known U.S. companies. The Fund can buy other
equity securities, such as preferred stocks and securities convertible
into common stock. The Fund can buy securities of issuers in foreign
countries, buy typically does not hold them to a substantial degree.
The Fund can invest in any country, but it emphasizes investments in
the United States and other developed markets.
Well-known and established companies the Fund focuses on
generally are companies that have a history of earnings and
dividends and are issued by seasoned companies, having an
operating history of at least five years, including any
predecessors. While the Fund can invest in securities of issues
of all market capitalization ranges, the well known, established
companies the Fund's investment Manager, OppenheimerFunds, Inc.
usually emphasizes for the Fund are categorized as "large
capitalization" issuers (having a market capitalization of $5
billion or more). Current income is a secondary consideration in
the selection of the Fund's portfolio securities.
The Fund can also use hedging instruments and certain derivative
investments to try to manage investment risks. These investments are
more fully explained in "About the Fund's Investments," below.
|X| How Does the Manager Decide What Securities to Buy or
Sell? In selecting securities for the Fund, the Fund's portfolio
manager looks primarily for companies with high growth potential
using fundamental analysis of a company's financial statements
and management structure, and analysis of the company's
operations and product development, as well as the industry of
which the issuer is part.
In seeking broad diversification of the Fund's portfolio,
the portfolio manager looks for stocks that are reasonably priced
in relation to overall stock market valuations. The portfolio
manager currently focuses on the factors below (which may vary in
particular cases and may change over time), looking for:
|_| Companies in market sectors that are market leaders,
|_| Companies with relatively stable or established businesses in
established markets, that are in or entering into a growth cycle.
|_| Companies with a history of above-average earnings growth.
Who Is the Fund Designed For? The Fund's shares are available only as
an investment option under certain variable annuity contracts,
variable life insurance policies and investment plans offered through
insurance company separate accounts of participating insurance
companies, for investors seeking capital appreciation in their
investment over the long term, from investments in common stocks of
well-known companies. Those investors should be willing to assume the
risks of short-term share price fluctuations that are typical for a
fund focusing on stock investments. Since the Fund's income level will
fluctuate and will likely be small, it is not designed for investors
needing an assured level of current income. The Fund is not a complete
investment program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments in stocks are subject to changes in their value from
a number of factors. They include changes in general stock market
movements (this is referred to as "market risk"), or the change
in value of particular stocks because of an event affecting the
issuer. At times, the Fund might increase the relative emphasis
of its investments in a particular industry. If it does, it may
be subject to the risks that economic, political or other events
can have a negative effect on the values of securities of issuers
in that industry (this is referred to as "industry risk").
These risks collectively form the risk profile of the Fund,
and can affect the value of the Fund's investments, its
investment performance and its price per share. These risks mean
that you can lose money by investing in the Fund. When you redeem
your shares, they may be worth more or less than what you paid
for them.
The Manager tries to reduce risks by carefully researching
securities before they are purchased. The Fund attempts to reduce
its exposure to market risks by diversifying its investments,
that is, by not holding a substantial percentage of the stock of
any one company and by not investing too great a percentage of
the Fund's assets in any one issuer. Also, the Fund does not
concentrate 25% or more of its investments in any one industry.
However, changes in the overall market prices of securities
and the income they pay can occur at any time. The share price of
the Fund will change daily based on changes in market prices of
securities and market conditions and in response to other
economic events. There is no assurance that the Fund will achieve
its investment objective.
|X| Risks of Investing in Stocks. Stocks fluctuate in price,
and their short-term volatility at times may be great. Because
the Fund currently invests primarily in common stocks for capital
appreciation, the value of the Fund's portfolio will be affected
by changes in the stock markets. Market risk will affect the
Fund's net asset value per share, which will fluctuate as the
values of the Fund's portfolio securities change. A variety of
factors can affect the price of a particular stocks and the
prices of individual stocks do not all move in the same direction
uniformly or at the same time. Different stock markets may behave
differently from each other.
Additionally, stocks of issuers in a particular industry may
be affected by changes in economic conditions that affect that
industry more than others, or by changes in government
regulations, availability of basic resources or supplies, or
other events. To the extent that the Fund has greater emphasis on
investments in a particular industry, its share values may
fluctuate in response to events affecting that industry.
Other factors can affect a particular stock's price, such as
poor earnings reports by the issuer, loss of major customers,
major litigation against the issuer, or changes in government
regulations of large companies, but can also invest in small and
medium-size companies, which may have more volatile stock prices
than large companies.
How Risky is the Fund Overall? In the short term, stock markets can be
volatile, and the price of the Fund's shares can go up and down
substantially. The Fund generally does not use income-oriented
investments to a great extent to help cushion the Fund's share price
from stock market volatility, except for defensive purposes. Because
it focuses on larger companies, the Fund generally may be less
volatile than funds focusing on investments in small-cap stocks, but
the Fund may have greater risk of volatility than funds that invest in
both stocks and fixed income securities.
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks
of investing in the Fund, by showing changes in the Fund's
performance1 from year to year for the last ten calendar years
and by showing how the average annual total returns of the Fund's
shares compare to those of a broad-based market index. The Fund's
past investment performance is not necessarily an indication of
how the Fund will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
For the period from 1/1/99 through 3/31/99, the Fund's cumulative
return (not annualized) was 6.55%. Charges imposed by the separate
accounts that invest in the Fund are not included in the calculations
of return in this bar chart, and if those charges were included, the
returns would be less than those shown. During the periods shown in
the bar chart, the highest return (not annualized) for a calendar
quarter was 26.75% (4th Q '98) and the lowest return (not annualized)
for a calendar quarter was -16.41% (3rd Q '98).
Average Annual Total Returns
for the periods ended 1 Year 5 Years 10 Years
December 31, 1998
Oppenheimer Capital 24.00% 22.10% 16.85%
Appreciation Fund/VA
S&P 500 Index 28.60% 24.05% 19.19%
The Fund's returns in the table measure the performance of a
hypothetical account without deducting charges imposed by the separate
accounts that invest in the Fund and assume that all dividends and
capital gains distributions have been reinvested in additional shares.
Because the Fund invests primarily in stocks, the Fund's performance
is compared to the S&P 500 Index, an unmanaged index of equity
securities that is a measure of the general domestic stock market.
However, it must be remembered that the index performance reflects the
reinvestment of income but does not consider the effects of
transaction costs.
The Fund's total returns should not be expected to be the same as the
returns of other Oppenheimer funds, even if both funds have the same
portfolio managers and/or similar names.
1 The Fund has two classes of shares. This Prospectus offers only the
class of shares that has no class name designation, and the
performance shown is for that class. The other class of shares, Class
2, is not offered in this Prospectus.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of the Fund's
portfolio among the different types of permitted investments will vary
over time based upon the evaluation of economic and market trends by
the Manager. The Fund's portfolio might not always include all of the
different types of investments described below. The Statement of
Additional Information contains more detailed information about the
Fund's investment policies and risks.
|X| Stock Investments. The types of growth companies the
Manager focuses on are larger, more established growth companies.
Growth companies may be companies that are developing new
products or services, such as companies in the technology sector,
or they may be expanding into new markets for their products,
such as the energy sector. Growth companies tend to retain a
large part of their earnings for research, development or
investment in capital assets. Therefore, they do not tend to
emphasize paying dividends, and may not pay any dividends for
some time. They are selected for the Fund's portfolio because the
Manager believes the price of the stock will increase over time.
|_| Cyclical Opportunities. The Fund may also seek to take
advantage of changes in the business cycle by investing in
companies that are sensitive to those changes if the Manager
believes they have growth potential. For example, when the
economy is expanding, companies in the consumer durables and
technology sectors might benefit and present long-term growth
opportunities. The Fund might sometimes seek to take tactical
advantage of short-term market movements or events affecting
particular issuers or industries.
|_| Industry Focus. At times, the Fund may increase the
relative emphasis of its investment in a particular industry.
Stocks of issuers in a particular industry are subject to changes
in economic conditions, government regulations, availability of
basic resources or supplies, or other events that affect that
industry more than others. To the extent that the Fund has
greater emphasis on investments in a particular industry, its
share values may fluctuate in response to events affecting that
industry. To some extent that risk may be limited by the Fund's
policy of not concentrating 25% or more of its assets in
investments in any one industry.
While the Fund emphasizes investments in common stocks, it
can also buy preferred stocks and securities convertible into
common stock. While many convertible securities are debt
securities, the Manager considers some of them to be "equity
equivalents" because of the conversion feature and in those cases
their rating has less impact on the investment decision than in
the case of other debt securities. Nevertheless, convertible debt
securities are subject to both "credit risk" (the risk that the
issuer will not pay interest or repay principal in a timely
manner) and "interest rate risk" (the risk that prices of the
securities will be affected inversely by changes in prevailing
interest rates). If the Fund buys convertible securities (or
other debt securities), it will focus primarily on
investment-grade securities which pose less credit risk than
lower-grade debt securities.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance contract
based on an insurance company separate account to qualify for
favorable tax treatment under the Internal Revenue Code, the
underlying investments must follow special diversification
requirements that limit the percentage of assets that can be
invested in securities of particular issuers. The Fund's
investment program is managed to meet those requirements, in
addition to other diversification requirements under the Internal
Revenue Code and the Investment Company Act that apply to
publicly-sold mutual funds.
Failure by the Fund to meet those special requirements could
cause earnings on a contract owner's interest in an insurance
company separate account to be taxable income. Those
diversification requirements might also limit, to some degree,
the Fund's investment decisions in a way that could reduce its
performance.
|X| Can the Fund's Investment Objective and Policies Change?
The Fund's Board of Trustees can change non-fundamental
investment 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 Fund's investment objective is a fundamental
policy. Investment restrictions that are fundamental policies are
listed in the Statement of Additional Information. An investment
policy is not fundamental unless this Prospectus or the Statement
of Additional Information says that it is.
|X| Portfolio Turnover. The Fund may engage in short-term
trading to try to achieve its objective. Portfolio turnover
affects brokerage costs the Fund pays. The Financial Highlights
table at the end of this Prospectus shows the Fund's portfolio
turnover rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund can also
use the investment techniques and strategies described below. The Fund
might not always use all of the different types of techniques and
investments described below. These techniques involve certain risks,
although some are designed to help reduce investment or market risks.
|X| Illiquid and Restricted Securities. Investments may be
illiquid because there is no active trading market for them,
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 its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933.
The Fund will not invest more than 15% of its net assets in
illiquid or restricted securities. Certain restricted securities
that are eligible for resale to qualified institutional
purchasers may not be subject to that limit. The Manager monitors
holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a number
of different kinds of "derivative" investments. In general terms,
a derivative investment is one whose value depends on (or is
derived from) the value of an underlying asset, interest rate or
index.
|_| There are Special Risks in Using Derivative Investments.
If the issuer of the derivative does not pay the amount due, the
Fund can lose money on the investment. Also, the underlying
security or investment on which the derivative is based, and the
derivative itself, might not perform the way the Manager expected
it to perform. If that happens, the Fund's share price could
decline or the Fund could get less income than expected. The Fund
has limits on the amount of particular types of derivatives it
can hold. However, using derivatives can cause the Fund to lose
money on its investment and/or increase the volatility of its
share prices.
In the broadest sense, exchange-traded options, futures
contracts, and other hedging instruments the Fund might use may
be considered "derivative investments." In addition to using
hedging instruments, the Fund might use other derivative
investments because they offer the potential for increased
principal value.
Markets underlying securities and indices might move in a
direction not anticipated by the Manager. Interest rate and stock
market changes in the U.S. and abroad may also influence the
performance of derivatives. As a result of these risks the Fund
could realize less principal or income from the investment than
expected. Certain derivative investments held by the Fund may be
illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of
futures contracts, forward contracts and put and call options,
including options on futures and broadly-based securities
indices. These are all referred to as "hedging instruments." The
Fund does not currently use hedging extensively and is not
required to do so to seek its objective. The Fund has limits on
its use of hedging instruments and currently does not use them
for speculative purposes.
The Fund could buy and sell options, futures and forward
contracts for a number of purposes. It might do so to try to
manage its exposure to the possibility that the prices of its
portfolio securities may decline, or to establish a position in
the securities market as a temporary substitute for purchasing
individual securities. It might do so to try to manage its
exposure to changing interest rates.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. For example, if a covered call
written by the Fund is exercised on an investment that has
increased in value, the Fund will be required to sell the
investment at the call price and will not be able to realize any
profit if the investment has increased in value above the call
price.
If the Manager used a hedging instrument at the wrong time
or judged market conditions incorrectly, the strategy could
reduce the Fund's return. The 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.
Temporary Defensive Investments. For cash management purposes, the
Fund can hold cash equivalents such as commercial paper, repurchase
agreements, Treasury bills and other short-term U.S. government
securities. In times of adverse or unstable market or economic
conditions, the Fund can invest up to 100% of its assets in temporary
defensive investments. These would ordinarily be U. S. government
securities, highly-rated commercial paper, bank deposits or repurchase
agreements. To the extent the Fund invests defensively in these
securities, it might not achieve its investment objective.
Year 2000 Risks. Because many computer software systems in use today
cannot distinguish the year 2000 from the year 1900, the markets for
securities in which the Fund invests could be detrimentally affected
by computer failures beginning January 1, 2000. Failure of computer
systems used for securities trading could result in settlement and
liquidity problems for the Fund and other investors. That failure
could have a negative impact on handling securities trades, pricing
and accounting services. Data processing errors by government issuers
of securities could result in economic uncertainties, and those
issuers might incur substantial costs in attempting to prevent or fix
such errors, all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have been working
on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that
event, although there cannot be assurance of success. Additionally,
the services they provide depend on the interaction of their computer
systems with those of insurance companies with separate accounts that
invest in the Fund, brokers, information services, the Fund's
Custodian and other parties. Therefore, any failure of the computer
systems of those parties to deal with the year 2000 might also have a
negative effect on the services they provide to the Fund. The extent
of that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds, Inc.,
chooses the Fund's 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 an Investment Advisory
Agreement that states the Manager's responsibilities. The Agreement
sets the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds, with
assets of more than $100 billion as of March 31, 1999, and with
more than 4 million shareholder accounts. The Manager is located
at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
|X| Portfolio Manager. The portfolio manager of the Fund is
Jane Putnam. She is a Vice President of the Fund and the Manager.
She has been the person principally responsible for the
day-to-day management of the Fund's portfolio since May, 1994.
Ms. Putnam also serves as an officer and portfolio manager for
other Oppenheimer funds. Before joining the manager in 1994, she
was a portfolio manager and equity research analyst for Chemical
Bank.
|X| Advisory Fees. Under the Investment Advisory Agreement,
the Fund pays the Manager an advisory fee at an annual rate that
declines on additional assets as the Fund grows: 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 over
$800 million. The Fund's management fee for its last fiscal year
ended December 31, 1998, was 0.72% of the Fund's average annual
net assets.
|X| Possible Conflicts of Interest. The Fund offers its
shares to separate accounts of different insurance companies that
are not affiliated with each other, as an investment for their
variable annuity, variable life and other investment product
contracts. While the Fund does not foresee any disadvantages to
contract owners from these arrangements, it is possible that the
interests of owners of different contracts participating in the
Fund through different separate accounts might conflict. For
example, a conflict could arise because of differences in tax
treatment.
The Fund's Board has procedures to monitor the portfolio for
possible conflicts to determine what action should be taken. If a
conflict occurs, the Board might require one or more
participating insurance company separate accounts to withdraw
their investments in the Fund. That could force the Fund to sell
securities at disadvantageous prices, and orderly portfolio
management could be disrupted. Also, the Board might refuse to
sell shares of the Fund to a particular separate account, or
could terminate the offering of the Fund's shares if required to
do so by law or if it would be in the best interests of the
shareholders of the Fund to do so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased only by
separate investment accounts of participating insurance companies as
an underlying investment for variable life insurance policies,
variable annuity contracts or other investment products. Individual
investors cannot buy shares of the Fund directly. Please refer to the
accompanying prospectus of the participating insurance company for
information on how to select the Fund as an investment option for that
variable life insurance policy, variable annuity or other investment
product. The Fund reserves the right to refuse any purchase order when
the Manager believes it would be in the Fund's best interests to do
so.
Information about your investment in the Fund through your variable
annuity contract, variable life insurance policy or other plan can be
obtained only from your participating insurance company or its
servicing agent. The Fund's Transfer Agent does not hold or have
access to those records. Instructions for buying or selling shares of
the Fund should be given to your insurance company or its servicing
agent, not directly to the Fund or its Transfer Agent.
|X| At What Price Are Shares Sold? Shares are sold at their
offering price, which is the net asset value per share. The Fund
does not impose any sales charge on purchases of its shares. If
there are any charges imposed under the variable annuity,
variable life or other contract through which Fund shares are
purchased, they are described in the accompanying prospectus of
the participating insurance company.
The net asset value per share is determined as of the close
of The New York Stock Exchange on each day that the exchange is
open for trading (referred to in this Prospectus as a "regular
business day"). The Exchange normally closes at 4:00 P.M., New
York time, but may close earlier on some days. All references to
time in this Prospectus mean "New York time."
The net asset value per share is determined by dividing the
value of the Fund's net assets attributable to a class of shares
by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the
Fund's securities to determine the Fund's net asset value, in
general based on market values. The Board has adopted special
procedures for valuing illiquid and restricted securities and
securities for which market values cannot be readily obtained.
Because some foreign securities trade in markets and on exchanges
that operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on days
when shares of the Fund cannot be purchased or redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next calculation
of the net asset value per share that is made after the insurance
company (as the Fund's designated agent to receive purchase
orders) receives a purchase order from its contract owners to
purchase Fund shares on a regular business day, provided that the
Fund receives the order from the insurance company, generally by
9:30 A.M. on the next regular business day at the offices of its
Transfer Agent in Denver, Colorado.
|X| Classes of Shares. The Fund offers two different classes
of shares. The class of shares offered by this Prospectus has no
class name designation. The other class is designated as Class 2.
The different classes of shares represent investments in the same
portfolio of securities but are expected to have different
expenses and share prices.
This Prospectus may not be used to offer Class 2 shares. A
description of the Service Plans that affect only Class 2 shares
of the Fund is contained in the Fund's Prospectus that offers
Class 2 shares. That Prospectus, when available, may be obtained
without charge by contacting any participating insurance company
that offers Class 2 shares of the Fund as an investment for its
separate accounts. You can also obtain a copy from
OppenheimerFunds Distributor, Inc. by calling toll-free
1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the participating
insurance companies that hold Fund shares in their separate accounts
for the benefit of variable annuity contracts, variable life insurance
policies or other investment products can place orders to redeem
shares. Contract holders and policy holders should not directly
contact the Fund or its transfer agent to request a redemption of Fund
shares. Contract owners should refer to the withdrawal or surrender
instructions in the accompanying prospectus of the participating
insurance company.
The share price that applies to a redemption order is the
next net asset value per share that is determined after the
participating insurance company (as the Fund's designated agent)
receives a redemption request on a regular business day from its
contract or policy holder, provided that the Fund receives the
order from the insurance company, generally by 9:30 A.M. the next
regular business day at the office of its Transfer Agent in
Denver, Colorado. The Fund normally sends payment by Federal
Funds wire to the insurance company's account the day after the
Fund receives the order (and no later than 7 days after the
Fund's receipt of the order). Under unusual circumstances
determined by the Securities and Exchange Commission, payment may
be delayed or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for each
class of shares from net investment income, if any, on an annual
basis, and to pay those dividends in March on a date selected by the
Board of Trustees. The Fund has no fixed dividend rate and cannot
guarantee that it will pay any dividends.
All dividends (and any capital gains distributions will be
reinvested automatically in additional Fund shares at net asset
value for the account of the participating insurance company
(unless the insurance company elects to have dividends or
distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out of any
net short-term or long-term capital gains in March of each year. The
Fund may make supplemental distributions of dividends and capital
gains following the end of its fiscal year. There can be no assurance
that the Fund will pay any capital gains distributions in a particular
year.
Taxes. For a discussion of the tax status of a variable annuity
contract, a variable life insurance policy or other investment product
of a participating insurance company, please refer to the accompanying
prospectus of your participating insurance company. Because shares of
the Fund may be purchased only through insurance company separate
accounts for variable annuity contracts, variable life insurance
policies or other investment products, dividends paid by the Fund from
net investment income and distributions (if any) of net realized
short-term and long-term capital gains will be taxable, if at all, to
the participating insurance company.
This information is only a summary of certain federal income
tax information about an investment in Fund shares. You should
consult with your tax advisor or your participating insurance
company representative about the effect of an investment in the
Fund under your contract or policy.
Financial Highlights
The Financial Highlights Table is presented to help you understand the
Fund's financial performance for the past 5 fiscal years. Certain
information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has
been audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report, along with the Fund's financial statements, is
included in the Statement of Additional Information, which is
available on request.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31,
1998
1997 1996 1995 1994
=================================================================================================================================
<S> <C>
<C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period
$32.44 $27.24 $23.55 $17.68 $17.70
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income
.13 .25 .15 .25 .22
Net realized and unrealized gain (loss)
7.28 6.62 5.46 6.10 (.05)
- ------ ------ ------ ------ ------
Total income from investment operations
7.41 6.87 5.61 6.35 .17
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income
(.24) (.15) (.25) (.22) (.15)
Distributions from net realized gain
(2.94) (1.52) (1.67) (.26) (.04)
- ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders
(3.18) (1.67) (1.92) (.48) (.19)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
$36.67 $32.44 $27.24 $23.55 $17.68
====== ====== ====== ====== ======
=================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1)
24.00% 26.68% 25.20% 36.65% 0.97%
=================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $768,550
$493,906 $285,920 $117,710 $63,283
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $609,246
$390,447 $152,466 $ 88,803 $59,953
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income
0.50% 1.02% 1.08% 1.46% 1.38%
Expenses
0.75% 0.75% 0.81%(2) 0.79% 0.58%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3)
55.7% 66.0% 65.4% 58.2% 53.8%
</TABLE>
1. 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 returns are not annualized
for periods of less than one full year. Total return information does
not reflect expenses that apply at the separate account level or to
related insurance products. Inclusion of these charges would reduce
the total return figures for all periods shown.
2. The expense ratio was 0.79% net of the voluntary reimbursement by
the Manager.
3. 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. Purchases and sales of
investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $478,348,867 and $297,133,286,
respectively.
For More Information About Oppenheimer Capital Appreciation Fund/VA:
The following additional information about Oppenheimer Capital Appreciation
Fund is available without charge upon
request:
Statement of Additional Information
This document includes additional information about the Fund's
investment policies, risks, and operations. It is incorporated by
reference into this Prospectus (which means it is legally part of this
Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is
available in the Fund's Annual and Semi-Annual Reports to
shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year. The Reports refer to
the Fund as "Oppenheimer Growth Fund" (its name prior to May 1, 1999).
How to Get More Information:
You can request the Statement of Additional Information, the Annual
and Semi-Annual Reports, and other information about the Fund:
By Telephone:
Call OppenheimerFunds Services toll-free:
1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional Information
and other Fund documents and reports by visiting the SEC's Public
Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon
payment of a duplicating fee by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund
or to make any representations about the Fund other than what is
contained in this Prospectus. This Prospectus is not an offer to sell
shares of the Fund, nor a solicitation of an offer to buy shares of
the Fund, to any person in any state or other jurisdiction where it is
unlawful to make such an offer.
SEC File No. 811-4108
PR0610.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Capital Appreciation Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of Oppenheimer
Capital Appreciation Fund/VA (the "Fund") under the heading
"Annual Total Return (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund
depicting the annual total returns of a hypothetical $10,000
investment in shares of the Fund for each of the ten most recent
calendar years, without deducting separate account expenses. Set
forth below are the relevant data that will appear on the bar
chart:
Calendar
Year
Ended Annual Total Returns
12/31/89 23.59%
12/31/90 -8.21%
12/31/91 25.54%
12/31/92 14.53%
12/31/93 7.25%
12/31/94 0.97%
12/31/95 36.66%
12/31/96 25.20%
12/31/97 26.69%
12/31/98 24.00%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Small Cap Growth Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Small Cap Growth Fund/VA is a mutual fund that seeks
capital appreciation as its goal. The Fund invests mainly in common
stocks of companies with market capitalization less than $1 billion.
Shares of the Fund are sold only as the underlying investment for
variable life insurance policies, variable annuity contracts and other
insurance company separate accounts. A prospectus for the insurance
product you have selected accompanies this Prospectus and explains how
to select shares of the Fund as an investment under that insurance
product.
This Prospectus contains important information about the
Fund's objective, its investment policies, strategies and risks.
Please read this Prospectus (and your insurance product
prospectus) carefully before you invest and keep them for future
reference about your account.
As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved the Fund's securities nor has it
determined that this Prospectus is accurate or complete. It is a
criminal offense to represent otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund seeks capital appreciation.
What Does the Fund Invest In? The Fund invests mainly in common
stocks, but can buy other equity securities, such as preferred stocks
and securities convertible into common stock. The Fund invests
primarily in securities of companies with market capitalization less
than $1 billion that the Fund's investment Manager, OppenheimerFunds,
Inc., believes have favorable growth prospectus. The Fund is not
required to sell a security if the issuers market capitalization grows
above $1 billion. The Fund can also buy securities of issuers having a
market capitalization over $1 billion, but does not expect to do so to
a significant degree. The Fund can invest in any country, including
countries with developed or emerging markets, but currently emphasizes
investments in the U.S. and other developed markets. While these
stocks may be traded on stock exchanges, in many cases the Fund buys
over-the-counter securities, which has special risks.
The Fund can also use hedging instruments and certain
derivative investments to try to manage investment risks. These
investments are more fully explained in "About the Fund's
Investments," below.
|X| How Does the Manager Decide What Securities to Buy or
Sell? In selecting securities for the Fund, the Fund's portfolio
managers look primarily for companies with high growth potential
using fundamental analysis of a company's financial statements
and management structure, and analysis of the company's
operations and product development, as well as the industry of
which the issuer is part. The portfolio managers also evaluate
research on particular industries, market trends and general
economic conditions.
In seeking broad diversification of the Fund's portfolio,
the portfolio managers currently focus on the factors below
(which may vary in particular cases and may change over time),
looking for:
|_| Companies with small capitalizations, that is, $1 billion or less,
|_| Companies with management that has a proven ability to handle
growth,
|_| Companies that self-finance expansion rather than adding to their
debt,
|_| Companies with accelerating earnings and sustainable earnings
growth, and
|_| Companies with innovative products or services.
Who Is the Fund Designed For? The Fund's shares are available only as
an investment option under certain variable annuity contracts,
variable life insurance policies and investment plans offered through
insurance company separate accounts of participating insurance
companies, for investors seeking capital growth in their investment
over the long term, from a fund that invests in small-cap stocks.
Those investors should be willing to assume the greater risks of
short-term share price fluctuations that are typical for an aggressive
fund focusing on small-cap stocks. Since the Fund does not invest for
income and the income from its investments will likely be small, it is
not designed for investors needing an assured level of current income.
The Fund is not a complete investment program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments are subject to changes in their value from a number
of factors. Investments in stocks can be volatile and are subject
to changes in general stock market movements (this is referred to
as "market risk"). There may be events or changes affecting
particular industries that might have a relatively greater
weighting in the Fund's portfolio (this is referred to as
"industry risk") or the change in value of a particular stock
because of an event affecting the issuer.
Stocks of growth companies may provide greater opportunities
for capital appreciation but may be more volatile than other
stocks. That volatility is likely to be even greater for
small-cap companies. The Fund can also buy foreign securities
that have special risks not associated with investments in
domestic securities, such as the effects of currency fluctuations
on relative prices.
These risks collectively form the risk profile of the Fund,
and can affect the value of the Fund's investments, its
investment performance and its price per share. These risks mean
that you can lose money by investing in the Fund. When you redeem
your shares, they may be worth more or less than what you paid
for them.
The Fund's Manager, tries to reduce risks by carefully
researching securities before they are purchased. The Fund
attempts to reduce its exposure to market risks by diversifying
its investments, that is, by not holding a substantial percentage
of the stock of any one company and by not investing too great a
percentage of the Fund's assets in any one company. Also, the
Fund does not concentrate 25% or more of its assets in
investments in any one industry. However, changes in the overall
market prices of securities can occur at any time. The share
price of the Fund will change daily based on changes in market
prices of securities and market conditions, and in response to
other economic events. There is no assurance that the Fund will
achieve its investment objective.
|X| Risks of Investing in Stocks. Because the Fund invests
primarily in common stocks of small-cap growth companies, the
value of the Fund's portfolio will be affected by changes in the
stock market and the special economic and other factors that
might primarily affect the prices of small cap stocks. Market
risk will affect the Fund's net asset value per share, which will
fluctuate as the values of the Fund's portfolio securities
change. The prices of individual stocks do not all move in the
same direction uniformly or at the same time. Different stock
markets may behave differently from each other.
Other factors can affect a particular stock's price, such as
poor earnings reports by the issuer, loss of major customers,
major litigation against the issuer, or changes in government
regulations affecting the issuer or its industry. To the extent
that the Fund increases the relative emphasis of its portfolio
investments in a particular industry, its share values may
fluctuate in response to events affecting that industry.
|X| Special Risks of Small-Cap Stocks. The Fund focuses its
investments on securities of companies having a market
capitalization of up to $1 billion, which can include both
established and newer companies. While newer emerging growth
companies might offer greater opportunities for capital
appreciation than larger, more established companies, they
involve substantially greater risks of loss and price
fluctuations than larger, more-established issuers.
Small-cap companies may have limited product lines or
markets for their products, limited access to financial resources
and less depth in management skill than larger, more established
companies. Their stocks may be less liquid than those of larger
issuers. That means the Fund could have greater difficulty
selling a security of a small cap issuer at an acceptable price,
especially in periods of market volatility. That factor increases
the potential for losses to the Fund. Also, it may take a
substantial period of time before the Fund realizes a gain on an
investment in a small-cap company, if it realizes any gain at
all.
Because of the special risks associated with investments in
small, unseasoned issuers which are companies that have been in
operation less than three years, (including the operations of any
predecessors) the Fund intends to limit these investments to not
more than 20% of total assets.
How Risky is the Fund Overall? In the short term, the markets for
small-cap stocks can be volatile, and the price of the Fund's shares
can go up and down substantially. The Fund generally does not use
income-oriented investments to help cushion the Fund's total return
from changes in stock prices, except for defensive purposes. The Fund
is a very aggressive investment vehicle, designed for investors
willing to assume greater risks in the hope of achieving greater
gains, and its share price is likely to fluctuate more than the price
of shares of Funds emphasizing large-cap stocks.
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The Fund's Past Performance
Because the Fund commenced operations on May 1, 1998, calendar year
performance information for 1998 is not included in this Prospectus.
To obtain the Fund's current total returns, you can contact the
Transfer Agent at the telephone number on the Back Cover. Please
remember that the Fund's total returns do not consider the effect of
charges imposed by the insurance company separate accounts that invest
in the Fund. If those charges were included, the returns would be
less.
The Fund's total returns should not be expected to be the same as the
returns of other Oppenheimer funds, even if both funds have the same
portfolio managers and/or similar names.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of the Fund's
portfolio among the different types of permitted investments will vary
over time based upon the evaluation of economic and market trends by
the Manager. The Fund's portfolio might not always include all of the
different types of investments described below. The Statement of
Additional Information contains more detailed information about the
Fund's investment policies and risks.
|X| Small-Cap Stock Investments. The Fund emphasizes
investments in equity securities of small companies that the
Manager believes have growth potential. Small-cap growth
companies tend to be companies that may be developing new
products or services, that have relatively favorable prospects,
or that are expanding into new and growing markets. Current
examples include companies in the fields of telecommunications,
biotechnology, computer software, and new consumer products.
While they include established companies that are entering a
growth cycle, they also include newer companies.
Emerging growth companies may be providing new products or
services that can enable them to capture a dominant or important
market position. They may have a special area of expertise or the
capability to take advantage of changes in demographic factors in
a more profitable way than larger, more established companies.
Growth companies tend to retain a large part of their
earnings for research, development or investment in capital
assets. Therefore, they do not tend to emphasize paying
dividends, and may not pay any dividends for some time. They are
selected for the Fund's portfolio because the Manager believes
the price of the stock will increase over the long term.
|_| Cyclical Opportunities. The Fund focuses on seeking
growth over the long term but might also seek to take advantage
of changes in the business cycle by investing in companies that
are sensitive to those changes, if the Manager believes they have
growth potential. For example, when the economy is expanding,
companies in the consumer durables and technology sectors might
benefit and present long-term growth opportunities. There is the
risk that those securities can lose value when the issuer or
industry is out of phase in the business cycle.
|_| Industry Focus. At times, the Fund may increase the
relative emphasis of its investments in a particular industry.
Stocks of issuers in a particular industry might be affected by
changes in economic conditions or by changes in government
regulations, availability of basic resources or supplies, or
other events that affect that industry more than others. To the
extent that the Fund has a greater emphasis on investments in a
particular industry, its share values may fluctuate in response
to events affecting that industry. To some extent that risk may
be limited by the Fund's policy of not concentrating 25% or more
of its assets in investments in any one industry.
|_| Other Equity Securities. While the Fund emphasizes
investments in common stocks, it may also buy preferred stocks
and securities convertible into common stock. While some
convertible securities are debt securities, the Manager considers
some of them to be "equity equivalents" because of the conversion
feature and in that case their rating has less impact on the
investment decision than in the case of other debt securities.
Nevertheless, convertible securities are subject to both "credit
risk" (the risk that the issuer will not pay interest or repay
principal in a timely manner) and "interest rate risk" (the risk
that the prices of the securities will be affected inversely by
changes in prevailing interest rates). If the Fund buys
convertible securities (or other debt securities) it will focus
primarily on investment-grade securities, which pose less credit
risk than lower-grade debt securities.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance contract
based on an insurance company separate account to qualify for
favorable tax treatment under the Internal Revenue Code, the
underlying investments must follow special diversification
requirements that limit the percentage of assets that can be
invested in securities of particular issuers. The Fund's
investment program is managed to meet those requirements, in
addition to other diversification requirements under the Internal
Revenue Code and the Investment Company Act that apply to
publicly-sold mutual funds.
Failure by the Fund to meet those special requirements could
cause earnings on a contract owner's interest in an insurance
company separate account to be taxable income. Those
diversification requirements might also limit, to some degree,
the Fund's investment decisions in a way that could reduce its
performance.
|X| Can the Fund's Investment Objective and Policies Change?
The Fund's Board of Trustees can change non-fundamental
investment 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 Fund's investment objective is a fundamental
policy. Investment restrictions that are fundamental policies are
listed in the Statement of Additional Information. An investment
policy is not fundamental unless this Prospectus or the Statement
of Additional Information says that it is.
|X| Portfolio Turnover. The Fund may engage in short-term
trading to try to achieve its objective. Portfolio turnover
affects brokerage costs the Fund pays. The Financial Highlights
table at the end of this Prospectus shows the Fund's portfolio
turnover rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund can also
use the investment techniques and strategies described below. The
Manager might not always use all of the different types of techniques
and investments described below. These techniques involve certain
risks, although some are designed to help reduce investment or market
risks.
|X| Risks of Foreign Investing. The Fund can invest in foreign
securities, although most of the small cap stocks the Fund holds are
issued by domestic companies. The Fund currently emphasizes
investments in U.S. companies and does not expect its investments in
foreign securities to exceed 25% of its net assets.
While foreign securities offer special investment opportunities,
there are also special risks. The change in value of a foreign
currency against the U.S. dollar will result in a change in the
U.S. dollar value of securities denominated in that foreign
currency. Foreign issuers are not subject to the same accounting
and disclosure requirements that U.S. companies are subject to.
The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy
in the U.S. or abroad, or other political and economic factors.
|X| Illiquid and Restricted Securities. Investments may
be illiquid because there is no active trading market for
them, 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 its resale or
which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund will not invest more
than 15% of its net assets in illiquid or restricted
securities. Certain restricted securities that are eligible
for resale to qualified institutional purchasers may not be
subject to that limit. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether
to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a
number of different kinds of "derivative" investments. The
Fund can use derivatives to seek increased returns or to try
to hedge investment risks, although it does not do so
currently to a significant degree. In general terms, a
derivative investment is one whose value depends on (or is
derived from) the value of an underlying asset, interest
rate or index. Options, futures, and forward contracts are
examples of derivatives the Fund can use.
|_| There are Special Risks in Using Derivative
Investments. If the issuer of the derivative does not pay
the amount due, the Fund can lose money on the investment.
Also, the underlying security or investment on which the
derivative is based, and the derivative itself, might not
perform the way the Manager expected it to perform. If that
happens, the Fund's share price could decline or the Fund
could get less income than expected. The Fund has limits on
the amount of particular types of derivatives it can hold.
However, using derivatives can cause the Fund to lose money
on its investment and/or increase the volatility of its
share prices.
Markets underlying securities and indices might move in
a direction not anticipated by the Manager. Interest rate
and stock market changes in the U.S. and abroad may also
influence the performance of derivatives. As a result of
these risks the Fund could realize less principal or income
from the investment than expected. Certain derivative
investments held by the Fund may be illiquid. |X| Hedging.
The Fund can buy and sell certain kinds of futures
contracts, forward contracts, and put and call options,
including options on futures and broadly-based securities
indices. These are all referred to as "hedging instruments."
The Fund does not currently use hedging extensively and is
not required to do so to seek its objective. The Fund has
limits on its use of hedging instruments and currently does
not use them to a significant degree.
The Fund could buy and sell options, futures and
forward contracts for a number of purposes. It might do so
to try to manage its exposure to the possibility that the
prices of its portfolio securities may decline, or to
establish a position in the securities market as a temporary
substitute for purchasing individual securities. It might do
so to try to manage its exposure to changing interest rates.
Forward contracts can be used to try to manage foreign
currency risks on the Fund's foreign investments.
Options trading involves the payment of premiums and
has special tax effects on the Fund. There are also special
risks in particular hedging strategies. For example, if a
covered call written by the Fund is exercised on an
investment that has increased in value, the Fund will be
required to sell the investment at the call price and will
not be able to realize any profit if the investment has
increased in value above the call price.
If the Manager used a hedging instrument at the wrong
time or judged market conditions incorrectly, the strategy
could reduce the Fund's return. The 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.
Temporary Defensive Investments. For cash management purposes,
the Fund can hold cash equivalents such as commercial paper,
repurchase agreements, Treasury bills and other short-term U.S.
government securities. In times of adverse or unstable market or
economic conditions, the Fund can invest up to 100% of its assets
in temporary defensive investments. These would ordinarily be U.
S. government securities, highly-rated commercial paper, bank
deposits or repurchase agreements. To the extent the Fund invests
defensively in these securities, it might not achieve its
investment objective.
Year 2000 Risks. Because many computer software systems in use
today cannot distinguish the year 2000 from the year 1900, the
markets for securities in which the Fund invests could be
detrimentally affected by computer failures beginning January 1,
2000. Failure of computer systems used for securities trading
could result in settlement and liquidity problems for the Fund
and other investors. That failure could have a negative impact on
handling securities trades, pricing and accounting services. Data
processing errors by government issuers of securities could
result in economic uncertainties, and those issuers might incur
substantial costs in attempting to prevent or fix such errors,
all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent
have been working on necessary changes to their computer
systems to deal with the year 2000 and expect that their
systems will be adapted in time for that event, although
there cannot be assurance of success. Additionally, the
services they provide depend on the interaction of their
computer systems with those of insurance companies with
separate accounts that invest in the Fund, brokers,
information services, the Fund's Custodian and other
parties. Therefore, any failure of the computer systems of
those parties to deal with the year 2000 might also have a
negative effect on the services they provide to the Fund.
The extent of that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds,
Inc., chooses the Fund's 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 an
Investment Advisory Agreement that states the Manager's
responsibilities. The Agreement sets the fees paid by the Fund to
the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds,
with assets of more than $100 billion as of March 31, 1999,
and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor,
New York, New York 10048-0203.
|X| Portfolio Managers. The Portfolio Managers of the
Fund are Jay W. Tracey, III and Alan Gilston. They have been
the persons principally responsible for the day-to-day
management of the Fund since its inception in May 1998, and
are Vice Presidents of the Fund and of the Manager. They
also serve as officers and portfolio managers of other
Oppenheimer funds. Mr. Tracey had been a portfolio manager
since October 1991, and then was as a Managing Director of
Buckingham Capital Management from February through
September 1994, at which time he rejoined the Manager. Prior
to joining the Manager in September 1997, Mr. Gilston was a
Vice President and portfolio manager for Schroeder Capital
Management International, Inc.
|X| Advisory Fees. Under the Investment Advisory
Agreement, the Fund pays the Manager an advisory fee at an
annual rate that declines on additional assets as the Fund
grows: 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 over $800 million. The Fund's
management fee for its last fiscal year ended December 31,
1998, was 0.75% of the Fund's average annual net assets.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased
only by separate investment accounts of participating insurance
companies as an underlying investment for variable life insurance
policies, variable annuity contracts or other investment
products. Individual investors cannot buy shares of the Fund
directly. Please refer to the accompanying prospectus of the
participating insurance company for information on how to select
the Fund as an investment option for that variable life insurance
policy, variable annuity or other investment product. The Fund
reserves the right to refuse any purchase order when the Manager
believes it would be in the Fund's best interests to do so.
Information about your investment in the Fund through your
variable annuity contract, variable life insurance policy or
other plan can be obtained only from your participating insurance
company or its servicing agent. The Fund's Transfer Agent does
not hold or have access to those records. Instructions for buying
or selling shares of the Fund should be given to your insurance
company or its servicing agent, not directly to the Fund or its
Transfer Agent.
|X| At What Price Are Shares Sold? Shares are sold at
their offering price, which is the net asset value per
share. The Fund does not impose any sales charge on
purchases of its shares. If there are any charges imposed
under the variable annuity, variable life or other contract
through which Fund shares are purchased, they are described
in the accompanying prospectus of the participating
insurance company.
The net asset value per share is determined as of the
close of The New York Stock Exchange on each day that the
exchange is open for trading (referred to in this Prospectus
as a "regular business day"). The Exchange normally closes
at 4:00 P.M., New York time, but may close earlier on some
days. All references to time in this Prospectus mean "New
York time."
The net asset value per share is determined by dividing
the value of the Fund's net assets attributable to a class
of shares by the number of shares of that class that are
outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine the
Fund's net asset value, in general based on market values.
The Board has adopted special procedures for valuing
illiquid and restricted securities and securities for which
market values cannot be readily obtained. Because some
foreign securities trade in markets and on exchanges that
operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on
days when shares of the Fund cannot be purchased or
redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next
calculation of the net asset value per share that is made
after the insurance company (as the Fund's designated agent
to receive purchase orders) receives a purchase order from
its contract owners to purchase Fund shares on a regular
business day, provided that the Fund receives the order from
the insurance company by 9:30 A.M. on the next regular
business day at the offices of its Transfer Agent in Denver,
Colorado.
|X| Classes of Shares. The Fund offers two different
classes of shares. The class of shares offered by this
Prospectus has no class name designation. The other class is
designated as Class 2. The different classes of shares
represent investments in the same portfolio of securities
but are expected to have different expenses and share
prices.
This Prospectus may not be used to offer Class 2
shares. A description of the Service Plans that affect only
Class 2 shares of the Fund is contained in the Fund's
Prospectus that offers Class 2 shares. That Prospectus, when
available, may be obtained without charge by contacting any
participating insurance company that offers Class 2 shares
of the Fund as an investment for its separate accounts. You
can also obtain a copy from OppenheimerFunds Distributor,
Inc. by calling toll-free 1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the
participating insurance companies that hold Fund shares in their
separate accounts for the benefit of variable annuity contracts,
variable life insurance policies or other investment products can
place orders to redeem shares. Contract holders and policy
holders should not directly contact the Fund or its transfer
agent to request a redemption of Fund shares. Contract owners
should refer to the withdrawal or surrender instructions in the
accompanying prospectus of the participating insurance company.
The share price that applies to a redemption order is
the next net asset value per share that is determined after
the participating insurance company (as the Fund's
designated agent) receives a redemption request on a regular
business day from its contract or policy holder, provided
that the Fund receives the order from the insurance company,
generally by 9:30 A.M. the next regular business day at the
office of its Transfer Agent in Denver, Colorado. The Fund
normally sends payment by Federal Funds wire to the
insurance company's account the day after the Fund receives
the order (and no later than 7 days after the Fund's receipt
of the order). Under unusual circumstances determined by the
Securities and Exchange Commission, payment may be delayed
or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for
each class of shares from net investment income, if any, on an
annual basis, and to pay those dividends in March on a date
selected by the Board of Trustees. the Fund has no fixed dividend
rate and cannot guarantee that it will pay any dividends.
All dividends (and any capital gains distributions)
will be reinvested automatically in additional Fund shares
at net asset value for the account of the participating
insurance company (unless the insurance company elects to
have dividends or distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out
of any net short-term or long-term capital gains in March of each
year. The Fund may make supplemental distributions of dividends
and capital gains following the end of its fiscal year. There can
be no assurance that the Fund will pay any capital gains
distributions in a particular year.
Taxes. For a discussion of the tax status of a variable annuity
contract, a variable life insurance policy or other investment
product of a participating insurance company, please refer to the
accompanying prospectus of your participating insurance company.
Because shares of the Fund may be purchased only through
insurance company separate accounts for variable annuity
contracts, variable life insurance policies or other investment
products, dividends paid by the Fund from net investment income
and distributions (if any) of net realized short-term and
long-term capital gains will be taxable, if at all, to the
participating insurance company.
This information is only a summary of certain federal
income tax information about an investment in Fund shares.
You should consult with your tax advisor or your
participating insurance company representative about the
effect of an investment in the Fund under your contract or
policy.
Financial Highlights
The Financial Highlights Table is presented to help you
understand the Fund's financial performance since its inception.
Certain information reflects financial results for a single Fund
share. The total return in the table represent the rate that an
investor would have earned (or lost) on an investment in the Fund
(assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP, the Fund's
independent auditors, whose report, along with the Fund's
financial statements, is included in the Statement of Additional
Information, which is available on request.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights Period
Ended
December
31,
1998(1)
<S> <C>
================================================================================
Per Share Operating Data
Net asset value, beginning of period $10.00
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.02)
Net realized and unrealized gain (loss) (.38)
-------
Total loss from investment operations (.40)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 9.60
=======
================================================================================
Total Return, at Net Asset Value(2) (4.00)%
================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $994
- --------------------------------------------------------------------------------
Average net assets (in thousands) $441
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net investment loss
(0.79)%(3)
Expenses
0.87%(3)
- --------------------------------------------------------------------------------
Portfolio turnover rate(4) 61.4%
1. For the period from May 1, 1998 (commencement of operations)
to December 31, 1998.
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 returns are not
annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate
account level or to related insurance products. Inclusion of
these charges would reduce 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. Purchases and
sales of investment securities (excluding short-term securities)
for the period ended December 31, 1998 were $1,023,289 and
$242,621, respectively.
</TABLE>
For More Information About Oppenheimer Small Cap Growth Fund/VA:
The following additional information about Oppenheimer Small Cap
Growth Fund/VA is available without charge upon request:
Statement of Additional Information
This document includes additional information about the Fund's
investment policies, risks, and operations. It is incorporated by
reference into this Prospectus (which means it is legally part of
this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and
performance is available in the Fund's Annual and Semi-Annual
Reports to shareholders. The Annual Report includes a discussion
of market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the
Annual and Semi-Annual Reports, and other information about the
Fund: By Telephone: Call OppenheimerFunds Services toll-free:
1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional
Information and other Fund documents and reports by visiting the
SEC's Public Reference Room in Washington, D.C. (Phone
1-800-SEC-0330) or the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the
Fund or to make any representations about the Fund other than
what is contained in this Prospectus. This Prospectus is not an
offer to sell shares of the Fund, nor a solicitation of an offer
to buy shares of the Fund, to any person in any state or other
jurisdiction where it is unlawful to make such an offer.
SEC File No. 811-4108
PR0297.001.0599 Printed on recycled paper.
(OppenheimerFunds logo)
Oppenheimer Global Securities Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Global Securities Fund/VA is a mutual fund
that 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 that are considered to have appreciation
possibilities. It invests mainly in common stocks of U.S.
and foreign issuers.
Shares of the Fund are sold only as the underlying
investment for variable life insurance policies, variable
annuity contracts and other insurance company separate
accounts. A prospectus for the insurance product you have
selected accompanies this Prospectus and explains how to
select shares of the Fund as an investment under that
insurance product. This Prospectus contains important
information about the Fund's objective, its investment
policies, strategies and risks. Please read this Prospectus
(and your insurance product prospectus) carefully before you
invest and keep them for future reference about your
account.
As with all mutual funds, the Securities and Exchange Commission
has not approved or disapproved the Fund's securities nor has it
determined that this Prospectus is accurate or complete. It is a
criminal offense to represent otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The 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 that are considered to
have appreciation possibilities.
What Does the Fund Invest In? The Fund invests mainly in common
stocks, and can also buy other equity securities, including
preferred stocks and securities convertible into common stock.
The Fund buys securities of issuers in the U.S. and foreign
countries. The Fund can invest without limit in foreign
securities and can invest in any country, including countries
with developed or emerging markets. However, the Fund's
investment Manager, OppenheimerFunds, Inc., currently emphasizes
investments in developed markets.
The Fund has no requirements to allocate its
investments in any set percentages in any particular
countries, but normally will invest in at least three
countries (one of which may be the United States). Typically
the Fund invests in a number of different countries.
The Fund can invest in securities of issuers in any
market capitalization range. The Fund can also use hedging
instruments and certain derivative investments to try to
manage investment risks. These investments are more fully
explained in "About the Fund's Investments," below.
|X| How Does the Manager Decide What Securities to Buy
or Sell? In selecting securities for the Fund, the Fund's
portfolio manager looks primarily for foreign and U.S.
companies with high growth potential, using fundamental
analysis of a company's financial statements and management
structure, and analysis of the company's operations and
product development, as well as the industry of which the
issuer is part.
In seeking broad diversification of the Fund's
portfolio, the portfolio manager considers overall and
relative economic conditions in U.S. and foreign markets,
and seeks broad diversification in different countries to
help moderate the special risks of foreign investing. The
portfolio manager currently focuses on the factors below
(which may vary in particular cases and may change over
time), looking for:
|_| Companies of small-, medium- and large-capitalization ranges
worldwide,
|_| Stocks to provide growth opportunities,
|_| Companies with strong competitive positions and high demand
for their products or services.
In applying these and other selection criteria, the
portfolio manager considers the effect of worldwide trends
on the growth of various business sectors. The trends, or
global "themes," currently employed include technological
change, demographic/geopolitical change, and changing
resource needs. The Fund does not invest a fixed or specific
amount of its assets in any one sector, and these themes and
this strategy may change over time.
Who Is the Fund Designed For? The Fund's shares are available
only as an investment option under certain variable annuity
contracts, variable life insurance policies and investment plans
offered through insurance company separate accounts of
participating insurance companies, for investors seeking capital
growth in their investment over the long term, from a fund that
normally has substantial investments in foreign securities. Those
investors should be willing to assume the risks of short-term
share price fluctuations that are typical for a fund focusing on
stock investments and investments in foreign securities. Since
the Fund does not invest with the goal of seeking income, and its
current income will likely be small, it is not designed for
investors needing an assured level of current income. The Fund is
not a complete investment program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments are subject to changes in their value from a
number of factors. They include changes in general stock
market movements (this is referred to as "market risk"),or
the change in value of particular stocks because of an event
affecting the issuer. The Fund expects to have substantial
amounts of its investments in foreign securities. Therefore,
it will be subject to the risks that economic, political or
other events can have on the values of securities of issuers
in particular foreign countries.
These risks collectively form the risk profile of the
Fund, and can affect the value of the Fund's investments,
its investment performance and its price per share. These
risks mean that you can lose money by investing in the Fund.
When you redeem your shares, they may be worth more or less
than what you paid for them.
The Manager tries to reduce risks by carefully
researching securities before they are purchased. The Fund
attempts to reduce its exposure to market risks by
diversifying its investments, that is, by not holding a
substantial percentage of the stock of any one company and
by not investing too great a percentage of the Fund's assets
in any one issuer. Also, the Fund does not concentrate 25%
or more of its investments in any one industry.
However, changes in the overall market prices of
securities and the income they pay can occur at any time.
The share price of the Fund will change daily based on
changes in market prices of securities and market conditions
and in response to other economic events. There is no
assurance that the Fund will achieve its investment
objective.
|X| Risks of Investing in Stocks. Stocks fluctuate in
price, and their short-term volatility at times may be
great. Because the Fund currently focuses its investments
primarily on common stocks for capital appreciation, the
value of the Fund's portfolio will be affected by changes in
the stock markets. Market risk will affect the Fund's net
asset value per share, which will fluctuate as the values of
the Fund's portfolio securities change. A variety of factors
can affect the price of a particular stock, and the prices
of individual stocks do not all move in the same direction
uniformly or at the same time. Different stock markets may
behave differently from each other.
Additionally, stocks of issuers in a particular
industry may be affected by changes in economic conditions
that affect that industry more than others, or by changes in
government regulations, availability of basic resources or
supplies, or other events. To the extent that the Fund has
greater emphasis on investments in a particular industry
using its "global themes" strategy, its share values may
fluctuate in response to events affecting that industry.
Other factors can affect a particular stock's price,
such as poor earnings reports by the issuer, loss of major
customers, major litigation against the issuer, or changes
in government regulations affecting the issuer. The Fund can
invest in securities of large companies and also small and
medium-size companies, which may have more volatile stock
prices than large companies.
|X| Risks of Foreign Investing. The Fund expects to
invest substantial amounts of its assets in foreign
securities. While foreign securities offer special
investment opportunities, there are also special risks.
The change in value of a foreign currency against the
U.S. dollar will result in a change in the U.S. dollar value
of securities denominated in that foreign currency. Foreign
issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to.
The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary
policy in the U.S. or abroad, or other political and
economic factors.
|X| There are Special Risks in Using Derivative
Investments. The Fund can use derivatives to seek increased
returns or to try to hedge investment risks. In general
terms, a derivative investment is one whose value depends on
(or is derived from) the value of an underlying asset,
interest rate or index. Options, futures, and forward
contracts are examples of derivatives.
If the issuer of the derivative does not pay the amount
due, the Fund can lose money on the investment. Also, the
underlying security or investment on which the derivative is
based, and the derivative itself, might not perform the way
the Manager expected it to perform. If that happens, the
Fund's share price could decline or the Fund could get less
income than expected. The Fund has limits on the amount of
particular types of derivatives it can hold. However, using
derivatives can cause the Fund to lose money on its
investment and/or increase the volatility of its share
prices.
How Risky is the Fund Overall? In the short term, domestic and
foreign stock markets can be volatile, and the price of the
Fund's shares can go up and down substantially. The Fund does not
seek income from debt securities to try to reduce the volatility
of its share prices. The Fund generally may be less volatile than
funds focusing on investments in emerging markets or small-cap
stocks, but the Fund has greater risks than funds that focus
solely on large-cap domestic stocks or stocks and bonds.
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the
risks of investing in the Fund, by showing changes in the
Fund's performance1 from year to year for the full calendar
years since the Fund's inception and by showing how the
average annual total returns of the Fund's shares compare to
those of a broad-based market index. The Fund's past
investment performance is not necessarily an indication of
how the Fund will perform in the future.
___________________
1The Fund has two classes of shares. This Prospectus offers only
the class of shares that has no class name designation, and the
performance shown is for that class. The other class of shares,
Class 2, is not offered in this Prospectus.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
For the period from 1/1/99 through 3/31/99, the Fund's cumulative
return (not annualized) was 3.50%. Charges imposed by the
separate accounts that invest in the Fund are not included in the
calculations of return in this bar chart, and if those charges
were included, the returns would be less than those shown. During
the period shown in the bar chart, the highest return (not
annualized) for a calendar quarter was 22.83% (4th Q '98) and the
lowest return (not annualized) for a calendar quarter was -15.62%
(3rd Q '98).
Average Annual Total Returns
for the periods ended 1 Year 5 Years Life of Fund*
December 31, 1998
Oppenheimer Global 14.11% 9.67% 12.49%
Securities Fund/VA
MSCI World Index 24.80% 16.19% 14.26%
*The Fund's inception date was 11/20/90. The "life of class"
index performance is shown from 11/30/90.
The Fund's returns in the table measure the performance of a
hypothetical account without deducting charges imposed by the
separate accounts that invest in the Fund and assume that all
dividends and capital gains distributions have been reinvested in
additional shares. Because the Fund invests in U.S. and foreign
stocks, the Fund's performance is compared to the Morgan Stanley
Capital International World Index, an unmanaged index of equity
securities listed on stock exchanges of 20 foreign countries and
the U.S. However, it must be remembered that the index
performance does not consider the effects of transaction costs.
The Fund's total returns should not be expected to be the same as
the returns of other Oppenheimer funds, even if both funds have
the same portfolio managers and/or similar names.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of the
Fund's portfolio among the different types of permitted
investments will vary over time based upon the evaluation of
economic and market trends by the Manager. The Fund's portfolio
might not always include all of the different types of
investments described below. The Statement of Additional
Information contains more detailed information about the Fund's
investment policies and risks.
|X| Stock Investments. The Fund invests in securities issued by
domestic or foreign companies that the Manager believes have
appreciation potential. The Fund invests primarily in a
diversified portfolio of common stocks (and may buy other equity
securities) of issuers that may be of small, medium or large
size. Equity securities include common stocks, preferred stocks
and securities convertible into common stock. Although many
convertible securities are debt securities, the Manager considers
some convertible securities to be "equity equivalents" because of
the conversion feature and in that case their rating has less
impact on the investment decision than in the case of other debt
securities. Nevertheless, convertible debt securities are subject
to both "credit risk" (the risk that the issuer will not pay
interest or repay principal in a timely manner) and "interest
rate risk" (the risk that prices of the security will be affected
inversely by changes in prevailing interest rates). If the Fund
buys convertible securities, it will focus primarily on
investment-grade securities.
|_| Cyclical Opportunities. The Fund may also seek to
take advantage of changes in the business cycle by investing
in companies that are sensitive to those changes if the
Manager believes they have growth potential. For example,
when the economy is expanding, companies in the consumer
durables and technology sectors might benefit and present
long-term growth opportunities. The Fund might sometimes
seek to take tactical advantage of short-term market
movements or events affecting particular issuers or
industries.
|_| Industry Focus. At times, the Fund may increase the
relative emphasis of its investments in a particular
industry. Stocks of issuers in a particular industry are
subject to changes in economic conditions, government
regulations, availability of basic resources or supplies, or
other events that affect that industry more than others. To
the extent that the Fund has greater emphasis on investments
in a particular industry, its share values may fluctuate in
response to events affecting that industry. To some extent
that risk may be limited by the Funds' policy of not
concentrating 25% or more of its assets in investments in
any one industry.
|X| Special Risks of Emerging and Developing Markets.
Securities of issuers in emerging and developing markets may
offer special investment opportunities, but present risks
not found in more mature markets. Those securities may be
more difficult to sell at an acceptable price and their
prices may be more volatile than securities of issuers in
more developed markets. Settlements of trades may be subject
to greater delays so that the Fund might not receive the
proceeds of a sale of a security on a timely basis. These
investments may be very speculative.
These countries might have less developed trading
markets and exchanges. Emerging market countries may have
less developed legal and accounting systems and investments
may be subject to greater risks of government restrictions
on withdrawing the sale proceeds of securities from the
country. Economics of developing countries may be more
dependent on relatively few industries that may be highly
vulnerable to local and global changes. Governments may be
more unstable and present greater risks of nationalization
or restrictions on foreign ownership of stocks of local
companies.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance
contract based on an insurance company separate account to
qualify for favorable tax treatment under the Internal
Revenue Code, the underlying investments must follow special
diversification requirements that limit the percentage of
assets that can be invested in securities of particular
issuers. The Fund's investment program is managed to meet
those requirements, in addition to other diversification
requirements under the Internal Revenue Code and the
Investment Company Act that apply to publicly-sold mutual
funds.
Failure by the Fund to meet those special requirements
could cause earnings on a contract owner's interest in an
insurance company separate account to be taxable income.
Those diversification requirements might also limit, to some
degree, the Fund's investment decisions in a way that could
reduce its performance.
|X| Can the Fund's Investment Objective and Policies
Change? The Fund's Board of Trustees can change
non-fundamental investment 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 Fund's
investment objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the
Statement of Additional Information. An investment policy is
not fundamental unless this Prospectus or the Statement of
Additional Information says that it is.
|X| Portfolio Turnover. The Fund may engage in
short-term trading to try to achieve its objective.
Portfolio turnover affects brokerage costs the Fund pays.
The Financial Highlights table at the end of this Prospectus
shows the Fund's portfolio turnover rates during prior
fiscal years.
Other Investment Strategies. To seek its objective, the Fund can
also use the investment techniques and strategies described
below. The Fund might not always use all of the different types
of techniques and investments described below. These techniques
involve certain risks, although some are designed to help reduce
investment or market risks.
|X| Illiquid and Restricted Securities. Investments may
be illiquid because there is no active trading market for
them, 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 its resale or
which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund will not invest more
than 15% of its net assets in illiquid or restricted
securities. Certain restricted securities that are eligible
for resale to qualified institutional purchasers may not be
subject to that limit. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether
to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a
number of different kinds of "derivative" investments. In
the broadest sense, exchange-traded options, futures
contracts, and other hedging instruments the Fund might use
may be considered "derivative investments." In addition to
using hedging instruments, the Fund can use other derivative
investments because they offer the potential for increased
income and principal value.
Markets underlying securities and indices might move in
a direction not anticipated by the Manager. Interest rate
and stock market changes in the U.S. and abroad may also
influence the performance of derivatives. As a result of
these risks the Fund could realize less principal or income
from the investment than expected. Certain derivative
investments held by the Fund may be illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of forward
contracts, futures contracts, and put and call options, including
options on futures and broadly-based securities indices. These
are all referred to as "hedging instruments." The Fund is not
required to hedge to seek its objective. The Fund has limits on
its use of hedging instruments and does not use them for
speculative purposes.
The Fund could buy and sell options, futures and
forward contracts for a number of purposes. It might do so
to try to manage its exposure to the possibility that the
prices of its portfolio securities may decline, or to
establish a position in the securities market as a temporary
substitute for purchasing individual securities. It might do
so to try to manage its exposure to changing interest rates.
Forward contracts can be used to try to manage foreign
currency risks on the Fund's foreign investments.
Options trading involves the payment of premiums and
has special tax effects on the Fund. There are also special
risks in particular hedging strategies. For example, if a
covered call written by the Fund is exercised on an
investment that has increased in value, the Fund will be
required to sell the investment at the call price and will
not be able to realize any profit if the investment has
increased in value above the call price. In writing a put,
there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price.
If the Manager used a hedging instrument at the wrong
time or judged market conditions incorrectly, the strategy
could reduce the Fund's return. The 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.
Temporary Defensive Investments. For cash management purposes,
the Fund can hold cash equivalents such as commercial paper,
repurchase agreements, Treasury bills and other short-term U.S.
government securities. In times of adverse or unstable market or
economic conditions, the Fund can invest up to 100% of its assets
in temporary defensive investments. These would ordinarily be U.
S. government securities, highly-rated commercial paper, bank
deposits or repurchase agreements. To the extent the Fund invests
defensively in these securities, it might not achieve its
investment objective.
Year 2000 Risks. Because many computer software systems in use
today cannot distinguish the year 2000 from the year 1900, the
markets for securities in which the Fund invests could be
detrimentally affected by computer failures beginning January 1,
2000. Failure of computer systems used for securities trading
could result in settlement and liquidity problems for the Fund
and other investors. That failure could have a negative impact on
handling securities trades, pricing and accounting services. Data
processing errors by government issuers of securities could
result in economic uncertainties, and those issuers might incur
substantial costs in attempting to prevent or fix such errors,
all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have been
working on necessary changes to their computer systems to deal
with the year 2000 and expect that their systems will be adapted
in time for that event, although there cannot be assurance of
success. Additionally, the services they provide depend on the
interaction of their computer systems with those of insurance
companies with separate accounts that invest in the Fund,
brokers, information services, the Fund's Custodian and other
parties. Therefore, any failure of the computer systems of those
parties to deal with the year 2000 might also have a negative
effect on the services they provide to the Fund. The extent of
that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds,
Inc., chooses the Fund's 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 an
Investment Advisory Agreement that states the Manager's
responsibilities. The Agreement sets the fees paid by the Fund to
the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds,
with assets of more than $100 billion as of March 31, 1999,
and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor,
New York, New York 10048-0203.
|X| Portfolio Manager. The portfolio manager of the
Fund is William L. Wilby. He is a Vice President of the Fund
and a Senior Vice President of the Manager. He has been the
person principally responsible for the day-to-day management
of the Fund's portfolio since its inception in December,
1995. Mr. Wilby also serves as an officer and portfolio
manager for other Oppenheimer funds. Prior to joining the
Manager in 1993, he was an international investment
strategist at Brown Brothers Harriman & Co. and before that
a Managing Director and Portfolio Manager at AIG Global
Investors.
|X| Advisory Fees. Under the Investment Advisory
Agreement, the Fund pays the Manager an advisory fee at an
annual rate that declines on additional assets as the Fund
grows: 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 over $800 million. The Fund's
management fee for its last fiscal year ended December 31,
1998, was 0.68% of the Fund's average annual net assets.
|X| Possible Conflicts of Interest. The Fund offers its
shares to separate accounts of different insurance companies
that are not affiliated with each other, as an investment
for their variable annuity, variable life and other
investment product contracts. While the Fund does not
foresee any disadvantages to contract owners from these
arrangements, it is possible that the interests of owners of
different contracts participating in the Fund through
different separate accounts might conflict. For example, a
conflict could arise because of differences in tax
treatment.
The Fund's Board has procedures to monitor the
portfolio for possible conflicts to determine what action
should be taken. If a conflict occurs, the Board might
require one or more participating insurance company separate
accounts to withdraw their investments in the Fund. That
could force the Fund to sell securities at disadvantageous
prices, and orderly portfolio management could be disrupted.
Also, the Board might refuse to sell shares of the Fund to a
particular separate account, or could terminate the offering
of the Fund's shares if required to do so by law or if it
would be in the best interests of the shareholders of the
Fund to do so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be purchased
only by separate investment accounts of participating insurance
companies as an underlying investment for variable life insurance
policies, variable annuity contracts or other investment
products. Individual investors cannot buy shares of the Fund
directly. Please refer to the accompanying prospectus of the
participating insurance company for information on how to select
the Fund as an investment option for that variable life insurance
policy, variable annuity or other investment product. The Fund
reserves the right to refuse any purchase order when the Manager
believes it would be in the Fund's best interests to do so.
Information about your investment in the Fund through your
variable annuity contract, variable life insurance policy or
other plan can be obtained only from your participating insurance
company or its servicing agent. The Fund's Transfer Agent does
not hold or have access to those records. Instructions for buying
or selling shares of the Fund should be given to your insurance
company or its servicing agent, not directly to the Fund or its
Transfer Agent.
|X| At What Price Are Shares Sold? Shares are sold at
their offering price, which is the net asset value per
share. The Fund does not impose any sales charge on
purchases of its shares. If there are any charges imposed
under the variable annuity, variable life or other contract
through which Fund shares are purchased, they are described
in the accompanying prospectus of the participating
insurance company.
The net asset value per share is determined as of the
close of The New York Stock Exchange on each day that the
exchange is open for trading (referred to in this Prospectus
as a "regular business day"). The Exchange normally closes
at 4:00 P.M., New York time, but may close earlier on some
days. All references to time in this Prospectus mean "New
York time."
The net asset value per share is determined by dividing
the value of the Fund"s net assets attributable to a class
of shares by the number of shares of that class that are
outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine the
Fund's net asset value, in general based on market values.
The Board has adopted special procedures for valuing
illiquid and restricted securities and securities for which
market values cannot be readily obtained. Because some
foreign securities trade in markets and on exchanges that
operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on
days when shares of the Fund cannot be purchased or
redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next
calculation of the net asset value per share that is made
after the insurance company (as the Fund's designated agent
to receive purchase orders) receives a purchase order from
its contract owners to purchase Fund shares on a regular
business day, provided that the Fund receives the order from
the insurance company, generally by 9:30 A.M. on the next
regular business day at the offices of its Transfer Agent in
Denver, Colorado.
|X| Classes of Shares. The Fund offers two different
classes of shares. The class of shares offered by this
Prospectus has no class name designation. The other class is
designated as Class 2. The different classes of shares
represent investments in the same portfolio of securities
but are expected to have different expenses and share
prices.
This Prospectus may not be used to offer Class 2
shares. A description of the Service Plans that affect only
Class 2 shares of the Fund is contained in the Fund's
Prospectus that offers Class 2 shares. That Prospectus, when
available, may be obtained without charge by contacting any
participating insurance company that offers Class 2 shares
of the Fund as an investment for its separate accounts. You
can also obtain a copy from OppenheimerFunds Distributor,
Inc. by calling toll-free 1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the
participating insurance companies that hold Fund shares in their
separate accounts for the benefit of variable annuity contracts,
variable life insurance policies or other investment products can
place orders to redeem shares. Contract holders and policy
holders should not directly contact the Fund or its transfer
agent to request a redemption of Fund shares. Contract owners
should refer to the withdrawal or surrender instructions in the
accompanying prospectus of the participating insurance company.
The share price that applies to a redemption order is
the next net asset value per share that is determined after
the participating insurance company (as the Fund's
designated agent) receives a redemption request on a regular
business day from its contract or policy holder, provided
that the Fund receives the order from the insurance company,
generally by 9:30 A.M. the next regular business day at the
office of its Transfer Agent in Denver, Colorado. The Fund
normally sends payment by Federal Funds wire to the
insurance company's account the day after the Fund receives
the order (and no later than 7 days after the Fund's receipt
of the order). Under unusual circumstances determined by the
Securities and Exchange Commission, payment may be delayed
or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for
each class of shares from net investment income, if any, on an
annual basis, and to pay those dividends in March on a date
selected by the Board of Trustees. The Fund has no fixed dividend
rate and cannot guarantee that it will pay any dividends.
All dividends (and any capital gains distributions will
be reinvested automatically in additional Fund shares at net
asset value for the account of the participating insurance
company (unless the insurance company elects to have
dividends or distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out
of any net short-term or long-term capital gains in March of each
year. The Fund may make supplemental distributions of dividends
and capital gains following the end of its fiscal year. There can
be no assurance that the Fund will pay any capital gains
distributions in a particular year.
Taxes. For a discussion of the tax status of a variable annuity
contract, a variable life insurance policy or other investment
product of a participating insurance company, please refer to the
accompanying prospectus of your participating insurance company.
Because shares of the Fund may be purchased only through
insurance company separate accounts for variable annuity
contracts, variable life insurance policies or other investment
products, dividends paid by the Fund from net investment income
and distributions (if any) of net realized short-term and
long-term capital gains will be taxable, if at all, to the
participating insurance company.
This information is only a summary of certain federal
income tax information about an investment in Fund shares.
You should consult with your tax advisor or your
participating insurance company representative about the
effect of an investment in the Fund under your contract or
policy.
Financial Highlights
The Financial Highlights Table is presented to help you
understand the Fund's financial performance for the past 5 fiscal
years. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by Deloitte
& Touche LLP, the Fund's independent auditors, whose report,
along with the Fund's financial statements, is included in the
Statement of Additional Information, which is available on
request.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31,
1998
1997 1996 1995 1994
================================================================================================================================
<S> <C>
<C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $21.37
$17.67 $15.00 $15.09 $16.30
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income
.24 .25 .15 .12 .04
Net realized and unrealized gain (loss)
2.64 3.68 2.52 .19 (.96)
------
- ------ ------ ------ ------
Total income (loss) from investment
operations
2.88 3.93 2.67 .31 (.92)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income
(.46) (.23) -- -- (.04)
Distributions from net realized gain
(1.72) -- -- (.40) (.25)
------
- ------ ------ ------ ------
Total dividends and distributions
to shareholders
(2.18) (.23) -- (.40) (.29)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $22.07
$21.37 $17.67 $15.00 $15.09
======
====== ====== ====== ======
================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1)
14.11% 22.42% 17.80% 2.24% (5.72)%
================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $1,135,029
$959,110 $582,080 $360,979 $297,842
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,055,123
$802,389 $466,750 $332,336 $214,545
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income
1.22% 1.51% 1.09% 0.86% 0.54%
Expenses
0.74% 0.76% 0.81% 0.89% 0.91%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2)
80.9% 67.1% 89.9% 131.3% 70.4%
</TABLE>
1. 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 returns are not
annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate
account level or to related insurance products. Inclusion of
these charges would reduce the total return figures for all
periods shown.
2. 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. Purchases and
sales of investment securities (excluding short-term securities)
for the period ended December 31, 1998 were $786,354,899 and
$769,035,230, respectively.>
For More Information About Oppenheimer Global Securities Fund/VA:
The following additional information about Oppenheimer Global Securities
Fund/VA is available without charge upon
request:
Statement of Additional Information
This document includes additional information about the Fund's investment
policies, risks, and operations.
It is incorporated by reference into this Prospectus (which means it is
legally part of this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is
available in the Fund's Annual and
Semi-Annual Reports to shareholders. The Annual Report includes a discussion
of market conditions and
investment strategies that significantly affected the Fund's performance
during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other
information about the Fund:
By Telephone:
Call OppenheimerFunds Services toll-free:
1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional
Information and other Fund documents and reports by visiting the
SEC's Public Reference Room in Washington, D.C. (Phone
1-800-SEC-0330) or the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the
Fund or to make any representations about the Fund other than
what is contained in this Prospectus. This Prospectus is not an
offer to sell shares of the Fund, nor a solicitation of an offer
to buy shares of the Fund, to any person in any state or other
jurisdiction where it is unlawful to make such an offer.
SEC File No. 811-4108
PR0485.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Global Securities Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of
Oppenheimer Global Securities Fund/VA (the "Fund") under the
heading "Annual Total Return (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the
Fund depicting the annual total returns of a hypothetical
$10,000 investment in shares of the Fund for each of the
eight most recent calendar years, without deducting separate
account expenses. Set forth below are the relevant data that
will appear on the bar chart:
Calendar
Year
Ended Annual Total Returns
12/31/91 3.39%
12/31/92 -7.11%
12/31/93 70.32%
12/31/94 -5.72%
12/31/95 2.24%
12/31/96 17.80%
12/31/97 22.42%
12/31/98 14.11%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Multiple Strategies Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Multiple Strategies Fund/VA is a mutual
fund that seeks a total investment return, which includes
current income and capital appreciation in the value of its
shares. The Fund allocates its investments among common
stocks, debt securities, and "money market" instruments.
Shares of the Fund are sold only as the underlying
investment for variable life insurance policies, variable
annuity contracts and other insurance company separate
accounts. A prospectus for the insurance product you have
selected accompanies this Prospectus and explains how to
select shares of the Fund as an investment under that
insurance product. This Prospectus contains important
information about the Fund's objective, its investment
policies, strategies and risks. Please read this Prospectus
(and your insurance product prospectus) carefully before you
invest and keep them for future reference about your
account.
As with all mutual funds, the Securities and Exchange
Commission has not approved or disapproved the Fund's
securities nor has it determined that this Prospectus is
accurate or complete. It is a criminal offense to represent
otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund seeks a
high total investment return, which includes current income
and capital appreciation in the value of its shares.
What Does the Fund Invest In? The Fund's investment Manager,
OppenheimerFunds, Inc., uses a variety of different types of
securities and investment strategies to seek the Fund's
objective:
o Equity securities, such as common stocks, preferred stocks
and securities convertible into common stock, of issuers in
the U.S. and foreign countries,
o Debt securities, such as bonds and notes issued by
domestic and foreign companies (which can include
lower-grade, high-yield securities), securities issued or
guaranteed by the U.S. government and its agencies and
instrumentalities including mortgage-related securities
(these are referred to as "U.S. government securities"), and
debt obligations of foreign governments,
o Money market instruments, which are obligations that have
a maturity of 13 months or less, including short-term U.S.
government securities, corporate and bank debt obligations
and commercial paper, and
o Hedging instruments, such as put and call options, foreign
currency forward contracts, futures and certain derivative
investments to try to enhance income or to manage investment
risks.
These investments are more fully explained in "About the
Fund's Investments," below.
|X| How Does the Manager Decide What Securities to Buy
or Sell? In selecting securities for the Fund, the Fund's
portfolio managers use different investment styles to carry
out an asset allocation strategy that seeks broad
diversification across asset classes. They normally maintain
a balanced mix of equity securities on the one hand, and
debt securities and money market instruments on the other,
although the Fund has no requirements to weight the
portfolio holdings in a fixed proportion. Therefore, the
portfolio's mix of equity securities, debt securities and
money market instruments will change over time.
The debt securities in the portfolio normally include a
mix of U.S. government securities, high-yield corporate
bonds and foreign government bonds, to seek current income.
The relative amounts of those types of debt securities in
the portfolio will change over time, because those sectors
of the bond markets generally react differently to changing
economic environments.
The portfolio managers employ both "growth" and "value"
styles in selecting equity securities. They use fundamental
analysis of a company's financial statements and management
structure, analysis of the company's operations and product
development, as well as the industry of which the issuer is
part. Value investing seeks issuers that are temporarily out
of favor or undervalued in the market by various measures,
such as the stock's price/earnings ratio. Growth investing
seeks issuers that the Manager believes have possibilities
for increases in their stock prices because of strong
earnings growth compared to the market, the development of
new products or services or other favorable economic
factors.
Who Is the Fund Designed For? The Fund's shares are
available only as an investment option under certain
variable annuity contracts, variable life insurance policies
and investment plans offered through insurance company
separate accounts of participating insurance companies, for
investors seeking high total return from their investment
over the long term, from a fund employing a variety of
investments and investment styles in a diversified
portfolio. Those investors should be willing to assume the
risks of short-term share price fluctuations that are
typical for a fund with significant investments in stocks
and foreign securities. Since the Fund's income level will
fluctuate, it is not designed for investors needing an
assured level of current income, and the Fund is not a
complete investment program.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments are subject to changes in their value from a
number of factors. They include changes in general stock and
bond market movements (this is referred to as "market
risk"), or the change in value of particular stocks or bonds
because of an event affecting the issuer (in the case of
bonds, this is known as "credit risk"). High-yield,
lower-grade bonds (commonly called "junk bonds") are subject
to greater credit risks than investment-grade securities.
The Fund can have a significant amount of its assets
invested in foreign securities. Therefore, it will be
subject to the risks of economic, political or other events
that can affect the values of securities of issuers in
particular foreign countries. Changes in interest rates can
also affect stock and bond prices (this is known as
"interest rate risk").
These risks collectively form the risk profile of the
Fund, and can affect the value of the Fund's investments,
its investment performance and its price per share. These
risks mean that you can lose money by investing in the Fund.
When you redeem your shares, they may be worth more or less
than what you paid for them.
The Manager tries to reduce risks by carefully
researching securities before they are purchased, and in
some cases by using hedging techniques. The Fund attempts to
reduce its exposure to market risks by diversifying its
investments, that is, by not holding a substantial
percentage of the stock of any one company and by not
investing too great a percentage of the Fund's assets in any
one issuer. Also, the Fund does not concentrate 25% or more
of its investments in any one industry.
However, changes in the overall market prices of
securities and the income they pay can occur at any time.
The share price of the Fund will change daily based on
changes in market prices of securities and market conditions
and in response to other economic events. There is no
assurance that the Fund will achieve its investment
objective.
|X| Risks of Investing in Stocks. Stocks fluctuate in
price, and their short-term volatility at times can be
great. The value of the Fund's portfolio therefore will be
affected by changes in the stock markets. Market risk will
affect the Fund's net asset value per share, which will
fluctuate as the values of the Fund's portfolio securities
change. A variety of factors can affect the price of a
particular stock, and the prices of individual stocks do not
all move in the same direction uniformly or at the same
time. Different stock markets may behave differently from
each other.
Additionally, stocks of issuers in a particular
industry may be affected by changes in economic conditions
that affect that industry more than others, or by changes in
government regulations, availability of basic resources or
supplies, or other events. Other factors can affect a
particular stock's price, such as poor earnings reports by
the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations
affecting the issuer. The Fund can invest in securities of
large companies and also small and medium-size companies,
which may have more volatile stock prices than large
companies.
|X| Risks of Foreign Investing. The Fund can buy
securities issued by companies or governments in any
country, including developed and underdeveloped countries.
Although there are no limits on the amounts it can invest in
foreign securities, normally the Fund does not expect to
invest more than 35% of its assets in foreign securities.
While foreign securities offer special investment
opportunities, there are also special risks that can reduce
the Fund's share price and returns. The change in value of a
foreign currency against the U.S. dollar will result in a
change in the U.S. dollar value of securities denominated in
that foreign currency. Foreign issuers are not subject to
the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments
may be affected by exchange control regulations,
expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes
in governmental economic or monetary policy in the U.S. or
abroad, or other political and economic factors. Foreign
government debt securities may not be backed by the full
faith and credit of the issuing government.
|_| Special Risks of Emerging and Developing Markets.
Securities of issuers in emerging and developing markets may
offer special investment opportunities, but present risks
not found in more mature markets. Those securities may be
more difficult to sell at an acceptable price and their
prices may be more volatile than securities of issuers in
more developed markets. Settlements of trades may be subject
to greater delays so that the Fund might not receive the
proceeds of a sale of a security on a timely basis. These
investments may be very speculative.
These countries might have less developed trading
markets and exchanges. Emerging market countries may have
less developed legal and accounting systems and investments
may be subject to greater risks of government restrictions
on withdrawing the sales proceeds of securities from the
country. Economies of developing countries may be more
dependent on relatively few industries that may be highly
vulnerable to local and global changes. Governments may be
more unstable and present greater risks of nationalization
or restrictions on foreign ownership of stocks of local
companies.
|X| Credit Risk. Debt securities are subject to credit risk.
Credit risk relates to the ability of the issuer of a
security to make interest and principal payments on the
security as they become due. If the issuer fails to pay
interest, the Fund's income might be reduced and if the
issuer fails to repay principal, the value of that security
and of the Fund's shares might be reduced. While the Fund's
investments in U.S. government securities are subject to
little credit risk, the Fund's other investments in debt
securities, particularly high-yield lower-grade debt
securities, are subject to risks of default.
|_| Special Risks of Lower-Grade Securities. Because
the Fund can invest in securities below investment-grade to
seek high income, the Fund's credit risks are greater than
those of funds that buy only investment-grade bonds.
Lower-grade debt securities (commonly called "junk bonds")
may be subject to greater market fluctuations and greater
risks of loss of income and principal than investment-grade
debt securities. Securities that are (or that have fallen)
below investment grade are exposed to a greater risk that
the issuers of those securities might not meet their debt
obligations. These risks can reduce the Fund's share prices
and the income it earns.
|X| Interest Rate Risks. The prices of debt securities,
including U.S. government securities, are subject to change
when prevailing interest rates change. When interest rates
fall, the values of already-issued debt securities generally
rise. When interest rates rise, the values of already-issued
debt securities generally fall. The magnitude of these
fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. The Fund's
share prices can go up or down when interest rates change
because of the effect of the changes on the value of the
Fund's investments in debt securities.
|X| Prepayment Risk. Prepayment risk occurs when the
mortgages underlying a mortgage-related security are prepaid
at a rate faster than anticipated (usually when interest
rates fall) and the issuer of the security can prepay the
principal prior to the security's maturity. Mortgage-related
securities that are subject to prepayment risk, including
the CMOs and other mortgage-related securities that the Fund
can buy, generally offer less potential for gains when
prevailing interest rates decline, and have greater
potential for loss than other debt securities when interest
rates rise.
The impact of prepayments on the price of a security
may be difficult to predict and may increase the volatility
of the price. The Fund might have to reinvest the proceeds
of prepaid securities in new securities offering lower
yields. Additionally, the Fund can buy mortgage-related
securities at a premium. Accelerated prepayments on those
securities could cause the Fund to lose the portion of its
principal investment represented by the premium the Fund
paid.
If interest rates rise rapidly, prepayments might occur
at slower rates than expected, which could have the effect
of lengthening the expected maturity of a short or
medium-term security. That could cause its value to
fluctuate more widely in response to changes in interest
rates. In turn, this could cause the value of the Fund's
shares to fluctuate more.
|X| There Are Special Risks in Using Derivative
Investments. The Fund can use derivatives to seek increased
returns or to try to hedge investment risks. In general
terms, a derivative investment is an investment contract
whose value depends on (or is derived from) the value of an
underlying asset, interest rate or index. Options, futures,
CMOs, and structured notes are examples of derivatives the
Fund can use.
If the issuer of the derivative does not pay the amount
due, the Fund can lose money on the investment. Also, the
underlying security or investment on which the derivative is
based, and the derivative itself, might not perform the way
the Manager expected it to perform. If that happens, the
Fund's share price could decline or the Fund could get less
income than expected. The Fund has limits on the amount of
particular types of derivatives it can hold. However, using
derivatives can cause the Fund to lose money on its
investment and/or increase the volatility of its share
prices.
How Risky is the Fund Overall? In the short term, domestic
and foreign stock markets can be volatile, and the price of
the Fund's shares will go up and down in response to those
changes. The Fund's income-oriented investments may help
cushion the Fund's total return from changes in stock
prices, but debt securities are subject to credit and
interest rate risks. The Fund may be less volatile than
funds that focus only on stock investments, but has more
risks than funds that focus solely on investment grade
bonds.
An investment in the Fund is not a deposit of any bank and
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the
risks of investing in the Fund, by showing changes in the
Fund's performance1 from year to year for the last ten
calendar years and by showing how the average annual total
returns of the Fund's shares compare to those of broad-based
market indices. The Fund's past investment performance is
not necessarily an indication of how the Fund will perform
in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing
annual total returns]
For the period from 1/1/99 through 3/31/99, the Fund's
cumulative return (not annualized) was 1.62%. Charges
imposed by the separate accounts that invest in the Fund are
not included in the calculations of return in this bar
chart, and if those charges were included, the returns would
be less than those shown. During the period shown in the bar
chart, the highest return (not annualized) for a calendar
quarter was 11.22% (4th Q '98) and the lowest return (not
annualized) for a calendar quarter was -10.46% (3rdh Q '98).
Average Annual Total Returns
for the periodS ended
December 31, 1998 1 Year 5 Years 10 Years
Oppenheimer Multiple 6.66% 11.43% 11.22%
Strategies Fund/VA
S&P 500 Index 28.60% 24.05% 19.19%
Lehman Bros.Aggregate Bond 8.69% 7.27% 9.26%
Index
The Fund's returns in the table measure the performance of a
hypothetical account without deducting charges imposed by
the separate account that invest in the Fund and assume that
all dividends and capital gains distributions have been
reinvested in additional shares. Because the Fund invests in
stocks, the Fund's performance is compared to the Standard &
Poor's 500 Index, an unmanaged index of U.S. equity
securities that is a measure of the general domestic stock
market. Because the Fund also invests in debt securities,
the Fund also compares its performance to the Lehman
Brothers Aggregate Bond Index, an unmanaged index of U.S.
corporate, government and mortgage-backed securities that is
a measure of the domestic bond market. However, it must be
remembered that the index performance reflects the
reinvestment of income but does not consider the effects of
transaction costs. Also, the Fund may have investments that
vary from the indices.
The Fund's total returns should not be expected to be the
same as the returns of other Oppenheimer funds, even if
funds have the same portfolio managers and/or similar names.
_________________
1 The Fund has two classes of shares. This Prospectus offers
only the class of shares that has no class name designation,
and the performance shown is for that class. The other class
of shares, Class 2, is not offered in this Prospectus.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of
the Fund's portfolio among the different types of permitted
investments will vary over time based upon the evaluation of
economic and market trends by the Manager. At times the Fund
may focus more on investing for capital appreciation with
less emphasis on income. At other times, for example when
stock markets are less stable, the Fund may increase the
relative emphasis of its portfolio in income-seeking
investments, such as bonds and money market instruments.
In seeking broad diversification of the Fund's
portfolio over asset classes, issuers and economies, the
portfolio managers consider overall and relative economic
conditions in U.S. and foreign markets. They seek broad
diversification by investing in different countries to help
moderate the special risks of investing in foreign
securities and lower-grade, high-yield debt securities. The
Fund's portfolio might not always include all of the
different types of investments described below. The
Statement of Additional Information contains more detailed
information about the Fund's investment policies and risks.
Stock and Other Equity Investments. The Fund can invest in
equity securities of issuers that may be of small, medium or
large size, to seek capital growth. Equity securities
include common stocks, preferred stocks and securities
convertible into common stock. Although some convertible
securities are a type of debt security, the Manager
considers some of those convertible securities to be "equity
equivalents" because of the conversion feature. In that
case, their rating has less impact on the investment
decision than in the case of other debt securities. The Fund
invests in securities issued by domestic or foreign
companies that the Manager believes have appreciation
potential or that are undervalued.
The Fund's equity investments may be exchange-traded or
over-the-counter securities. Over-the-counter securities may
have less liquidity than exchange-traded securities, and
stocks of companies with smaller capitalization have greater
risk of volatility than stocks of larger companies. The Fund
limits its investments in securities of small, unseasoned
issuers to not more than 5% of its net assets.
Debt Securities. The Fund can also invest in debt
securities, such as U.S. government securities, foreign
government securities, and foreign and domestic corporate
bonds, notes and debentures, for their income possibilities.
The debt securities the Fund buys may be rated by
nationally recognized rating organizations or they may be
unrated securities assigned a rating by the Manager. The
Fund's investments may be investment grade or below
investment grade in credit quality. The Manager does not
rely solely on ratings by rating organizations in selecting
debt securities but evaluates business and economic factors
affecting an issuer as well.
The Fund's foreign debt investments can be denominated
in U.S. dollars or in foreign currencies and can include
"Brady Bonds." Those are U.S. dollar-denominated debt
securities collateralized by zero-coupon U.S. Treasury
securities. They are typically issued by governments of
emerging market countries and are considered speculative
securities with higher risks of default. The Fund will buy
foreign currency only in connection with the purchase and
sale of foreign securities and not for speculation.
|X| U.S. Government Securities. The Fund can invest in
securities issued or guaranteed by the U.S. Treasury or
other U.S. government agencies or federally-chartered
corporate entities referred to as "instrumentalities". These
are referred to as "U.S. government securities" in this
Prospectus. They can include collateralized mortgage
obligations (CMOs) and other mortgage-related securities.
Mortgage-related securities are subject to additional risks
of unanticipated prepayments of the underlying mortgages,
which can affect the income stream to the Fund from those
securities as well as their values.
|_| U.S. Treasury Obligations. These include Treasury
bills (having maturities of one year or less when issued),
Treasury notes (having maturities of from one to ten years),
and Treasury bonds (having maturities of more than ten years
when issued). Treasury securities are backed by the full
faith and credit of the United States as to timely payments
of interest and repayment of principal. The Fund can buy U.
S. Treasury securities that have been "stripped" of their
interest coupons by a Federal Reserve Bank, zero-coupon U.S.
Treasury securities described below, and Treasury
Inflation-Protection Securities ("TIPS"). Although not
rated, Treasury obligations have little credit risk but
prior to their maturity are subject to interest rate risk.
|_| Obligations Issued or Guaranteed by U.S. Government
Agencies or Instrumentalities. These include direct
obligations and mortgage-related securities that have
different levels of credit support from the U.S. government.
Some are supported by the full faith and credit of the U.S.
government, such as Government National Mortgage Association
pass-through mortgage certificates (called "Ginnie Maes").
Some are supported by the right of the issuer to borrow from
the U.S. Treasury under certain circumstances, such as
Federal National Mortgage Association bonds ("Fannie Maes").
Others are supported only by the credit of the entity that
issued them, such as Federal Home Loan Mortgage Corporation
obligations ("Freddie Macs"). These have relatively little
credit risk.
|_| Mortgage-Related U.S. Government Securities. The
Fund can buy interests in pools of residential or commercial
mortgages, in the form of collateralized mortgage
obligations ("CMOs") and other "pass-through mortgage
securities. CMOs that are U.S. government securities have
collateral to secure payment of interest and principal. They
may be issued in different series each having different
interest rates and maturities. The collateral is either in
the form of mortgage pass-through certificates issued or
guaranteed by a U.S. agency or instrumentality or mortgage
loans insured by a U.S. government agency.
The prices and yields of CMOs are determined, in part,
by assumptions about the cash flows from the rate of
payments of the underlying mortgages. Changes in interest
rates may cause the rate of expected prepayments of those
mortgages to change. In general, prepayments increase when
general interest rates fall and decrease when interest rates
rise.
If prepayments of mortgages underlying a CMO occur
faster than expected when interest rates fall, the market
value and yield of the CMO could be reduced. Additionally,
the Fund may have to reinvest the prepayment proceeds in
other securities paying interest at lower rates, which could
reduce the Fund's yield.
When interest rates rise rapidly and if prepayments
occur more slowly than expected, a short- or medium-term CMO
can in effect become a long-term security, subject to
greater fluctuations in value. These prepayment risks can
make the prices of CMOs very volatile when interest rates
change. The prices of longer-term debt securities tend to
fluctuate more than those of shorter-term debt securities.
That volatility will affect the Fund's share prices.
|X| Private-Issuer Mortgage-Backed Securities. The Fund
can invest in mortgage-backed securities issued by private
issuers, which do not offer the credit backing of U.S.
government securities. Primarily these would include
multi-class debt or pass-through certificates secured by
mortgage loans. They may be issued by banks, savings and
loans, mortgage bankers and other non-governmental issuers.
Private issuer mortgage-backed securities are subject to the
credit risks of the issuers (as well as the interest rate
risks and prepayment risks of CMOs, discussed above),
although in some cases they may be supported by insurance or
guarantees.
|X| Asset-Backed Securities. The Fund can buy
asset-backed securities, which are fractional interests in
pools of loans collateralized by loans or other assets or
receivables. They are issued by trusts and special purpose
corporations that pass the income from the underlying pool
to the buyer of the interest. These securities are subject
to the risk of default by the issuer as well as by the
borrowers of the underlying loans in the pool.
|X| High-Yield, Lower-Grade Debt Securities. The Fund
can invest without limit in lower-grade, high yield debt
securities, including bonds, debentures, notes, preferred
stocks, loan participation interests, structured notes,
asset-backed securities, among others, to seek current
income. These securities are sometimes called "junk bonds."
The Fund has no requirements as to the maturity of the debt
securities it can buy, or as to the market capitalization
range of the issuers of those securities.
Lower-grade debt securities are those rated below "Baa"
by Moody's Investors Service or lower than "BBB" by Standard
& Poor's or that have similar ratings by other
nationally-recognized rating organizations. The Fund can
invest in securities rated as low as "C" or "D" or which are
in default at the time the Fund buys them. While securities
rated "Baa" by Moody's or "BBB" by S&P are considered
"investment grade," they have some speculative
characteristics.
While investment-grade securities are subject to risks
of non-payment of interest and principal, in general
high-yield lower-grade bonds, whether rated or unrated, have
greater risks than investment-grade securities. There may be
less of a market for them and therefore they may be harder
to sell at an acceptable price. The special risks these
securities are subject to mean that the Fund may not achieve
the expected income from them and that the Fund's net asset
value per share may be affected by declines in value of
these securities.
Money Market Instruments. The Fund can invest in money
market instruments, which are debt obligations having a
remaining maturity of 13 months or less. They include
short-term certificates of deposit, bankers' acceptances,
commercial paper (including variable amount master demand
notes), U.S. Government obligations, and other debt
instruments (including bonds) issued by corporations. These
securities may have variable or floating interest rates. The
Fund's investments in commercial paper in general will be
limited to paper in the top two rating categories of
Standard & Poor's, Moody's or other national rating
organizations.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance
contract based on an insurance company separate account to
qualify for favorable tax treatment under the Internal
Revenue Code, the underlying investments must follow special
diversification requirements that limit the percentage of
assets that can be invested in securities of particular
issuers. The Fund's investment program is managed to meet
those requirements, in addition to other diversification
requirements under the Internal Revenue Code and the
Investment Company Act that apply to publicly-sold mutual
funds.
Failure by the Fund to meet those special requirements
could cause earnings on a contract owner's interest in an
insurance company separate account to be taxable income.
Those diversification requirements might also limit, to some
degree, the Fund's investment decisions in a way that could
reduce its performance.
Can the Fund's Investment Objective and Policies Change? The
Fund's Board of Trustees can change non-fundamental
investment 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 Fund's objective is a
fundamental policy. Investment restrictions that are
fundamental policies are listed in the Statement of
Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of
Additional Information says that it is.
Portfolio Turnover. The Fund can engage in short-term
trading to try to achieve its objective. Portfolio turnover
affects brokerage costs the Fund pays. The Financial
Highlights table below shows the Fund's portfolio turnover
rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund
can also use the investment techniques and strategies
described below. The Fund might not always use all of the
different types of techniques and investments described
below. These techniques involve certain risks, although some
are designed to help reduce investment or market risks.
|X| Bank Loan Participation Agreements. The Fund can
invest in bank loan participation agreements. They provide
the Fund an undivided interest in a loan made by the issuing
bank in the proportion the Fund's interest bears to the
total principal amount of the loan. In evaluating the risk
of these investments, the Manager looks to the
creditworthiness of the borrower that is obligated to make
principal and interest payments on the loan. Not more than
5% of the Fund's net assets can be invested in participation
interests of any one borrower.
|X| Repurchase Agreements. The Fund can enter into
repurchase agreements. 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 could incur
costs in disposing of the collateral and might experience
losses if there is any delay in its ability to do so. There
is no limit on the amount of the Fund's net assets that may
be subject to repurchase agreements of 7 days or less.
|X| Zero-Coupon and "Stripped" Securities. Some of the
U.S. government debt securities the Fund buys are
zero-coupon bonds that pay no interest. They are issued at a
substantial discount from their face value. "Stripped"
securities are the separate income or principal components
of a debt security. Some CMOs or other mortgage-related
securities may be stripped, with each component having a
different proportion of principal or interest payments. One
class might receive all the interest and the other all the
principal payments. Zero-coupon and stripped securities are
subject to greater fluctuations in price from interest rate
changes than conventional interest-bearing securities. The
Fund may have to pay out the imputed income on zero-coupon
securities without receiving the actual cash currently.
Interest-only securities are particularly sensitive to
changes in interest rates.
The values of interest-only mortgage related securities
are also very sensitive to prepayments of underlying
mortgages. Principal-only securities are also sensitive to
changes in interest rates. When prepayments tend to fall,
the timing of the cash flows to these securities increases,
making them more sensitive to changes in interest rates. The
market for some of these securities may be limited, making
it difficult for the Fund to dispose of its holdings at an
acceptable price.
|X| Illiquid and Restricted Securities. Investments may
be illiquid because there is no active trading market for
them, 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 its resale or
which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund will not invest more
than 15% of its net assets in illiquid or restricted
securities. Certain restricted securities that are eligible
for resale to qualified institutional purchasers may not be
subject to that limit. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether
to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a
number of different kinds of "derivative" investments. In
the broadest sense, exchange-traded options, futures
contracts, mortgage-related securities and other hedging
instruments the Fund can use may be considered "derivative
investments." In addition to using hedging instruments, the
Fund may use other derivative investments because they offer
the potential for increased income and principal value.
Markets underlying securities and indices may move in a
direction not anticipated by the Manager. Interest rate and
stock market changes in the U.S. and abroad may also
influence the performance of derivatives. As a result of
these risks the Fund could realize less principal or income
from the investment than expected. Certain derivative
investments held by the Fund may be illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of
futures contracts, forward contracts and put and call
options, including options on futures and broadly-based
securities indices. These are all referred to as "hedging
instruments." The Fund is not required to use hedging
instruments to seek its objective. The Fund does not use
hedging instruments for speculative purposes, and has limits
on its use of them.
The Fund could buy and sell options, futures and
forward contracts for a number of purposes. It might do so
to try to manage its exposure to the possibility that the
prices of its portfolio securities may decline, or to
establish a position in the securities market as a temporary
substitute for purchasing individual securities. It might do
so to try to manage its exposure to changing interest rates.
Forward contracts can be used to try to manage foreign
currency risks on the Fund's foreign investments.
Options trading involves the payment of premiums and
has special tax effects on the Fund. There are also special
risks in particular hedging strategies. For example, if a
covered call written by the Fund is exercised on an
investment that has increased in value, the Fund will be
required to sell the investment at the call price and will
not be able to realize any profit if the investment has
increased in value above the call price. In writing a put,
there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price.
If the Manager used a hedging instrument at the wrong
time or judged market conditions incorrectly, the strategy
could reduce the Fund's return. The 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.
Year 2000 Risks. Because many computer software systems in
use today cannot distinguish the year 2000 from the year
1900, the markets for securities in which the Fund invests
could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used
for securities trading could result in settlement and
liquidity problems for the Fund and other investors. That
failure could have a negative impact on handling securities
trades, pricing and accounting services. Data processing
errors by government issuers of securities could result in
economic uncertainties, and those issuers might incur
substantial costs in attempting to prevent or fix such
errors, all of which could have a negative effect on the
Fund's investments and returns.
The Manager, the Distributor and the Transfer Agent have
been working on necessary changes to their computer systems
to deal with the year 2000 and expect that their systems
will be adapted in time for that event, although there
cannot be assurance of success. Additionally, the services
they provide depend on the interaction of their computer
systems with those of insurance companies with separate
accounts that invest in the Fund, brokers, information
services, the Fund's Custodian and other parties. Therefore,
any failure of the computer systems of those parties to deal
with the year 2000 might also have a negative effect on the
services they provide to the Fund. The extent of that risk
cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager,
OppenheimerFunds, Inc., chooses the Fund's 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 an Investment Advisory Agreement that states
the Manager's responsibilities. The Agreement sets forth the
fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds,
with assets of more than $100 billion as of March 31, 1999,
and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor,
New York, New York 10048-0203.
|X| Portfolio Manager. The Fund's management team
includes three portfolio managers. Each is a Vice President
of the Fund. They are the persons principally responsible
for the day-to-day management of the Fund's portfolio.
Richard H. Rubinstein, who is a Senior Vice President of the
Manager, has been a portfolio manager of the Fund since
April 1991. John Doney and Michael Levine, who are both Vice
Presidents of the Manager, have been portfolio managers of
the Fund since May 1999 and August 1998, respectively. Each
serves as an officer and manager of other Oppenheimer funds.
Prior to joining the Manager in June 1994, Mr. Levine was a
portfolio manager and research associate for Amas
Securities, Inc. Mr. Rubinstein has been a portfolio manager
of the Manager since June 1990 and Mr. Doney since June
1992.
|X| Advisory Fees. Under the Investment Advisory
Agreement, the Fund pays the Manager an advisory fee at an
annual rate that declines on additional assets as the Fund
grows: 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 over $800 million. The Fund's
management fee for its last fiscal year ended December 31,
1998, was 0.72% of the Fund's average annual net assets.
|X| Possible Conflicts of Interest. The Fund offers its
shares to separate accounts of different insurance companies
that are not affiliated with each other, as an investment
for their variable annuity, variable life and other
investment product contracts. While the Fund does not
foresee any disadvantages to contract owners from these
arrangements, it is possible that the interests of owners of
different contracts participating in the Fund through
different separate accounts might conflict. For example, a
conflict could arise because of differences in tax
treatment.
The Fund's Board has procedures to monitor the
portfolio for possible conflicts to determine what action
should be taken. If a conflict occurs, the Board might
require one or more participating insurance company separate
accounts to withdraw their investments in the Fund. That
could force the Fund to sell securities at disadvantageous
prices, and orderly portfolio management could be disrupted.
Also, the Board might refuse to sell shares of the Fund to a
particular separate account, or could terminate the offering
of the Fund's shares if required to do so by law or if it
would be in the best interests of the shareholders of the
Fund to do so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be
purchased only by separate investment accounts of
participating insurance companies as an underlying
investment for variable life insurance policies, variable
annuity contracts or other investment products. Individual
investors cannot buy shares of the Fund directly. Please
refer to the accompanying prospectus of the participating
insurance company for information on how to select the Fund
as an investment option for that variable life insurance
policy, variable annuity or other investment product. The
Fund reserves the right to refuse any purchase order when
the Manager believes it would be in the Fund's best
interests to do so.
Information about your investment in the Fund through your
variable annuity contract, variable life insurance policy or
other plan can be obtained only from your participating
insurance company or its servicing agent. The Fund's
Transfer Agent does not hold or have access to those
records. Instructions for buying or selling shares of the
Fund should be given to your insurance company or its
servicing agent, not directly to the Fund or its Transfer
Agent.
-- At What Price Are Shares Sold? Shares are sold at their
offering price, which is the net asset value per share. The
Fund does not impose any sales charge on purchases of its
shares. If there are any charges imposed under the variable
annuity, variable life or other contract through which Fund
shares are purchased, they are described in the accompanying
prospectus of the participating insurance company.
The net asset value per share is determined as of the
close of The New York Stock Exchange on each day that the
exchange is open for trading (referred to in this Prospectus
as a "regular business day"). The Exchange normally closes
at 4:00 P.M., New York time, but may close earlier on some
days. All references to time in this Prospectus mean "New
York time."
The net asset value per share is determined by dividing
the value of the Fund's net assets attributable to a class
of shares by the number of shares of that class that are
outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine the
Fund's net asset value, in general based on market values.
The Board has adopted special procedures for valuing
illiquid and restricted securities and securities for which
market values cannot be readily obtained. Because some
foreign securities trade in markets and on exchanges that
operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on
days when shares of the Fund cannot be purchased or
redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next
calculation of the net asset value per share that is made
after the insurance company (as the Fund's designated agent
to receive purchase orders) receives a purchase order from
its contract owners to purchase Fund shares on a regular
business day, provided that the Fund receives the order from
the insurance company, generally by 9:30 A.M. on the next
regular business day at the offices of its Transfer Agent in
Denver, Colorado.
-- Classes of Shares. The Fund offers two different classes
of shares. The class of shares offered by this Prospectus
has no class name designation. The other class is designated
as Class 2. The different classes of shares represent
investments in the same portfolio of securities but are
expected to have different expenses and share prices.
This prospectus may not be used to offer or sell Class
2 shares. A description of the Service Plans that affect
only Class 2 shares of the Fund is contained in the Fund's
prospectus that offers Class 2 shares. That prospectus may
be obtained without charge by contacting any participating
insurance company that offers Class 2 shares of the Fund as
an investment for its separate accounts. You can also obtain
a copy from OppenheimerFunds Distributor, Inc., by calling
toll-free at 1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the
participating insurance companies that hold Fund shares in
their separate accounts for the benefit of variable annuity
contracts, variable life insurance policies or other
investment products can place orders to redeem shares.
Contract holders and policy holders should not directly
contact the Fund or its transfer agent to request a
redemption of Fund shares. Contract owners should refer to
the withdrawal or surrender instructions in the accompanying
prospectus of the participating insurance company.
The share price that applies to a redemption order is
the next net asset value per share that is determined after
the participating insurance company (as the Fund's
designated agent) receives a redemption request on a regular
business day from its contract or policy holder, provided
that the Fund receives the order from the insurance company
by 9:30 A.M. the next regular business day at the office of
its Transfer Agent in Denver, Colorado. The Fund normally
sends payment by Federal Funds wire to the insurance
company's account the day after the Fund receives the order
(and no later than 7 days after the Fund's receipt of the
order). Under unusual circumstances determined by the
Securities and Exchange Commission, payment may be delayed
or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately
for each class of shares from net investment income on an
annual basis, and to pay those dividends in March on a date
selected by the Board of Trustees. The Fund has no fixed
dividend rate and cannot guarantee that it will pay any
dividends.
All dividends (and any capital gains distributions will
be reinvested automatically in additional Fund shares at net
asset value for the account of the participating insurance
company (unless the insurance company elects to have
dividends or distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the
sale of portfolio securities. If it does, it may make
distributions out of any net short-term or long-term capital
gains in March of each year. The Fund may make supplemental
distributions of dividends and capital gains following the
end of its fiscal year. There can be no assurance that the
Fund will pay any capital gains distributions in a
particular year.
Taxes. For a discussion of the tax status of a variable
annuity contract, a variable life insurance policy or other
investment product of a participating insurance company,
please refer to the accompanying prospectus of your
participating insurance company. Because shares of the Fund
may be purchased only through insurance company separate
accounts for variable annuity contracts, variable life
insurance policies or other investment products, dividends
paid by the Fund from net investment income and
distributions (if any) of net realized short-term and
long-term capital gains will be taxable, if at all, to the
participating insurance company.
This information is only a summary of certain federal
income tax information about an investment in Fund shares.
You should consult with your tax advisor or your
participating insurance company representative about the
effect of an investment in the Fund under your contract or
policy.
Financial Highlights
The Financial Highlights Table is presented to help you
understand the Fund's financial performance for the past
five years. Certain information reflects financial results
for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of
all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report, along with the Fund's financial
statements, is included in the Statement of Additional
Information, which is available on request.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights Year Ended December 31,
1998
1997 1996 1995 1994
==================================================================================================================
<S> <C>
<C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $17.01
$15.63 $14.55 $12.91 $13.88
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .71
.62 .72 .66 .63
Net realized and unrealized gain (loss) .42
1.95 1.45 2.00 (.90)
-----
- ----- ----- ------ ------
Total income (loss) from investment operations 1.13
2.57 2.17 2.66 (.27)
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.16)
(.61) (.74) (.65) (.60)
Distributions from net realized gain (.93)
(.58) (.35) (.37) (.10)
------
- ------ ------ ------ ------
Total dividends and distributions to shareholders (1.09)
(1.19) (1.09) (1.02) (.70)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.05
$17.01 $15.63 $14.55 $12.91
======
====== ====== ====== ======
==================================================================================================================
Total Return, at Net Asset Value(1) 6.66%
17.22% 15.50% 21.36% (1.95)%
==================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $622,333
$637,545 $484,285 $381,263 $292,067
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $640,131
$564,369 $428,277 $344,745 $279,949
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.05%
3.86% 4.89% 4.81% 4.90%
Expenses 0.76%
0.75% 0.77% 0.77% 0.56%
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 42.5%
41.9% 40.3% 39.0% 31.4%
</TABLE>
1. 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 returns are not annualized for periods of less
than one full year. Total return information does not
reflect expenses that apply at the separate account level or
to related insurance products. Inclusion of these charges
would reduce the total return figures for all periods shown.
2. 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. Purchases and sales of investment securities
(excluding short-term securities) for the period ended
December 31, 1998 were $235,924,766 and $252,937,156,
respectively.
For More Information About Oppenheimer Multiple Strategies Fund/VA:
The following additional information about Oppenheimer
Multiple Strategies Fund/VA is available without charge upon
request:
Statement of Additional Information
This document includes additional information about the Fund's investment
policies, risks, and operations.
It is incorporated by reference into this Prospectus (which means it is
legally part of this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and
performance is available in the Fund's Annual and
Semi-Annual Reports to shareholders. The Annual Report
includes a discussion of market conditions and investment
strategies that significantly affected the Fund's
performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the
Annual and Semi-Annual Reports, and other information about
the Fund: By Telephone: Call OppenheimerFunds Services
toll-free: 1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional
Information and other Fund documents and reports by visiting
the SEC's Public Reference Room in Washington, D.C. (Phone
1-800-SEC-0330) or the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about
the Fund or to make any representations about the Fund other
than what is contained in this Prospectus. This Prospectus
is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any
person in any state or other jurisdiction where it is
unlawful to make such an offer.
SEC File No. 811-4108
PR0670.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Multiple Strategies Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of
Oppenheimer Multiple Strategies Fund/VA (the "Fund") under
the heading "Annual Total Return (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the
Fund depicting the annual total returns of a hypothetical
$10,000 investment in shares of the Fund for each of the ten
most recent calendar years, without deducting separate
account expenses. Set forth below are the relevant data that
will appear on the bar chart:
Calendar
Year
Ended Annual Total Returns
12/31/89 15.76%
12/31/90 -1.90%
12/31/91 17.48%
12/31/92 8.99%
12/31/93 15.95%
12/31/94 -1.95%
12/31/95 21.36%
12/31/96 15.50%
12/31/97 17.22%
12/31/98 6.66%
<PAGE>
(OppenheimerFunds logo)
Oppenheimer Main Street Growth & Income Fund/VA
A series of Oppenheimer Variable Account Funds
Prospectus dated May 1, 1999
Oppenheimer Main Street Growth & Income Fund/VA is a mutual
fund that seeks high total return, which includes growth in
the value of its shares as well as current income, from
equity and debt securities. The Fund invests mainly in
common stocks of U.S. companies. Prior to May 1, 1999, this
Fund was named "Oppenheimer Growth & Income Fund". Shares of
the Fund are sold only as the underlying investment for
variable life insurance policies, variable annuity contracts
and other insurance company separate accounts. A prospectus
for the insurance product you have selected accompanies this
Prospectus and explains how to select shares of the Fund as
an investment under that insurance product. This Prospectus
contains important information about the Fund's objective,
its investment policies, strategies and risks. Please read
this Prospectus (and your insurance product prospectus)
carefully before you invest and keep them for future
reference about your account.
As with all mutual funds, the Securities and Exchange
Commission has not approved or disapproved the Fund's
securities nor has it determined that this Prospectus is
accurate or complete. It is a criminal offense to represent
otherwise.
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
About the Fund's Investments
How the Fund is Managed
Investing in the Fund
How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
About the Fund
The Fund's Objective and Investment Strategies
What Is the Fund's Investment Objective? The Fund's
objective is to seek high total return (which includes
growth in the value of its shares as well as current income)
from equity and debt securities.
What Does the Fund Invest In? The Fund invests mainly in
common stocks of U.S. companies, and can also invest in
other equity securities such as preferred stocks and
securities convertible into common stocks. Although the Fund
does not have any requirements as to the capitalization of
issuers in which it invests, the Fund's investment Manager,
OppenheimerFunds, Inc., currently emphasizes the stocks of
large-capitalization companies in the Fund's portfolio. At
times, the Fund may increase the relative emphasis of its
investments in small-cap and mid-cap stocks. While the Fund
can buy foreign securities and debt securities such as bonds
and notes, currently it does not emphasize those
investments.
The Fund can also use hedging instruments and certain
derivative investments to try to manage investment risks.
These investments are more fully explained in "About the
Fund's Investments," below.
|X| How Does the Manager Decide What Securities to Buy
or Sell? In selecting securities for purchase or sale by the
Fund, the Fund's portfolio managers use an investment
process that combines quantitative models, fundamental
research about particular securities and individual
judgment. While this process and the inter-relationship of
the factors used may change over time and its implementation
may vary in particular cases, in general the selection
process involves the use of:
Multi-factor quantitative models: These include a group
of "top-down" models that analyze data such as relative
valuations, relative price trends, interest rates and the
shape of the yield curve. These help direct portfolio
emphasis by market capitalization (small, mid, or large),
industries, and value or growth styles. A group of "bottom
up" models helps to rank stocks in a universe typically
including 2000 stocks, selecting stocks for relative
attractiveness by analyzing fundamental stock and company
characteristics.
o Fundamental research: The portfolio managers use internal
research and analysis by other market analysts, with
emphasis on current company news and industry-related
events.
o Judgment: The portfolio is then continuously rebalanced by
the portfolio managers, using all of the tools described
above.
Who Is the Fund Designed For? The Fund's shares are
available only as an investment option under certain
variable annuity contracts, variable life insurance policies
and investment plans offered through insurance company
separate accounts of participating insurance companies, for
investors seeking high total return from their investment
over the long term. Those investors should be willing to
assume the risks of short-term share price fluctuations that
are typical for a fund with significant investments in
stocks. Since the Fund's income level will fluctuate, it is
not designed for investors needing an assured level of
current income.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's
investments are subject to changes in their value from a
number of factors. They include changes in general stock and
bond market movements (this is referred to as "market
risk"), or the change in value of particular stocks or bonds
because of an event affecting the issuer (in the case of
bonds, this is known as "credit risk").
At times, the Fund may increase the relative emphasis
of its investments in a particular industry compared to the
weighting of that industry in the S&P 500 Index, which the
Fund uses as a performance benchmark. Therefore, it may be
subject to the risks that economic, political or other
events can have a negative effect on the values of
securities of issuers in that industry (this is referred to
as "industry risk"). Changes in interest rates can also
affect bond prices (this is known as "interest rate risk").
These risks collectively form the risk profile of the
Fund, and can affect the value of the Fund's investments,
its investment performance and its price per share. These
risks mean that you can lose money by investing in the Fund.
When you redeem your shares, they may be worth more or less
than what you paid for them.
The Manager tries to reduce risks by carefully
researching securities before they are purchased. The Fund
attempts to reduce its exposure to market risks by
diversifying its investments, that is, by not holding a
substantial percentage of stock of any one company and by
not investing too great a percentage of the Fund's assets in
any one issuer. Also, the Fund does not concentrate 25% or
more of its investments in any one industry.
However, changes in the overall market prices of
securities and the income they pay can occur at any time.
The share price of the Fund will change daily based on
changes in market prices of securities and market conditions
and in response to other economic events. There is no
assurance that the Fund will achieve its investment
objective.
|X| Risks of Investing in Stocks. Stocks fluctuate in
price, and their short-term volatility at times may be
great. Because the Fund currently emphasizes investments in
common stocks, the value of the Fund's portfolio will be
affected by changes in the stock markets. Market risk will
affect the Fund"s net asset value per share, which will
fluctuate as the values of the Fund's portfolio securities
change.
A variety of factors can affect the price of a
particular stock and the prices of individual stocks do not
all move in the same direction uniformly or at the same
time. Different stock markets may behave differently from
each other. In particular, because the Fund currently
intends to focus its investments in stocks of U.S. issuers,
it will be affected primarily to changes in U.S. stock
markets.
Additionally, stocks of issuers in a particular
industry may be affected by changes in economic conditions
that affect that industry more than others, or by changes in
government regulations, availability of basic resources or
supplies, or other events. Other factors can affect a
particular stock's price, such as poor earnings reports by
the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations
affecting the issuer. The Fund can change the relative
emphasis of its investment focus from time to time on small
and medium-size companies (having a market capitalization of
less than $5 billion), which may have more volatile stock
prices than large companies.
How Risky is the Fund Overall? In the short term, stock
markets can be volatile, and the price of the Fund's shares
will go up and down in response to those changes. The Fund's
income-oriented investments, if any, may help cushion the
Fund's total return from changes in stock prices, but debt
securities are subject to credit and interest rate risks and
are not the main focus of the Fund. The Fund may be less
volatile than funds that focus only on small-cap, foreign or
sector stock investments, but may be more volatile than
funds that place more emphasis on debt securities,
particularly on investment grade bonds.
An investment in the Fund is not a deposit of any bank and
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the
risks of investing in the Fund, by showing changes in the
Fund's performance1 for the full calendar year since the
Fund's inception and by showing how the average annual total
returns of the Fund's shares compare to those of a
broad-based market index. The Fund's past investment
performance is not necessarily an indication of how the Fund
will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
For the period from 1/1/99 through 3/31/99, the Fund's
cumulative return (not annualized) was 3.87%. Charges
imposed by the separate accounts that invest in the Fund are
not included in the calculations of return in this bar
chart, and if those charges were included, the returns would
be less than those shown. During the period shown in the bar
chart, the highest return (not annualized) for a calendar
quarter was 19.28% ( 4th Q '98) and the lowest return (not
annualized) for a calendar quarter was -22.38% ( 3rd Q '98).
Average Annual Total Returns
for the periods ended 1 Year Life of Fund*
December 31, 1998
Oppenheimer Main Street 4.70% 27.00%
Growth & Income Fund/VA
S&P 500 Index 28.60% 28.61%
*The Fund's inception date was 7/5/95. The "life of class" index performance
is shown from 6/30/95.
The Fund's returns in the table measure the performance of a
hypothetical account without deducting charges imposed by
the separate accounts that invest in the Fund and assume
that all dividends and capital gains distributions have been
reinvested in additional shares. Because the Fund invests
mainly in stocks, the Fund's performance is compared to the
Standard & Poor's 500 Index, an unmanaged index of U.S.
equity securities. However, it must be remembered that the
index performance reflects the reinvestment of income but
does not consider the effects of capital gains or
transaction costs. Also, the Fund may have investments that
vary from the index.
_____________________
1 The Fund has two classes of shares. This Prospectus offers
only the class of shares that has no class name designation,
and the performance shown is for that class. The other class
of shares, Class 2, is not offered in this Prospectus.
The Fund's total returns should not be expected to be the
same as the returns of other Oppenheimer funds, even if both
funds have the same portfolio managers and/or similar names.
About the Fund's Investments
The Fund's Principal Investment Policies. The allocation of
the Fund's portfolio among the different types of permitted
investments will vary over time based upon the evaluation of
economic and market trends by the Manager. The Fund's
portfolio might not always include all the different types
of investments described below. The Statement of Additional
Information contains more detailed information about the
Fund's investment policies and risks.
|X| Stock and Other Equity Investments. The Fund invests
mainly in common stocks. It can also buy other equity
securities. Equity securities include common stocks,
preferred stocks and securities convertible into common
stock. Although some convertible securities are a type of
debt security, the Manager considers some of those
convertible securities to be "equity equivalents" because of
the conversion feature and their rating has less impact on
the investment decision than in the case of other debt
securities. The Fund invests in securities issued by
companies that the Manager believes have appreciation
potential.
The Fund"s equity investments may be exchange-traded or
over-the-counter securities. Over-the-counter securities may
have less liquidity than exchange-traded securities, and
stocks of companies with smaller capitalization have greater
risk of volatility than stocks of larger companies.
|X| Special Portfolio Diversification Requirements. To
enable a variable annuity or variable life insurance
contract based on an insurance company separate account to
qualify for favorable tax treatment under the Internal
Revenue Code, the underlying investments must follow special
diversification requirements that limit the percentage of
assets that can be invested in securities of particular
issuers. The Fund's investment program is managed to meet
those requirements, in addition to other diversification
requirements under the Internal Revenue Code and the
Investment Company Act that apply to publicly-sold mutual
funds.
Failure by the Fund to meet those special requirements
could cause earnings on a contract owner's interest in an
insurance company separate account to be taxable income.
Those diversification requirements might also limit, to some
degree, the Fund's investment decisions in a way that could
reduce its performance.
Can the Fund's Investment Objective and Policies Change? The
Fund's Board of Trustees can change non-fundamental
investment 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 Fund's objective is a
fundamental policy. Investment restrictions that are
fundamental policies are listed in the Statement of
Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of
Additional Information says that it is.
Portfolio Turnover. The Fund can engage in short-term
trading to try to achieve its objective. Portfolio turnover
affects brokerage costs the Fund pays. The Financial
Highlights table at the end of this Prospectus shows the
Fund's portfolio turnover rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund
can also use the investment techniques and strategies
described below. The Fund might not always use all of the
different types of techniques and investments described
below. These techniques involve certain risks, although some
are designed to help reduce investment or market risks.
|X| Debt Securities. The Fund can also invest in debt
securities, such as U.S. government securities, foreign
government securities, and foreign and domestic corporate
bonds, notes and debentures, for their income possibilities.
Currently the Fund does not invest a significant percentage
of its assets in debt securities, although their relative
emphasis in the portfolio may change if the Manager believes
they offer opportunities to increase the Fund's total
return.
The debt securities the Fund buys may be rated by
nationally recognized rating organizations or they may be
unrated securities assigned a rating by the Manager. The
Fund's investments may be above or below investment grade in
credit quality. The Manager does not rely solely on ratings
by rating organizations in selecting debt securities but
evaluates business and economic factors affecting an issuer
as well.
|X| Risks of Foreign Investing. The Fund can buy
securities issued by companies or governments in any
country, including developed and underdeveloped countries.
There are no limits on the amounts it can invest in foreign
securities, but the Fund currently does not expect to have
substantial investments in foreign securities. While foreign
securities offer special investment opportunities, there are
also special risks.
The change in value of a foreign currency against the
U.S. dollar will result in a change in the U.S. dollar value
of securities denominated in that foreign currency. Foreign
issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to.
The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary
policy in the U.S. or abroad, or other political and
economic factors.
|_| Interest Rate Risks. The values of debt securities are
subject to change when prevailing interest rates change.
When interest rates fall, the values of already-issued debt
securities generally rise. When interest rates rise, the
values of already-issued debt securities generally fall. The
magnitude of these fluctuations will typically be greater
for longer-term debt securities than shorter-term debt
securities. The Fund's share prices can go up or down when
interest rates change because of the effect of the changes
on the value of the Fund's investments in debt securities.
|_| Credit Risk. Debt securities are subject to credit
risk. Credit risk relates to the ability of the issuer of a
security to make interest and principal payments on the
security as they become due. If the issuer fails to pay
interest, the Fund's income might be reduced and if the
issuer fails to repay principal, the value of that security
and of the Fund's shares might be reduced. While the Fund's
investments in U.S. government securities are subject to
little credit risk, the Fund's other investments in debt
securities are subject to risks of default.
|_| U.S. Government Securities. The Fund can invest in
securities issued or guaranteed by the U.S. Treasury or
other U.S. government agencies or federally-chartered
corporate entities referred to as "instrumentalities". These
are referred to as "U.S. government securities" in this
Prospectus. Although not rated, Treasury obligations have
little credit risk but prior to their maturity are subject
to interest rate risk.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The
Fund can 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 might be a loss to
the Fund if the value of the security declines prior to the
settlement date. No income accrues to the Fund on a
when-issued security until the Fund receives the security on
settlement of the trade.
|X| Illiquid and Restricted Securities. Investments may be
illiquid because there is no active trading market for them,
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 its resale or
which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund will not invest more
than 15% of its net assets in illiquid or restricted
securities. Certain restricted securities that are eligible
for resale to qualified institutional purchasers may not be
subject to that limit. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether
to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a number
of different kinds of "derivative" investments. In general
terms, a derivative investment is an investment contract
whose value depends on (or is derived from) the value of an
underlying asset, interest rate or index. In the broadest
sense, exchange-traded options, futures contracts,
mortgage-related securities and other hedging instruments
the Fund can use may be considered "derivative investments."
In addition to using hedging instruments, the Fund may use
other derivative investments because they offer the
potential for increased income and principal value.
|X| There Are Special Risks in Using Derivative Investments.
If the issuer of the derivative does not pay the amount due,
the Fund can lose money on the investment. Also, the
underlying security or investment on which the derivative is
based, and the derivative itself, might not perform the way
the Manager expected it to perform. If that happens, the
Fund's share price could decline or the Fund could get less
income than expected. The Fund has limits on the amount of
particular types of derivatives it can hold. However, using
derivatives can cause the Fund to lose money on its
investment and/or increase the volatility of its share
prices.
Markets underlying securities and indices may move in a
direction not anticipated by the Manager. Interest rate and
stock market changes in the U.S. and abroad may also
influence the performance of derivatives. As a result of
these risks the Fund could realize less principal or income
from the investment than expected. Certain derivative
investments held by the Fund may be illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of
futures contracts, put and call options, forward contracts
and options on futures and broadly-based securities indices.
These are all referred to as "hedging instruments." The Fund
is not required to use hedging instruments to seek its
objective. The Fund does not use hedging instruments for
speculative purposes, and has limits on its use of them.
The Fund could buy and sell options, futures and
forward contracts for a number of purposes. It might do so
to try to manage its exposure to the possibility that the
prices of its portfolio securities may decline, or to
establish a position in the securities market as a temporary
substitute for purchasing individual securities. It might do
so to try to manage its exposure to changing interest rates.
Options trading involves the payment of premiums and
has special tax effects on the Fund. There are also special
risks in particular hedging strategies. For example, if a
covered call written by the Fund is exercised on an
investment that has increased in value, the Fund will be
required to sell the investment at the call price and will
not be able to realize any profit if the investment has
increased in value above the call price. In writing a put,
there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price.
If the Manager used a hedging instrument at the wrong
time or judged market conditions incorrectly, the strategy
could reduce the Fund's return. The 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.
Temporary Defensive Investments. In times of unstable market
or economic conditions, the Fund can invest up to 100% of
its assets in temporary defensive investments. Generally
they would be U.S. government securities, highly-rated
commercial paper, bank deposits or repurchase agreements.
The Fund may also hold these types of securities pending the
investment of proceeds from the sale of Fund shares or
portfolio securities or to meet anticipated redemptions of
Fund shares. To the extent the Fund invests defensively in
these securities, it may not achieve its investment
objective of high total return.
Year 2000 Risks. Because many computer software systems in
use today cannot distinguish the year 2000 from the year
1900, the markets for securities in which the Fund invests
could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used
for securities trading could result in settlement and
liquidity problems for the Fund and other investors. That
failure could have a negative impact on handling securities
trades, pricing and accounting services. Data processing
errors by government issuers of securities could result in
economic uncertainties, and those issuers might incur
substantial costs in attempting to prevent or fix such
errors, all of which could have a negative effect on the
Fund's investments and returns.
The Manager, the Distributor and the Transfer Agent
have been working on necessary changes to their computer
systems to deal with the year 2000 and expect that their
systems will be adapted in time for that event, although
there cannot be assurance of success. Additionally, the
services they provide depend on the interaction of their
computer systems with those of insurance companies with
separate accounts that invest in the Fund, brokers,
information services, the Fund's Custodian and other
parties. Therefore, any failure of the computer systems of
those parties to deal with the year 2000 might also have a
negative effect on the services they provide to the Fund.
The extent of that risk cannot be ascertained at this time.
An investment in the Fund is not a deposit of any bank and
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
How the Fund Is Managed
The Manager. The Fund's investment Manager,
OppenheimerFunds, Inc., chooses the Fund's 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 an Investment Advisory Agreement that states
the Manager's responsibilities. The Agreement sets the fees
paid by the Fund to the Manager and describes the expenses
that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds,
with assets of more than $100 billion as of March 31, 1999,
and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor,
New York, New York 10048-0203.
|X| Portfolio Managers. The portfolio managers of the
Fund are Charles Albers and Nikolaos Monoyios, who are also
Vice Presidents of the Fund. They have been responsible for
the day-to-day management of the Fund's portfolio since May
1, 1999. Mr. Albers is a Senior Vice President of the
Manager and Mr. Monoyios is a Vice President of the Manager.
Prior to joining the Manager in April, 1998, they were
portfolio managers at Guardian Investor Services (from 1972
and 1979, respectively), the investment management
subsidiary of The Guardian Life Insurance Company.
|X| Advisory Fees. Under the Investment Advisory
Agreement, the Fund pays the Manager an advisory fee at an
annual rate that declines on additional assets as the Fund
grows: 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 over $800 million. The Fund's
management fee for its last fiscal year ended December 31,
1998, was 0.74% of the Fund's average annual net assets.
|X| Possible Conflicts of Interest. The Fund offers its
shares to separate accounts of different insurance companies
that are not affiliated with each other, as an investment
for their variable annuity, variable life and other
investment product contracts. While the Fund does not
foresee any disadvantages to contract owners from these
arrangements, it is possible that the interests of owners of
different contracts participating in the Fund through
different separate accounts might conflict. For example, a
conflict could arise because of differences in tax
treatment.
The Fund's Board has procedures to monitor the
portfolio for possible conflicts to determine what action
should be taken. If a conflict occurs, the Board might
require one or more participating insurance company separate
accounts to withdraw their investments in the Fund. That
could force the Fund to sell securities at disadvantageous
prices, and orderly portfolio management could be disrupted.
Also, the Board might refuse to sell shares of the Fund to a
particular separate account, or could terminate the offering
of the Fund's shares if required to do so by law or if it
would be in the best interests of the shareholders of the
Fund to do so.
Investing in the Fund
How to Buy and Sell Shares
How Are Shares Purchased? Shares of the Fund may be
purchased only by separate investment accounts of
participating insurance companies as an underlying
investment for variable life insurance policies, variable
annuity contracts or other investment products. Individual
investors cannot buy shares of the Fund directly. Please
refer to the accompanying prospectus of the participating
insurance company for information on how to select the Fund
as an investment option for that variable life insurance
policy, variable annuity or other investment product. The
Fund reserves the right to refuse any purchase order when
the Manager believes it would be in the Fund's best
interests to do so.
Information about your investment in the Fund through your
variable annuity contract, variable life insurance policy or
other plan can be obtained only from your participating
insurance company or its servicing agent. The Fund's
Transfer Agent does not hold or have access to those
records. Instructions for buying or selling shares of the
Fund should be given to your insurance company or its
servicing agent, not directly to the Fund or its Transfer
Agent.
|X| At What Price Are Shares Sold? Shares are sold at
their offering price, which is the net asset value per
share. The Fund does not impose any sales charge on
purchases of its shares. If there are any charges imposed
under the variable annuity, variable life or other contract
through which Fund shares are purchased, they are described
in the accompanying prospectus of the participating
insurance company.
The net asset value per share is determined as of the
close of The New York Stock Exchange on each day that the
exchange is open for trading (referred to in this Prospectus
as a "regular business day"). The Exchange normally closes
at 4:00 P.M., New York time, but may close earlier on some
days. All references to time in this Prospectus mean "New
York time."
The net asset value per share is determined by dividing
the value of the Fund's net assets attributable to a class
of shares by the number of shares of that class that are
outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine the
Fund's net asset value, in general based on market values.
The Board has adopted special procedures for valuing
illiquid and restricted securities and securities for which
market values cannot be readily obtained. Because some
foreign securities trade in markets and on exchanges that
operate on weekends and U.S. holidays, the values of some of
the Fund's foreign investments might change significantly on
days when shares of the Fund cannot be purchased or
redeemed.
The offering price that applies to an order from a
participating insurance company is based on the next
calculation of the net asset value per share that is made
after the insurance company (as the Fund's designated agent
to receive purchase orders) receives a purchase order from
its contract owners to purchase Fund shares on a regular
business day, provided that the Fund receives the order from
the insurance company, generally by 9:30 A.M. on the next
regular business day at the offices of its Transfer Agent in
Denver, Colorado.
|X| Classes of Shares. The Fund offers two different
classes of shares. The class of shares offered by this
Prospectus has no class "name" designation. The other class
is designated as Class 2. The different classes of shares
represent investments in the same portfolio of securities
but are expected to be subject to different expenses and
will likely have different share prices.
This prospectus may not be used to offer or sell Class
2 shares. A description of the Service Plans that affect
only Class 2 shares of the Fund is contained in the
Prospectus that offers Class 2 shares. That prospectus may
be obtained without charge when Class 2 shares are offered
by contacting any participating insurance sponsor that
offers Class 2 shares of the Funds as an investment for its
separate accounts. You can also obtain a copy from
OppenheimerFunds Distributor, Inc., by calling toll-free
1-888-470-0861.
How Are Shares Redeemed? As with purchases, only the
participating insurance companies that hold Fund shares in
their separate accounts for the benefit of variable annuity
contracts, variable life insurance policies or other
investment products can place orders to redeem shares.
Contract holders and policy holders should not directly
contact the Fund or its transfer agent to request a
redemption of Fund shares. Contract owners should refer to
the withdrawal or surrender instructions in the accompanying
prospectus of the participating insurance company.
The share price that applies to a redemption order is the
next net asset value per share that is determined after the
participating insurance company (as the Fund's designated
agent) receives a redemption request on a regular business
day from its contract or policy holder, provided that the
Fund receives the order from the insurance company by 9:30
A.M. the next regular business day at the office of its
Transfer Agent in Denver, Colorado. The Fund normally sends
payment by Federal Funds wire to the insurance company's
account the day after the Fund receives the order (and no
later than 7 days after the Fund's receipt of the order).
Under unusual circumstances determined by the Securities and
Exchange Commission, payment may be delayed or suspended.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately
for each class of shares from net investment income on an
annual basis, and to pay those dividends in March on a date
selected by the Board of Trustees. The Fund has no fixed
dividend rate and cannot guarantee that it will pay any
dividends.
All dividends (and any capital gains distributions will
be reinvested automatically in additional Fund shares at net
asset value for the account of the participating insurance
company (unless the insurance company elects to have
dividends or distributions paid in cash).
Capital Gains. The Fund may realize capital gains on the
sale of portfolio securities. If it does, it may make
distributions out of any net short-term or long-term capital
gains in March of each year. The Fund may make supplemental
distributions of dividends and capital gains following the
end of its fiscal year. There can be no assurance that the
Fund will pay any capital gains distributions in a
particular year.
Taxes. For a discussion of the tax status of a variable
annuity contract, a variable life insurance policy or other
investment product of a participating insurance company,
please refer to the accompanying prospectus of your
participating insurance company. Because shares of the Fund
may be purchased only through insurance company separate
accounts for variable annuity contracts, variable life
insurance policies or other investment products, dividends
paid by the Fund from net investment income and
distributions (if any) of net realized short-term and
long-term capital gains will be taxable, if at all, to the
participating insurance company.
This information is only a summary of certain federal
income tax information about an investment in Fund shares.
You should consult with your tax advisor or your
participating insurance company representative about the
effect of an investment in the Fund under your contract or
policy.
Financial Highlights
The Financial Highlights Table is presented to help you
understand the Fund's financial performance since inception.
Certain information reflects financial results for a single
Fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been
audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report, along with the Fund's financial
statements, is included in the Statement of Additional
Information, which is available on request.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights Year Ended December
31,
1998
1997 1996 1995(1)
========================================================================================================
<S> <C>
<C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $20.58
$16.37 $12.51 $10.00
- --------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .13
.19 .14 .01
Net realized and unrealized gain .92
4.91 3.91 2.52
------
- ------ ------- ------
Total income from investment operations 1.05
5.10 4.05 2.53
- -------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.05)
(.17) (.14) (.02)
Distributions from net realized gain (1.10)
(.72) (.05) --
------
- ------ ------- ------
Total dividends and distributions to shareholders (1.15)
(.89) (.19) (.02)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.48
$20.58 $16.37 $12.51
======
====== ====== ======
========================================================================================================
Total Return, at Net Asset Value(2) 4.70%
32.48% 32.51% 25.25%
========================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 308,353 $
155,368 $ 47,009 $ 4,288
- -------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 234,306 $
94,906 $ 21,562 $ 1,809
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.74%
1.15% 1.41% 0.50%(3)
Expenses 0.79%
0.83% 1.00% 2.07%(3)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 85.7%
78.5% 112.6% 23.7%
</TABLE>
1. For the period from July 5, 1995 (commencement of
operations) to December 31, 1995.
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 returns are not annualized for periods of less
than one full year. Total return information does not
reflect expenses that apply at the separate account level or
to related insurance products. Inclusion of these charges
would reduce 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. Purchases and sales of investment
securities (excluding short-term securities) for the period
ended December 31, 1998 were $287,405,235 and $199,780,365,
respectively.
For More Information About Oppenheimer Main Street Growth & Income Fund/VA:
The following additional information about Oppenheimer Main
Street Income & Growth Fund/VA is available without charge
upon request:
Statement of Additional Information
This document includes additional information about the
Fund's investment policies, risks, and operations. It is
incorporated by reference into this Prospectus (which means
it is legally part of this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and
performance is available in the Fund's Annual and
Semi-Annual Reports to shareholders. The Annual Report
includes a discussion of market conditions and investment
strategies that significantly affected the Fund's
performance during its last fiscal year. The report refers
to the Fund as "Oppenheimer Growth & Income Fund" (its name
prior to May 1, 1999).
How to Get More Information:
You can request the Statement of Additional Information, the
Annual and Semi-Annual Reports, and other information about
the Fund: By Telephone: Call OppenheimerFunds Services
toll-free: 1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
You can also obtain copies of the Statement of Additional
Information and other Fund documents and reports by visiting
the SEC's Public Reference Room in Washington, D.C. (Phone
1-800-SEC-0330) or the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about
the Fund or to make any representations about the Fund other
than what is contained in this Prospectus. This Prospectus
is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any
person in any state or other jurisdiction where it is
unlawful to make such an offer.
SEC File No. 811-4108
PR0650.001.0599 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Main Street Growth & Income Fund
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of
Oppenheimer Main Street Growth & Income Fund (the "Fund")
under the heading "Annual Total Return (as of 12/31 each
year)":
A bar chart will be included in the Prospectus of the
Fund depicting the annual total returns of a hypothetical
investment in shares of the Fund for each of the three most
recent calendar years, without deducting separate account
expenses. Set forth below are the relevant data that will
appear on the bar chart:
Calendar
Year
Ended Annual Total Returns
12/31/96 32.51%
12/31/97 32.48%
12/31/98 4.70%
<PAGE>
Oppenheimer Variable Account Funds
6803 S. Tucson Way, Englewood, Colorado 80112
1-888-470-0861
Statement of Additional Information dated May 1, 1999
OPPENHEIMER VARIABLE ACCOUNT FUNDS (the "Trust") is an investment company
consisting of ten separate Funds (the "Funds"):
Oppenheimer Money Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Bond Fund/VA
Oppenheimer Strategic Bond Fund/VA
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Capital Appreciation Fund/VA Prior to May 1, 1999, this Fund was
named "Oppenheimer Growth Fund."
Oppenheimer Small Cap Growth Fund/VA
Oppenheimer Global Securities Fund/VA
Oppenheimer Multiple Strategies Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA Prior to May 1, 1999, this
Fund was named "Oppenheimer Growth & Income Fund."
Shares of the Funds are sold to provide benefits under variable life
insurance policies and variable annuity contracts and other
insurance company separate accounts, as described in the Prospectuses for the
Funds and for the insurance products you have selected.
This Statement of Additional Information is not a
Prospectus. This document contains additional information
about the Funds and the Trust, and supplements information
in the Funds' Prospectuses dated May 1, 1999. It should be
read together with the Prospectuses. You can obtain a
Prospectus by writing to the Funds' Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver,
Colorado 80217, or by calling the Transfer Agent at the
toll-free number shown above.
Contents
Page
About the Funds
Additional Information About the Funds' Investment Policies and Risks
The Funds' Investment Policies
Other Investment Techniques and Strategies
Investment Restrictions
How the Funds are Managed
Organization and History
Trustees and Officers
The Manager
Brokerage Policies of the Funds
Distribution and Service Plans
Performance of the Funds
About Your Account
How To Buy and Sell Shares
Dividends, Capital Gains and Taxes
Additional Information About the Funds
Financial Information About the Funds
Independent Auditors' Report
Financial Statements
Appendix A: Ratings Definitions
Appendix B: Industry Classifications
Appendix C: Major Shareholders
ABOUT THE FUNDS
Additional Information About the Funds' Investment Policies and Risks
The investment objective, the principal investment
policies and the main risks of the Funds are described in
the Prospectus. This Statement of Additional Information
contains supplemental information about those policies and
risks and the types of securities that the Funds' investment
Manager, OppenheimerFunds, Inc., can select for the Funds.
Additional information is also provided about the strategies
that each Fund may use to try to achieve its objective. The
full name of each Fund is shown on the cover page, after
which the word "Oppenheimer" is omitted from these names to
conserve space.
The Funds' Investment Policies. The composition of the
Funds' portfolio and the techniques and strategies that the
Manager uses in selecting portfolio securities will vary
over time. The Funds are not required to use all of the
investment techniques and strategies described below at all
times in seeking their goals. They may use some of the
special investment techniques and strategies at some times
or not at all.
In selecting securities for the Funds' portfolios, the
Manager evaluates the merits of particular securities
primarily through the exercise of its own investment
analysis. That process may include, among other things,
evaluation of the issuer's historical operations, prospects
for the industry of which the issuer is part, the issuer's
financial condition, its pending product developments and
business (and those of competitors), the effect of general
market and economic conditions on the issuer's business, and
legislative proposals that might affect the issuer.
The Funds are categorized by the types of investment
they make. Capital Appreciation Fund/VA, Aggressive Growth
Fund/VA, Small Cap Growth Fund/VA and Global Securities
Fund/VA can be categorized as "Equity Funds." High Income
Fund/VA, Bond Fund/VA, and Strategic Bond Fund/VA can be
categorized as "Fixed Income Funds." Multiple Strategies
Fund/VA and Main Street Growth & Income Fund/VA share the
investment characteristics (and certain of the Investment
Policies) of both the Equity Funds and the Fixed Income
Funds, depending upon the allocations determined from time
to time by their portfolio managers. Money Fund's/VA
investment policies are explained separately; however,
discussion below about investment restrictions, repurchase
agreements, illiquid securities and loans of portfolio
securities also apply to Money Fund/VA.
|X| Investments in Equity Securities. The Equity Funds
focus their investments in equity securities, which include
common stocks, preferred stocks, rights and warrants, and
securities convertible into common stock. Certain equity
securities may be selected not only for their appreciation
possibilities but because they may provide dividend income.
Small-cap growth companies may offer greater
opportunities for capital appreciation than securities of
large, more established companies. However, these securities
also involve greater risks than securities of larger
companies. Securities of small capitalization issuers may be
subject to greater price volatility in general than
securities of large-cap and mid-cap companies. Therefore, to
the degree that a Fund has investments in smaller
capitalization companies at times of market volatility, that
Fund's share price may fluctuate more. Those investments may
be limited to the extent the Manager believes that such
investments would be inconsistent with the goal of
preservation of principal.
|_| Growth Companies. The Equity Funds in particular
may invest in securities of "growth" companies. Growth
companies are those companies that the Manager believes are
entering into a growth cycle in their business, with the
expectation that their stock will increase in value. They
may be established companies as well as newer companies in
the development stage. Growth companies may have a variety
of characteristics that in the Manager's view define them as
"growth" issuers.
They may be generating or applying new technologies,
new or improved distribution techniques or new services.
They may own or develop natural resources. They may be
companies that can benefit from changing consumer demands or
lifestyles, or companies that have projected earnings in
excess of the average for their sector or industry. In each
case, they have prospects that the Manager believes are
favorable for the long term. The portfolio managers of the
Funds look for growth companies with strong, capable
management sound financial and accounting policies,
successful product development and marketing and other
factors.
|_| Value Investing. In selecting equity investments,
the portfolio managers for the Equity Funds in particular
may from time to time use a value investing style. In using
a value approach, the portfolio managers seek stock and
other equity securities that appear to be temporarily
undervalued, by various measures, such as price/earnings
ratios, rather than seeking stocks of "growth" issuers. This
approach is subject to change and might not necessarily be
used in all cases. Value investing seeks stocks having
prices that are low in relation to their real worth or
future prospects, in the hope that a Fund will realize
appreciation in the value of its holdings when other
investors realize the intrinsic value of the stock.
Using value investing requires research as to the
issuer's underlying financial condition and prospects. Some
of the measures that can be used to identify these
securities include, among others:
|_| Price/Earnings ratio, which is the stock's price divided
by its earnings per share. A stock having a price/earnings
ratio lower than its historical range, or the market as a
whole or that of similar companies may offer attractive
investment opportunities.
|_| Price/book value ratio, which is the stock price divided
by the book value of the company per share, which measures
the company's stock price in relation to its asset value.
|_| Dividend Yield is measured by dividing the annual
dividend by the stock price per share.
|_| Valuation of Assets, which compares the stock price
to the value of the company's underlying assets, including
their projected value in the marketplace and liquidation
value.
|_| Convertible Securities. While convertible
securities are a form of debt security, in many cases their
conversion feature (allowing conversion into equity
securities) causes them to be regarded by the Manager more
as "equity equivalents." As a result, the rating assigned to
the security has less impact on the Manager's investment
decision with respect to convertible securities than in the
case of non-convertible fixed income securities. Convertible
securities are subject to the credit risks and interest rate
risks described below in "Debt Securities."
To determine whether convertible securities should be
regarded as "equity equivalents," the Manager examines the
following factors: (1) whether, at the option of the
investor, the convertible security can be exchanged for a
fixed number of shares of common stock of the issuer, (2)
whether the issuer of the convertible securities has
restated its earnings per share of common stock on a fully
diluted basis (considering the effect of conversion of the
convertible securities), and (3) the extent to which the
convertible security may be a defensive "equity substitute,"
providing the ability to participate in any appreciation in
the price of the issuer's common stock.
|_| Rights and Warrants. The Funds may invest in
warrants or rights. They do not expect that their
investments in warrants and rights will exceed 5% of their
total assets.
Warrants basically are options to purchase equity
securities at specific prices valid for a specific period of
time. Their prices do not necessarily move parallel to the
prices of the underlying securities. Rights are similar to
warrants, but normally have a short duration and are
distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of
the issuer.
|X| Investments in Bonds and Other Debt Securities. The
Fixed Income Funds in particular can invest in bonds,
debentures and other debt securities to seek current income
as part of its investment objective.
The Funds' debt investments can include
investment-grade and non-investment-grade bonds (commonly
referred to as "junk bonds"). Investment-grade bonds are
bonds rated in one of the four highest categories by Moody's
Investors Service, Inc., Standard & Poor's Corporation,
Fitch IBCA, Inc., Duff & Phelps, Inc., or that have
comparable ratings by another nationally-recognized rating
organization, or if unrated or split-rated, determined by
the Manager to be of comparable quality. In making
investments in debt securities, the Manager may rely to some
extent on the ratings of ratings organizations or it may use
its own research to evaluate a security's credit-worthiness.
|_| U.S. Government Securities. The Funds can buy
securities issued or guaranteed by the U.S. government or
its agencies and instrumentalities. Securities issued by the
U.S. Treasury are backed by the full faith and credit of the
U.S. government and are subject to very little credit risk.
Obligations of U.S. government agencies or instrumentalities
(including mortgage-backed securities) may or may not be
guaranteed or supported by the "full faith and credit" of
the United States. Some are backed by the right of the
issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. government to purchase
the agencies' obligations; while others are supported only
by the credit of the instrumentality. If a security is not
backed by the full faith and credit of the United States,
the owner of the security must look principally to the
agency issuing the obligation for repayment and may not be
able to assert a claim against the United States in the
event that the agency or instrumentality does not meet its
commitment. A Fund will invest in securities of U.S.
government agencies and instrumentalities only when the
Manager is satisfied that the credit risk with respect to
the agency or instrumentality is minimal.
|_| Special Risks of Lower-Grade Securities. Because
lower-rated securities tend to offer higher yields than
investment grade securities, a Fund may invest in lower
grade securities if the Manager is trying to achieve greater
income (and, in some cases, the appreciation possibilities
of lower-grade securities may be a reason they are selected
for a Fund's portfolio).
Some of the special credit risks of lower-grade
securities are discussed in the Prospectus. There is a
greater risk that the issuer may default on its obligation
to pay interest or to repay principal than in the case of
investment-grade securities. The issuer's low
creditworthiness may increase the potential for its
insolvency. An overall decline in values in the high yield
bond market is also more likely during a period of a general
economic downturn. An economic downturn or an increase in
interest rates could severely disrupt the market for high
yield bonds, adversely affecting the values of outstanding
bonds as well as the ability of issuers to pay interest or
repay principal. In the case of foreign high yield bonds,
these risks are in addition to the special risk of foreign
investing discussed in the Prospectus and in this Statement
of Additional Information.
While securities rated "Baa" by Moody's or 'BBB" by
Standard & Poor's or Duff & Phelps are investment-grade and
are not regarded as junk bonds, those securities may be
subject to special risks, and have some speculative
characteristics. Definitions of the debt security ratings
categories of Moody's, Standard & Poor's, Fitch IBCA and
Duff & Phelps are included in Appendix A to this Statement
of Additional Information.
|X| Asset-Backed Securities. Asset-backed securities
are fractional interests in pools of assets, typically
accounts receivable or consumer loans. They are issued by
trusts or special-purpose corporations. They are similar to
mortgage-backed securities, described below, and are backed
by a pool of assets that consist of obligations of
individual borrowers. The income from the pool is passed
through to the holders of participation interest in the
pools. The pools may offer a credit enhancement, such as a
bank letter of credit, to try to reduce the risks that the
underlying debtors will not pay their obligations when due.
However, the enhancement, if any, might not be for the full
par value of the security. If the enhancement is exhausted
and any required payments of interest or repayments of
principal are not made, that Fund could suffer losses on its
investment or delays in receiving payment.
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
related to 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 may
shorten the weighted average life of asset-backed securities
and may lower their return, in the same manner as in the
case of mortgage-backed securities and CMOs, described
below. Unlike mortgage-backed securities, asset-backed
securities typically do not have the benefit of a security
interest in the underlying collateral.
|X| Mortgage-Related Securities. Mortgage-related
securities are a form of derivative investment
collateralized by pools of commercial or residential
mortgages. Pools of mortgage loans are assembled as
securities for sale to investors by government agencies or
entities or by private issuers. These securities include
collateralized mortgage obligations ("CMOs"), mortgage
pass-through securities, stripped mortgage pass-through
securities, interests in real estate mortgage investment
conduits ("REMICs") and other real-estate related
securities.
Mortgage-related securities that are issued or
guaranteed by agencies or instrumentalities of the U.S.
government have relatively little credit risk (depending on
the nature of the issuer) but are subject to interest rate
risks and prepayment risks, as described in the Prospectus.
As with other debt securities, the prices of
mortgage-related securities tend to move inversely to
changes in interest rates. The Fixed Income Funds can buy
mortgage-related securities that have interest rates that
move inversely to changes in general interest rates, based
on a multiple of a specific index. Although the value of a
mortgage-related security may decline when interest rates
rise, the converse is not always the case.
In periods of declining interest rates, mortgages are
more likely to be prepaid. Therefore, a mortgage-related
security's maturity can be shortened by unscheduled
prepayments on the underlying mortgages. Therefore, it is
not possible to predict accurately the security's yield. The
principal that is returned earlier than expected may have to
be reinvested in other investments having a lower yield than
the prepaid security. Therefore, these securities may be
less effective as a means of "locking in" attractive
long-term interest rates, and they may have less potential
for appreciation during periods of declining interest rates,
than conventional bonds with comparable stated maturities.
Prepayment risks can lead to substantial fluctuations
in the value of a mortgage-related security. In turn, this
can affect the value of that Fund's shares. If a
mortgage-related security has been purchased at a premium,
all or part of the premium that Fund paid may be lost if
there is a decline in the market value of the security,
whether that results from interest rate changes or
prepayments on the underlying mortgages. In the case of
stripped mortgage-related securities, if they experience
greater rates of prepayment than were anticipated, the Fund
may fail to recoup its initial investment on the security.
During periods of rapidly rising interest rates,
prepayments of mortgage-related securities may occur at
slower than expected rates. Slower prepayments effectively
may lengthen a mortgage-related security's expected
maturity. Generally, that would cause the value of the
security to fluctuate more widely in responses to changes in
interest rates. If the prepayments on a Fund's
mortgage-related securities were to decrease broadly, that
Fund's effective duration, and therefore its sensitivity to
interest rate changes, would increase.
As with other debt securities, the values of
mortgage-related securities may be affected by changes in
the market's perception of the creditworthiness of the
entity issuing the securities or guaranteeing them. Their
values may also be affected by changes in government
regulations and tax policies.
|_| Collateralized Mortgage Obligations. CMOs are
multi-class bonds that are backed by pools of mortgage loans
or mortgage pass-through certificates. They may be
collateralized by: (1) pass-through certificates issued or
guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac, (2)
unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veterans'
Affairs, (3) unsecuritized conventional mortgages, (4) other
mortgage-related securities, or (5) any combination of
these.
Each class of CMO, referred to as a "tranche," is
issued at a specific coupon rate and has a stated maturity
or final distribution date. Principal prepayments on the
underlying mortgages may cause the CMO to be retired much
earlier than the stated maturity or final distribution date.
The principal and interest on the underlying mortgages may
be allocated among the several classes of a series of a CMO
in different ways. One or more tranches may have coupon
rates that reset periodically at a specified increase over
an index. These are floating rate CMOs, and typically have a
cap on the coupon rate. Inverse floating rate CMOs have a
coupon rate that moves in the reverse direction to an
applicable index. The coupon rate on these CMOs will
increase as general interest rates decrease. These are
usually much more volatile than fixed rate CMOs or floating
rate CMOs.
|X| Foreign Securities. The Equity Funds and the Fixed
Income Funds may invest in foreign securities, and Global
Securities Fund expects to have substantial investments in
foreign securities. These include equity securities issued
by foreign companies and debt securities issued or
guaranteed by foreign companies or governments, including
supra-national entities. "Foreign securities" include equity
and debt securities of companies organized under the laws of
countries other than the United States and debt securities
issued or guaranteed by governments other than the U.S.
government or by foreign supra-national entities. They also
include securities of companies (including those that are
located in the U.S. or organized under U.S. law) that derive
a significant portion of their revenue or profits from
foreign businesses, investments or sales, or that have a
significant portion of their assets abroad. They may be
traded on foreign securities exchanges or in the foreign
over-the-counter markets.
Securities of foreign issuers that are represented by
American Depository Receipts or that are listed on a U.S.
securities exchange or traded in the U.S. over-the-counter
markets are not considered "foreign securities" for the
purpose of a Fund's investment allocations, because they are
not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and
held abroad.
Because the Funds may purchase securities denominated
in foreign currencies, a change in the value of such foreign
currency against the U.S. dollar will result in a change in
the amount of income the Funds have available for
distribution. Because a portion of the Funds' investment
income may be received in foreign currencies, the Funds will
be required to compute their income in U.S. dollars for
distribution to shareholders, and therefore the Funds will
absorb the cost of currency fluctuations. After the Funds
have distributed income, subsequent foreign currency losses
may result in the Fund's having distributed more income in a
particular fiscal period than was available from investment
income, which could result in a return of capital to
shareholders.
Investing in foreign securities offers potential
benefits not available from investing solely in securities
of domestic issuers. They include 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. The Funds will hold foreign currency only
in connection with the purchase or sale of foreign
securities.
|_| Foreign Debt Obligations. The debt obligations of
foreign governments and entities may or may not be supported
by the full faith and credit of the foreign government. The
Fixed Income Funds may buy securities issued by certain
supra-national entities, which include entities designated
or supported by governments to promote economic
reconstruction or development, international banking
organizations and related government agencies. Examples are
the International Bank for Reconstruction and Development
(commonly called the "World Bank"), the Asian Development
bank and the Inter-American Development Bank.
The governmental members of these supra-national
entities are "stockholders" that typically make capital
contributions and may be committed to make additional
capital contributions if the entity is unable to repay its
borrowings. A supra-national entity's lending activities may
be limited to a percentage of its total capital, reserves
and net income. There can be no assurance that the
constituent foreign governments will continue to be able or
willing to honor their capitalization commitments for those
entities.
The Fixed Income Funds can invest in U.S.
dollar-denominated "Brady Bonds." These foreign debt
obligations may be fixed-rate par bonds or floating-rate
discount bonds. They are generally collateralized in full as
to repayment of principal at maturity by U.S. Treasury
zero-coupon obligations that have the same maturity as the
Brady Bonds. Brady Bonds can be viewed as having three or
four valuation components: (i) the collateralized repayment
of principal at final maturity; (ii) the collateralized
interest payments; (iii) the uncollateralized interest
payments; and (iv) any uncollateralized repayment of
principal at maturity. Those uncollateralized amounts
constitute what is called the "residual risk."
If there is a default on collateralized Brady Bonds
resulting in acceleration of the payment obligations of the
issuer, the zero-coupon U.S. Treasury securities held as
collateral for the payment of principal will not be
distributed to investors, nor will those obligations be sold
to distribute the proceeds. The collateral will be held by
the collateral agent to the scheduled maturity of the
defaulted Brady Bonds. The defaulted bonds will continue to
remain outstanding, and the face amount of the collateral
will equal the principal payments which would have then been
due on the Brady Bonds in the normal course. Because of the
residual risk of Brady Bonds and the history of defaults
with respect to commercial bank loans by public and private
entities of countries issuing Brady Bonds, Brady Bonds are
considered speculative investments.
|_| Risks of Foreign Investing. Investments in foreign
securities may offer special opportunities for investing but
also present special additional risks and considerations not
typically associated with investments in domestic
securities. Some of these additional risks are: o reduction
of income by foreign taxes; o fluctuation in value of
foreign investments due to changes in currency rates or
currency control regulations (for example, currency
blockage); o transaction charges for currency exchange; o
lack of public information about foreign issuers; o lack of
uniform accounting, auditing and financial reporting
standards in foreign countries comparable to those
applicable to domestic issuers; o less volume on foreign
exchanges than on U.S. exchanges; o greater volatility and
less liquidity on foreign markets than in the U.S.; o less
governmental regulation of foreign issuers, stock exchanges
and brokers than in the U.S.; o greater difficulties in
commencing lawsuits; o higher brokerage commission rates
than in the U.S.; o increased risks of delays in settlement
of portfolio transactions or loss of certificates for
portfolio securities; o possibilities in some countries of
expropriation, confiscatory taxation, political, financial
or social instability or adverse diplomatic developments;
and o unfavorable differences between the U.S. economy and
foreign economies.
In the past, 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 re-imposed.
|_| Special Risks of Emerging Markets. Emerging and
developing markets abroad may also offer special
opportunities for growth investing but have greater risks
than more developed foreign markets, such as those in
Europe, Canada, Australia, New Zealand and Japan. There may
be even less liquidity in their securities markets, and
settlements of purchases and sales of securities may be
subject to additional delays. They are subject to greater
risks of limitations on the repatriation of income and
profits because of currency restrictions imposed by local
governments. Those countries may also be subject to the risk
of greater political and economic instability, which can
greatly affect the volatility of prices of securities in
those countries. The Manager will consider these factors
when evaluating securities in these markets, because the
selection of those securities must be consistent with the
Fund's goal of preservation of principal.
The Funds intend to invest less than 5% of their total
assets in securities of issuers of Eastern European
countries. The social, political and economic reforms in
most Eastern European countries are still in their early
stages, and there can be no assurance that these reforms
will continue. Eastern European countries in many cases do
not have a sophisticated or well-established capital market
structure for the sale and trading of securities.
Participation in the investment markets in some of those
countries may be available initially or solely through
investment in joint ventures, state enterprises, private
placements, unlisted securities or other similar illiquid
investment vehicles.
In addition, although investment opportunities may
exist in Eastern European countries, any change in the
leadership or policies of the governments of those
countries, or changes in the leadership or policies of any
other government that exercises a significant influence over
those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring.
As a result investment opportunities which may currently
exist may be threatened.
The prior authoritarian governments of a number of the
Eastern European countries previously expropriated large
amounts of real and personal property, which may include
property which will be represented by or held by entities
issuing the securities a Fund might wish to purchase. In
many cases, the claims of the prior property owners against
those governments were never finally settled. There can be
no assurance that any property represented by or held by
entities issuing securities purchased by a Fund will not
also be expropriated, nationalized, or confiscated. If that
property were confiscated, the Fund could lose a substantial
portion of its investments in such countries. A Fund's
investments could also be adversely affected by exchange
control regulations imposed in any of those countries.
|_| Risks of Conversion to Euro. On January 1, 1999,
eleven countries in the European Union adopted the euro as
their official currency. However, their current currencies
(for example, the franc, the mark, and the lira) will also
continue in use until January 1, 2002. After that date, it
is expected that only the euro will be used in those
countries. A common currency is expected to confer some
benefits in those markets, by consolidating the government
debt market for those countries and reducing some currency
risks and costs. But the conversion to the new currency will
affect the Fund operationally and also has potential risks,
some of which are listed below. Among other things, the
conversion will affect:
o issuers in which the Funds invest, because of changes in
the competitive environment from a consolidated currency
market and greater operational costs from converting to the
new currency. This might depress securities values.
o vendors the Funds depend on to carry out their business,
such as their custodian bank (which holds the foreign
securities each Fund buys), the Manager (which must price
the Funds' investments to deal with the conversion to the
euro) and brokers, foreign markets and securities
depositories. If they are not prepared, there could be
delays in settlements and additional costs to the Funds.
o exchange contracts and derivatives that are outstanding
during the transition to the euro. The lack of currency rate
calculations between the affected currencies and the need to
update the Fund's contracts could pose extra costs to the
Funds.
The Manager is upgrading (at its expense) its computer
and bookkeeping systems to deal with the conversion. The
Funds' custodian bank has advised the Manager of its plans
to deal with the conversion, including how it will update
its record keeping systems and handle the redenomination of
outstanding foreign debt. The Funds' portfolio managers will
also monitor the effects of the conversion on the issuers in
which each Fund invests. The possible effect of these
factors on the Funds' investments cannot be determined with
certainty at this time, but they may reduce the value of
some of the Funds' holdings and increase its operational
costs.
|X| Portfolio Turnover. "Portfolio turnover" describes the
rates at which the Funds traded their portfolio securities
during its last fiscal year. For example, if a Fund sold all
of its securities during the year, its portfolio turnover
rate would have been 100%. The Funds' portfolio turnover
rates will fluctuate from year to year, and any of the Funds
may have portfolio turnover rates of more than 100%
annually.
Other Investment Techniques and Strategies. In seeking their
respective objectives, the Funds may from time to time use
the types of investment strategies and investments described
below. They are not required to use all of these strategies
at all times, and at times may not use them.
|X| Investing in Small, Unseasoned Companies. The Funds
may invest in securities of small, unseasoned companies,
subject to limits (if any) stated in that Fund's Prospectus.
These are companies that have been in operation for less
than three years, including the operations of any
predecessors. Securities of these companies may be subject
to volatility in their prices. They may have a limited
trading market, which may adversely affect their ability to
dispose of them and can reduce the price the Funds might be
able to obtain for them. Other investors that own a security
issued by a small, unseasoned issuer for which there is
limited liquidity might trade the security when the Funds
are attempting to dispose of their holdings of that
security. In that case, a Fund might receive a lower price
for its holdings than might otherwise be obtained.
|X| When-Issued and Delayed-Delivery Transactions (All
Portfolios). The Funds may invest in securities on a
"when-issued" basis and may purchase or sell securities on a
"delayed-delivery" or "forward commitment" basis.
When-issued and delayed-delivery are terms that refer 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. Delivery and payment for the
securities take place at a later date (generally within 45
days of the date the offer is accepted). The securities are
subject to change in value from market fluctuations during
the period until settlement. The value at delivery may be
less than the purchase price. For example, 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 a loss to the Funds. During the
period between purchase and settlement, no payment is made
by the Funds to the issuer and no interest accrues to that
portfolio from the investment. No income begins to accrue to
the Funds on a when-issued security until the Funds receive
the security at settlement of the trade.
The Funds will engage in when-issued transactions to
secure what the Manager considers to be an advantageous
price and yield at the time of entering into the obligation.
When a Fund enters into a when-issued or delayed-delivery
transaction, it relies on the other party to complete the
transaction. Its failure to do so may cause that Fund to
lose the opportunity to obtain the security at a price and
yield the Manager considers to be advantageous.
When a Fund engages in when-issued and delayed-delivery
transactions, it does so for the purpose of acquiring or
selling securities consistent with its investment objective
and policies for its portfolio or for delivery pursuant to
options contracts it has entered into, and not for the
purpose of investment leverage. Although a Fund will enter
into delayed-delivery or when-issued purchase transactions
to acquire securities, it may dispose of a commitment prior
to settlement. If a Fund chooses to dispose of the right to
acquire a when-issued security prior to its acquisition or
to dispose of its right to delivery or receive against a
forward commitment, it may incur a gain or loss.
At the time a Fund makes the commitment to purchase or
sell a security on a when-issued or delayed delivery basis,
it records the transaction on their books and reflects the
value of the security purchased in determining that Fund's
net asset value. In a sale transaction, it records the
proceeds to be received. That fund will identify on its
books liquid assets at least equal in value to the value of
that Fund's purchase commitments until that Fund pays for
the investment.
When-issued and delayed-delivery transactions can be
used by the Funds as a defensive technique to hedge against
anticipated changes in interest rates and prices. For
instance, in periods of rising interest rates and falling
prices, a Fund might sell securities in their 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 delayed-delivery basis to obtain the benefit
of currently higher cash yields.
|X| Zero-Coupon Securities. The Fixed Income Funds may
buy zero-coupon and delayed interest securities, and
"stripped" securities of foreign government issuers, which
may or may not be backed by the "full faith and credit" of
the issuing foreign government, and of corporations. The
Fixed Income Funds may also buy zero-coupon and "stripped"
U.S. government securities. Zero-coupon securities issued by
foreign governments and by corporations will be subject to
greater credit risks than U.S. government zero-coupon
securities.
|X| "Stripped" Mortgage-Related Securities. The Fixed
Income Funds can invest in stripped mortgage-related
securities that are created by segregating the cash flows
from underlying mortgage loans or mortgage securities to
create two or more new securities. Each has a specified
percentage of the underlying security's principal or
interest payments. These are a form of derivative
investment.
Mortgage securities may be partially stripped so that
each class receives some interest and some principal.
However, they may be completely stripped. In that case all
of the interest is distributed to holders of one type of
security, known as an "interest-only" security, or "I/O,"
and all of the principal is distributed to holders of
another type of security, known as a "principal-only"
security or "P/O." Strips can be created for pass-through
certificates or CMOs.
The yields to maturity of I/Os and P/Os are very
sensitive to principal repayments (including prepayments) on
the underlying mortgages. If the underlying mortgages
experience greater than anticipated prepayments of
principal, that Fund might not fully recoup its investment
in an I/O based on those assets. If underlying mortgages
experience less than anticipated prepayments of principal,
the yield on the P/Os based on them could decline
substantially.
|X| Repurchase Agreements. The Funds may acquire
securities subject to repurchase agreements. They may do so
for liquidity purposes to meet anticipated redemptions of
Fund shares, or pending the investment of the proceeds from
sales of Fund shares, or pending the settlement of portfolio
securities transactions, or for temporary defensive
purposes, as described below.
In a repurchase transaction, the Funds buy a security
from, and simultaneously resells it to, an approved vendor
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. Approved
vendors include U.S. commercial banks, U.S. branches of
foreign banks, or broker-dealers that have been designated
as primary dealers in government securities. They must meet
credit requirements set by the Funds' Board of Trustees from
time to time.
The majority of these transactions run from day to day,
and delivery pursuant to the resale typically occurs within
one to five days of the purchase. Repurchase agreements
having a maturity beyond seven days are subject to each
Fund's limit on holding illiquid investments. No Fund will
enter into a repurchase agreement that causes more than 15%
of its net assets (for Money Fund/VA, 10%) 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 having maturities of
seven days or less.
Repurchase agreements, considered "loans" under the
Investment Company Act, are collateralized by the underlying
security. The Funds' repurchase agreements require that at
all times while the repurchase agreement are in effect, the
value of the collateral must equal or exceed the repurchase
price to fully collateralize the repayment obligation.
However, if the vendor fails to pay the resale price on the
delivery date, the Funds may incur costs in disposing of the
collateral and may experience losses if there is any delay
in its ability to do so. The Manager will monitor the
vendor's creditworthiness to confirm that the vendor is
financially sound and will continuously monitor the
collateral's value.
|X| Illiquid and Restricted Securities. Under the
policies and procedures established by the Fund's Board of
Trustees, the Manager determines the liquidity of certain of
the Funds' investments. To enable a Fund to sell its
holdings of a restricted security not registered under the
Securities Act of 1933, that Fund may have to cause those
securities to be registered. The expenses of registering
restricted securities may be negotiated by the Fund with the
issuer at the time the Fund buys the securities. When a Fund
must arrange registration because the Fund wishes to sell
the security, a considerable period may elapse between the
time the decision is made to sell the security and the time
the security is registered so that the Fund could sell it.
That Fund would bear the risks of any downward price
fluctuation during that period.
The Funds may also acquire restricted securities
through private placements. Those securities have
contractual restrictions on their public resale. Those
restrictions might limit a Fund's ability to dispose of the
securities and might lower the amount a Fund could realize
upon the sale.
The Funds have limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified
institutional purchasers under Rule 144A of the Securities
Act of 1933, if those securities have been determined to be
liquid by the Manager under Board-approved guidelines. Those
guidelines take into account the trading activity for such
securities and the availability of reliable pricing
information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the
Funds' holdings of that security may be considered to be
illiquid.
Illiquid securities include repurchase agreements
maturing in more than seven days and participation interests
that do not have puts exercisable within seven days.
|X| Forward Rolls. The Funds can enter into "forward
roll" transactions with respect to mortgage related
securities. In this type of transaction, the Funds sell a
mortgage related security to a buyer and simultaneously
agrees to repurchase a similar security (the same type of
security, and having the same coupon and maturity) at a
later date at a set price. The securities that are
repurchased will have the same interest rate as the
securities that are sold, but typically will be
collateralized by different pools of mortgages (with
different prepayment histories) than the securities that
have been sold. Proceeds from the sale are invested in
short-term instruments, such as repurchase agreements. The
income from those investments, plus the fees from the
forward roll transaction, are expected to generate income to
the Funds in excess of the yield on the securities that have
been sold.
The Funds will only enter into "covered" rolls. To
assure their future payment of the purchase price, the Funds
will identify cash, U.S. government securities or other
high-grade debt securities on their books in an amount equal
to their respective payment obligations under the roll.
These transactions have risks. During the period
between the sale and the repurchase, the Funds will not be
entitled to receive interest and principal payments on the
securities that have been sold. It is possible that the
market value of the securities the Funds sell may decline
below the price at which the Funds are obligated to
repurchase securities.
|X| Loans of Portfolio Securities. To raise cash for
liquidity purposes or income, the Funds can lend their
portfolio securities to brokers, dealers and other types of
financial institutions approved by the Fund's Board of
Trustees. These loans are limited to not more than 25% of
the value of that Fund's net assets. The Funds currently do
not intend to engage in loans of securities in the coming
year, but if they do so, such loans will not likely exceed
5% of that Fund's total assets.
There are some risks in connection with securities lending.
The Funds might experience a delay in receiving additional
collateral to secure a loan, or a delay in recovery of the
loaned securities if the borrower defaults. The Funds must
receive collateral for a loan. Under current applicable
regulatory requirements (which are subject to change), on
each business day the loan collateral must be at least equal
to the value of the loaned securities. It must consist of
cash, bank letters of credit, or securities of the U.S.
Government or its agencies or instrumentalities, or other
cash equivalents in which that Fund is permitted to invest.
To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Funds if the
demand meets the terms of the letter. The terms of the
letter of credit and the issuing bank both must be
satisfactory to the Funds.
When they lend securities, that Fund receives amounts
equal to the dividends or interest on loaned securities. It
also receives one or more of (a) negotiated loan fees, (b)
interest on securities used as collateral, and (c) interest
on any short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the
borrower. That Fund may also pay reasonable finder's,
custodian and administrative fees in connection with these
loans. The terms of a Fund's loans must meet applicable
tests under the Internal Revenue Code and must permit the
Fund to reacquire loaned securities on five days' notice or
in time to vote on any important matter.
|X| Borrowing for Leverage. Each Fund has the ability
to borrow from banks on an unsecured basis. Each Fund has
undertaken to limit borrowing to 25% of the value of that
Fund's net assets, which is further limited to 10% if
borrowing is for a purpose other than to facilitate
redemptions. Investing borrowed funds in portfolio
securities is a speculative technique known as "leverage."
The Funds may borrow only from banks. Under current
regulatory requirements, borrowings can 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 that Fund's assets fails to meet this 300% asset
coverage requirement, that Fund will reduce its bank debt
within three days to meet the requirement. To do so, that
Fund might have to sell a portion of its investments at a
disadvantageous time.
A Fund will pay interest on these loans, and that
interest expense will raise the overall expenses of that
Fund and reduce its returns. If it does borrow, its expenses
will be greater than comparable funds that do not borrow for
leverage. Additionally, that Fund's net asset value per
share might fluctuate more than that of funds that do not
borrow. Currently, the Funds do not contemplate using this
technique in the next year but if they do so, it will not
likely be to a substantial degree.
|X| Derivatives. The Funds can invest in a variety of
derivative investments for hedging purposes. Some derivative
investments the Funds can use are the hedging instruments
described below in this Statement of Additional Information.
The Equity Funds do not use, and do not currently
contemplate using, derivatives or hedging instruments to a
significant degree in the coming year and they are not
obligated to use them in seeking their objectives.
Other derivative investments the Fixed Income Funds can
invest in include "index-linked" notes. Principal and/or
interest payments on these notes depend on the performance
of an underlying index. Currency-indexed securities are
another derivative these Funds may use. Typically, these are
short-term or intermediate-term debt securities. Their value
at maturity or the 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 type of index security offers the potential for
increased income or principal payments but at a greater risk
of loss than a typical debt security of the same maturity
and credit quality.
Other derivative investments the Fixed Income Funds can
use 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 it is payable in an amount based on the price
of the issuer's common stock at the time of maturity. Both
alternatives present 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 might not be
as high as the Manager expected.
|X| Hedging. Although the Funds can use hedging
instruments, they are not obligated to use them in seeking
their objective. To attempt to protect against declines in
the market value of the Funds' portfolio, to permit the
Funds to retain unrealized gains in the value of portfolio
securities which have appreciated, or to facilitate selling
securities for investment reasons, the Funds could:
|_| sell futures contracts,
|_| buy puts on such futures or on
securities, or
|_| write covered calls on securities or futures. Covered
calls may also be used to increase the Funds' income, but
the Manager does not expect to engage extensively in that
practice.
The Funds can use hedging to establish a position in
the securities market as a temporary substitute for
purchasing particular securities. In that case the Funds
would normally seek to purchase the securities and then
terminate that hedging position. The Funds might also use
this type of hedge to attempt to protect against the
possibility that its portfolio securities would not be fully
included in a rise in value of the market. To do so the
Funds could:
|_| buy futures, or
|_| buy calls on such futures or on securities.
The Funds' strategy of hedging with futures and options
on futures will be incidental to the Fund's activities in
the underlying cash market. The particular hedging
instruments the Funds can use are described below. The Funds
may employ new hedging instruments and strategies when they
are developed, if those investment methods are consistent
with the Funds' investment objective and are permissible
under applicable regulations governing the Fund.
|_| Futures. The Equity Funds, Multiple Strategies Fund/VA
and Main Street Growth & Income Fund/VA can buy and sell
future contracts that relate to
(1) broadly-based stock indices (these are referred to as
"stock index futures") and
(2) foreign currencies (these are referred to as "forward
contracts"). The Fixed Income Funds can buy and sell futures
contracts that relate to
(1) bond indices (these are referred to as "bond index
futures"), (2) debt securities (these are referred to as
"interest rate futures"), and (3) forward contracts.
A broadly-based stock index is used as the basis for
trading stock index futures. They may in some cases be based
on stocks of issuers in a particular industry or group of
industries. A stock index assigns relative values to the
common stocks included in the index and its value fluctuates
in response to the changes in value of the underlying
stocks. A stock index cannot be purchased or sold directly.
Bond index futures are similar contracts based on the future
value of the basket of securities that comprise the index.
These contracts obligate the seller to deliver, and the
purchaser to take, cash to settle the futures transaction.
There is no delivery made of the underlying securities to
settle the futures obligation. Either party may also settle
the transaction by entering into an offsetting contract.
An interest rate future obligates the seller to deliver
(and the purchaser to take) cash or a specified type of debt
security to settle the futures transaction. Either party
could also enter into an offsetting contract to close out
the position.
No money is paid or received by the Funds on the
purchase or sale of a future. Upon entering into a futures
transaction, the Funds will be required to deposit an
initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be
deposited with the Funds' custodian bank 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
(that is, its value on that Fund's books is changed) to
reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the
futures broker daily.
At any time prior to expiration of the future, the
Funds may elect to close out their position by taking an
opposite position, at which time a final determination of
variation margin is made and any additional cash must be
paid by or released to that Fund. Any loss or gain on the
future is then realized by that Fund for tax purposes. All
futures transactions are effected through a clearinghouse
associated with the exchange on which the contracts are
traded.
|_| Put and Call Options. The Funds can buy and sell
certain kinds of put options ("puts") and call options
("calls"). The Funds can buy and sell exchange-traded and
over-the-counter put and call options, including index
options, securities options, currency options, commodities
options, and options on the other types of futures described
above.
|_| Writing Covered Call Options. The Funds can write
(that is, sell) covered calls. If a Fund sells a call
option, it must be covered. That means the Fund must own the
security subject to the call while the call is outstanding,
or, for certain types of calls, the call may be covered by
segregating liquid assets to enable that Fund to satisfy its
obligations if the call is exercised. Up to 100% of a Fund's
total assets may be subject to calls that Fund writes.
When a Fund writes a call on a security, it receives
cash (a premium). That Fund agrees to sell the underlying
security to a purchaser of a corresponding call on the same
security during the call period at a fixed exercise price
regardless of market price changes during the call period.
The call period is usually not more than nine months. The
exercise price may differ from the market price of the
underlying security. That Fund shares the risk of loss that
the price of the underlying security may decline during the
call period. That risk may be offset to some extent by the
premium the Fund receives. If the value of the investment
does not rise above the call price, it is likely that the
call will lapse without being exercised. In that case the
Fund would keep the cash premium and the investment.
When a Fund writes a call on an index, it receives cash
(a premium). If the buyer of the call exercises it, the Fund
will pay an amount of cash equal to the difference between
the closing price of the call and the exercise price,
multiplied by a specified multiple that determines the total
value of the call for each point of difference. If the value
of the underlying investment does not rise above the call
price, it is likely that the call will lapse without being
exercised. In that case the Fund would keep the cash
premium.
The Funds' custodian bank, or a securities depository
acting for the custodian bank, will act as the Funds' escrow
agent, through the facilities of the Options Clearing
Corporation ("OCC"), as to the investments on which the
Funds have written calls traded on exchanges or as to other
acceptable escrow securities. In that way, no margin will be
required for such transactions. OCC will release the
securities on the expiration of the option or when the Funds
enter into a closing transaction.
When a Fund writes an over-the-counter ("OTC") option,
that Fund will enter into an arrangement with a primary U.S.
government securities dealer which will establish a formula
price at which the Fund will have the absolute right to
repurchase that OTC option. The formula price will generally
be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable
below the market price of the underlying security (that is,
the option is "in the money"). When a Fund writes an OTC
option, it will treat as illiquid (for purposes of its
restriction on holding illiquid securities) the
mark-to-market value of any OTC option it holds, unless the
option is subject to a buy-back agreement by the executing
broker.
To terminate its obligation on a call it has written, a
Fund may purchase a corresponding call in a "closing
purchase transaction." A Fund will then realize a profit or
loss, depending upon whether the net of the amount of the
option transaction costs and the premium received on the
call the Fund wrote is more or less than the price of the
call the Fund purchases to close out the transaction. That
Fund may realize a profit if the call expires unexercised,
because that Fund will retain the underlying security and
the premium it received when it wrote the call. Any such
profits are considered short-term capital gains for Federal
income tax purposes, as are the premiums on lapsed calls.
When distributed by a Fund they are taxable as ordinary
income. If a Fund cannot effect a closing purchase
transaction due to the lack of a market, it will have to
hold the callable securities until the call expires or is
exercised.
A Fund may also write calls on a futures contract
without owning the futures contract or securities
deliverable under the contract. To do so, at the time the
call is written, that Fund must cover the call by
segregating an equivalent dollar amount of liquid assets.
The Fund will segregate additional liquid assets if the
value of the segregated assets drops below 100% of the
current value of the future. Because of this segregation
requirement, in no circumstances would that Fund's receipt
of an exercise notice as to that future require that Fund to
deliver a futures contract. It would simply put that Fund in
a short futures position, which is permitted by the Funds'
hedging policies.
|_| Writing Put Options. Each Fund can sell 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. The Funds will not write puts if, as a
result, more than 50% of the Fund's net assets would be
required to be segregated to cover such put options.
If a Fund writes a put, the put must be covered by
segregated liquid assets. The premium the Funds receive from
writing a put represents a profit, as long as the price of
the underlying investment remains equal to or above the
exercise price of the put. However, that Fund also assumes
the obligation during the option period to buy the
underlying investment from the buyer of the put at the
exercise price, even if the value of the investment falls
below the exercise price. If a put a Fund has written
expires unexercised, that Fund realizes a gain in the amount
of the premium less the transaction costs incurred. If the
put is exercised, that Fund must fulfill its obligation to
purchase the underlying investment at the exercise price.
That price will usually exceed the market value of the
investment at that time. In that case, that Fund may incur a
loss if it sells the underlying investment. That loss will
be 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 the Fund incurred.
When writing a put option on a security, to secure its
obligation to pay for the underlying security that Fund will
deposit in escrow liquid assets with a value equal to or
greater than the exercise price of the underlying
securities. That Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against
those assets.
As long as a Fund's obligation as the put writer
continues, it may be assigned an exercise notice by the
broker-dealer through which the put was sold. That notice
will require that Fund to take delivery of the underlying
security and pay the exercise price. No Fund has control
over when it may be required to purchase the underlying
security, since it may be assigned an exercise notice at any
time prior to the termination of its obligation as the
writer of the put. That obligation terminates upon
expiration of the put. It may also terminate if, before it
receives an exercise notice, that Fund effects a closing
purchase transaction by purchasing a put of the same series
as it sold. Once a Fund has been assigned an exercise
notice, it cannot effect a closing purchase transaction.
A Fund may decide to effect a closing purchase
transaction to realize a profit on an outstanding put option
it has written or to prevent the underlying security from
being put. Effecting a closing purchase transaction will
also permit that Fund to write another put option on the
security, or to sell the security and use the proceeds from
the sale for other investments. A Fund will realize a profit
or loss from a closing purchase transaction depending on
whether the cost of the transaction is less or more than the
premium received from writing the put option. Any profits
from writing puts are considered short-term capital gains
for Federal tax purposes, and when distributed by a Fund, is
taxable as ordinary income.
|_| Purchasing Calls and Puts. Each Fund can purchase
calls to protect against the possibility that its portfolio
will not participate in an anticipated rise in the
securities market. When a Fund buys a call (other than in a
closing purchase transaction), it pays a premium. That Fund
then 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. A Fund benefits
only if it sells the call 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 Fund exercises the
call. If a Fund does not exercise the call or sell it
(whether or not at a profit), the call will become worthless
at its expiration date. In that case the Fund will have paid
the premium but lost the right to purchase the underlying
investment.
A Fund can buy puts whether or not it holds the
underlying investment in its portfolio. When a Fund
purchases a put, it pays a premium and, except as to puts on
indices, 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 that 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. In that case the Fund will have paid the
premium but lost the right to sell the underlying
investment. However, the Fund may sell the put prior to its
expiration. That sale may or may not be at a profit.
When a Fund purchases a call or put on an index or
future, it pays a premium, but settlement is in cash rather
than by delivery of the underlying investment to the Fund. A
gain or loss depends on changes in the index in question
(and thus on price movements in the securities market
generally) rather than on price movements in individual
securities or futures contracts.
A Fund may buy a call or put only if, after the
purchase, the value of all call and put options held by the
Fund will not exceed 5% of the Fund's total assets.
|_| Buying and Selling Options on Foreign Currencies. A
Fund can buy and sell calls and puts on foreign currencies.
They include puts and calls that trade on a securities or
commodities exchange or in the over-the-counter markets or
are quoted by major recognized dealers in such options. A
Fund could use these calls and puts to try to protect
against declines in the dollar value of foreign securities
and increases in the dollar cost of foreign securities the
Fund wants to acquire.
If the Manager anticipates a rise in the dollar value
of a foreign currency in which securities to be acquired are
denominated, the increased cost of those securities may be
partially offset by purchasing calls or writing puts on that
foreign currency. If the Manager anticipates a decline in
the dollar value of a foreign currency, the decline in the
dollar value of portfolio securities denominated in that
currency might be partially offset by writing calls or
purchasing puts on that foreign currency. However, the
currency rates could fluctuate in a direction adverse to a
Fund's position. That Fund will then have incurred option
premium payments and transaction costs without a
corresponding benefit.
A call the Fund writes on a foreign currency is
"covered" if that 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 it can do so for additional cash
consideration held in a segregated account by its custodian
bank) upon conversion or exchange of other foreign currency
held in its portfolio.
A Fund could write a call on a foreign currency to
provide a hedge against a decline 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. That decline might be one that occurs due to an
expected adverse change in the exchange rate. This is known
as a "cross-hedging" strategy. In those circumstances, the
Fund covers the option by maintaining cash, U.S. government
securities or other liquid, high grade debt securities in an
amount equal to the exercise price of the option, in a
segregated account with the Fund's custodian bank.
|_| Risks of Hedging with Options and Futures. 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 a
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. A Fund's option
activities could affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the
Fund might cause a Fund to sell related portfolio
securities, thus increasing its turnover rate. The exercise
by a Fund of puts on securities will cause the sale of
underlying investments, increasing portfolio turnover.
Although the decision whether to exercise a put it holds is
within a Fund's control, holding a put might cause that Fund
to sell the related investments for reasons that would not
exist in the absence of the put.
A Fund could pay a brokerage commission each time it
buys or sells a call, a put or an underlying investment in
connection with the exercise of a call or put. Those
commissions could be higher on a relative basis than the
commissions for direct purchases or sales of the underlying
investments. Premiums paid for options are small in relation
to the market value of the underlying investments.
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 values being more sensitive to
changes in the value of the underlying investment.
If a covered call written by a Fund is exercised on an
investment that has increased in value, that Fund will be
required to sell the investment at the call price. It will
not be able to realize any profit if the investment has
increased in value above the call price.
An option position may be closed out only on a market
that 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. A Fund might
experience losses if it could not close out a position
because of an illiquid market for the future or option.
There is a risk in using short hedging by selling
futures or purchasing puts on broadly-based indices or
futures to attempt to protect against declines in the value
of a Fund's portfolio securities. The risk is that the
prices of the futures or the applicable index will correlate
imperfectly with the behavior of the cash prices of that
Fund's securities. For example, it is possible that while a
Fund has used a hedging instrument in a short hedge, the
market might advance and the value of the securities held in
the Fund's portfolio might decline. If that occurred, the
Fund would lose money on the hedging instrument and also
experience a decline in the value of its portfolio
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 securities will tend to move in the
same direction as the indices upon which the hedging
instrument is based.
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 portfolio securities being hedged and movements in the
price of the hedging instruments, a Fund may use hedging
instruments in a greater dollar amount than the dollar
amount of portfolio securities being hedged. It might do so
if the historical volatility of the prices of the portfolio
securities being hedged are more than the historical
volatility of the applicable index.
The ordinary spreads between prices in the cash and futures
markets are subject to distortions, due to differences in
the nature of those markets. First, all participants in the
futures market 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 market depends 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 market could be
reduced, thus producing distortion. Third, from the point of
view of speculators, the deposit requirements in the futures
market are less onerous than margin requirements in the
securities markets. Therefore, increased participation by
speculators in the futures market may cause temporary price
distortions.
A Fund can use 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, broadly-based
indices or on securities. It is possible that when a Fund
does so the market might decline. If that Fund then
concludes not to invest in securities because of concerns
that the market might decline further or for other reasons,
the Fund will realize a loss on the hedging instruments that
is not offset by a reduction in the price of the securities
purchased.
|_| 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. A
Fund uses them to "lock in" the U.S. dollar price of a
security denominated in a foreign currency that the Fund has
bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and a
foreign currency. A Fund limits its exposure in foreign
currency exchange contracts in a particular foreign currency
to the amount of its assets denominated in that currency or
a closely-correlated currency. A Fund may also use
"cross-hedging" where it hedges against changes in
currencies other than the currency in which a security it
holds is denominated.
Under a forward contract, one party agrees to purchase,
and another party agrees to sell, a specific currency at a
future date. That date may be any fixed number of days from
the date of the contract agreed upon by the parties. The
transaction price is set at the time the contract is entered
into. These contracts are traded in the inter-bank market
conducted directly among 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 the risk of
fluctuations in the prices of the underlying securities a
Fund owns or intends to acquire, but it does fix a rate of
exchange in advance. Although forward contracts may reduce
the risk of loss from a decline in the value of the hedged
currency, at the same time they limit any potential gain if
the value of the hedged currency increases.
When a Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, or
when it anticipates receiving dividend payments in a foreign
currency, the Fund might desire to "lock-in" the U.S. dollar
price of the security or the U.S. dollar equivalent of the
dividend payments. To do so, that Fund could enter into a
forward contract for the purchase or sale of the amount of
foreign currency involved in the underlying transaction, in
a fixed amount of U.S. dollars per unit of the foreign
currency. This is called a "transaction hedge." The
transaction hedge will protect the Fund against a loss from
an adverse change in 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 the payments are made or received.
A Fund could also use forward contracts to lock in the
U.S. dollar value of a portfolio position. This is called a
"position hedge." When a Fund believes that foreign currency
might suffer a substantial decline against the U.S. dollar,
it could enter into a forward contract to sell an amount of
that foreign currency approximating the value of some or all
of the Fund's portfolio securities denominated in that
foreign currency. When a Fund believes that the U.S. dollar
might suffer a substantial decline against a foreign
currency, it could enter into a forward contract to buy that
foreign currency for a fixed dollar amount. Alternatively, a
Fund could enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount if the Fund
believes that the U.S. dollar value of the foreign currency
to be sold pursuant to its forward contract will fall
whenever there is a decline in the U.S. dollar value of the
currency in which portfolio securities of the Fund are
denominated. That is referred to as a "cross hedge."
A Fund will cover its short position in these cases by
identifying to its custodian bank assets having a value
equal to the aggregate amount of the Fund's commitment under
forward contracts. No Fund will enter into forward contracts
or maintain a net exposure to such contracts if the
consummation of the contracts would obligate a Fund to
deliver an amount of foreign currency in excess of the value
of that Fund's portfolio securities or other assets
denominated in that currency or another currency that is the
subject of the hedge.
The precise matching of the amounts under forward
contracts and the value of the securities involved generally
will not be possible because the future value of securities
denominated in foreign currencies will change as a
consequence of market movements between the date the forward
contract is entered into and the date it is sold. In some
cases the Manager might decide to sell the security and
deliver foreign currency to settle the original purchase
obligation. If the market value of the security is less than
the amount of foreign currency the Fund is obligated to
deliver, the Fund might have to purchase additional foreign
currency on the "spot" (that is, cash) market to settle the
security trade. If the market value of the security instead
exceeds the amount of foreign currency the Fund is obligated
to deliver to settle the trade, the Fund might have to sell
on the spot market some of the foreign currency received
upon the sale of the security. There will be additional
transaction costs on the spot market in those cases.
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 to pay additional
transactions costs. The use of forward contracts in this
manner might reduce a Fund's performance if there are
unanticipated changes in currency prices to a greater degree
than if a Fund had not entered into such contracts.
At or before the maturity of a forward contract
requiring a Fund to sell a currency, the Fund might sell a
portfolio security and use the sale proceeds to make
delivery of the currency. In the alternative a Fund might
retain the security and offset its contractual obligation to
deliver the currency by purchasing a second contract. Under
that contract a Fund will obtain, on the same maturity date,
the same amount of the currency that it is obligated to
deliver. Similarly, a Fund might 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. The gain or loss will depend on
the extent to which the exchange rate or rates between the
currencies involved moved between the execution dates of the
first contract and offsetting contract.
The costs to a 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 brokerage fees or commissions
are involved. Because these contracts are not traded on an
exchange, a Fund must evaluate the credit and performance
risk of the counterparty under each forward contract.
Although a 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. Funds
may convert foreign currency from time to time, and will
incur costs in doing so. 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 might
offer to sell a foreign currency to a Fund at one rate,
while offering a lesser rate of exchange if the Fund desires
to resell that currency to the dealer.
|_| Regulatory Aspects of Hedging Instruments. When
using futures and options on futures, the Funds are required
to operate within certain guidelines and restrictions with
respect to the use of futures as established by the
Commodities Futures Trading Commission (the "CFTC"). In
particular, a Fund is exempted from registration with the
CFTC as a "commodity pool operator" if the Fund complies
with the requirements of Rule 4.5 adopted by the CFTC. The
Rule does not limit the percentage of Bond Fund/VA's assets
that may be used for futures margin and related options
premiums for a bona fide hedging position. However, under
the Rule, a Fund must limit its aggregate initial futures
margin and related options premiums to not more than 5% of
the Funds' net assets for hedging strategies that are not
considered bona fide hedging strategies under the Rule.
Under the Rule, a Fund must also use short futures and
options on futures solely for bona fide hedging purposes
within the meaning and intent of the applicable provisions
of the Commodity Exchange Act.
Transactions in options by a Fund are subject to
limitations established by the option exchanges. The
exchanges limit the maximum number of options that may be
written or held by a single investor or group of investors
acting in concert. Those limits apply 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 different exchanges or through one or
more brokers. Thus, the number of options that a Fund may
write or hold may be affected by options written or held by
other entities, including other investment companies having
the same advisor as that Fund (or an adviser that is an
affiliate of the Funds' advisor). The exchanges also impose
position limits on futures transactions. An exchange may
order the liquidation of positions found to be in violation
of those limits and may impose certain other sanctions.
Under the Investment Company Act, when a Fund purchases
a future, it must maintain cash or readily marketable
short-term debt instruments in an amount equal to the market
value of the securities underlying the future, less the
margin deposit applicable to it.
|_| Tax Aspects of Certain Hedging Instruments. Certain
foreign currency exchange contracts are treated as "Section
1256 contracts" under the Internal Revenue Code. In general,
gains or losses relating to Section 1256 contracts are
characterized as 60% long-term and 40% short-term capital
gains or losses under the Code. However, foreign currency
gains or losses arising from Section 1256 contracts that are
forward contracts generally are treated as ordinary income
or loss. In addition, Section 1256 contracts held by the
Funds at the end of each taxable year are
"marked-to-market," and unrealized gains or losses are
treated as though they were realized. These contracts also
may be marked-to-market for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An
election can be made by a Fund to exempt those transactions
from this marked-to-market treatment.
Certain forward contracts a Fund enters into may result
in "straddles" for Federal income tax purposes. The straddle
rules may affect the character and timing of gains (or
losses) recognized by that Fund on straddle positions.
Generally, a loss sustained on the disposition of a position
making up a straddle is allowed only to the extent that the
loss exceeds any unrecognized gain in the offsetting
positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the
straddle, or the offsetting position is disposed of.
Under the Internal Revenue Code, the following gains or
losses are treated as ordinary income or loss: (1) gains or
losses attributable to fluctuations in exchange rates that
occur between the time a Fund accrues interest or other
receivables or accrues expenses or other liabilities
denominated in a foreign currency and the time that Fund
actually collects such receivables or pays such liabilities,
and (2) gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition
of a debt security denominated in a foreign currency or
foreign currency forward contracts and the date of
disposition.
Currency gains and losses are offset against market
gains and losses on each trade before determining a net
"Section 988" gain or loss under the Internal Revenue Code
for that trade, which may increase or decrease the amount of
a Fund's investment income available for distribution to its
shareholders.
|X| Temporary Defensive Investments. When market
conditions are unstable, or the Manager believes it is
otherwise appropriate to reduce holdings in stocks, the
Funds can invest in a variety of debt securities for
defensive purposes. The Funds can also purchase these
securities for liquidity purposes to meet cash needs due to
the redemption of Fund shares, or to hold while waiting to
reinvest cash received from the sale of other portfolio
securities. The Funds can buy:
|_| obligations issued or guaranteed by the U. S.
government or its instrumentalities or agencies,
|_| commercial paper (short-term, unsecured, promissory
notes of domestic or foreign companies) rated in the three
top rating categories of a nationally recognized rating
organization,
|_| short-term debt obligations of corporate issuers, rated
investment grade (rated at least Baa by Moody's Investors
Service, Inc. or at least BBB by Standard & Poor's
Corporation, or a comparable rating by another rating
organization), or unrated securities judged by the Manager
to have a comparable quality to rated securities in those
categories,
|_| certificates of deposit and bankers' acceptances of
domestic and foreign banks having total assets in excess of
$1 billion, and
|_| repurchase agreements.
Short-term debt securities would normally be selected
for defensive or cash management purposes because they can
normally be disposed of quickly, are not generally subject
to significant fluctuations in principal value and their
value will be less subject to interest rate risk than
longer-term debt securities.
-- Money Fund/VA Investment Policies. Under Rule 2a-7, Money
Fund/VA may purchase only "Eligible Securities," as defined
below, that the Manger, under procedures approved by 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 (the "Rating Requirements"), (b) a security
that is guaranteed, and either that guarantee or the party
providing that guarantee meets the Rating Requirements, or
(c) an unrated security that is either issued by an issuer
having another similar security that meets the Rating
Requirements, or is judged by the Manager to be of
comparable quality to investments that meet the Rating
Requirements. Rule 2a-7 permits Money Fund/VA 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. 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/VA's best interests to dispose of it; but if Money
Fund/VA disposes of the security within 5 days of
OppenheimerFunds, Inc. (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/VA'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 Service, Inc., Fitch IBCA,
Inc., Duff & Phelps, Inc., and Thomson BankWatch, Inc. See
Appendix A to this Statement of Additional Information for a
description of the rating categories of the Rating
Organizations.
-- Certificates of Deposit and Commercial Paper. Money
Fund/VA 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/VA 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/VA, or (ii)
subject to repurchase agreements (explained in the
prospectus), if the collateral for the agreement complies
with Rule 2a-7.
-- Bank Loan Participation Agreements. Money Fund/VA may
invest in bank loan participation agreements. They provide
the Fund with an undivided interest in a loan made by the
issuing bank in the proportion the Fund's interest bears to
the total principal amount of the loan. In evaluating the
risk of these investments, the Fund looks to the
creditworthiness of the borrower that is obligated to make
principal and interest payments on the loan.
-- Time Deposits. Money Fund/VA 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% limitation applicable to illiquid securities purchased
by Money Fund/VA.
-- Floating Rate/Variable Rate Notes. Money Fund/VA 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/VA may
invest have a demand feature entitling the holder to demand payment at an amount
approximately equal to 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. The interest rates on these notes
fluctuate from time to time. 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.
- -- Master Demand Notes. Master demand notes are corporate obligations that
permit the investment of fluctuating amounts by Money Fund/VA at varying rates
of interest pursuant to direct arrangements between Money Fund/VA, as lender,
and the corporate borrower that issues the note. These notes permit daily
changes in the amounts borrowed. Money Fund/VA 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,
where these obligations are not secured by letters of credit or other credit
support arrangements, Money Fund/VA'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 by Rating
Organizations, Money Fund/VA 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/VA's liquidity might be impaired if the borrower were unable to pay
principal and interest on demand. There is no limit on the amount of the Money
Fund/VA'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 10% limitation applicable to illiquid securities purchased by Money Fund/VA.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be changed
only by the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, a "majority" vote is defined as the vote of
the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a shareholder
meeting, if the holders of more than 50% of the outstanding shares are present
or represented by proxy, or
|_| more than 50% of the outstanding shares.
The Funds' investment objectives are fundamental policies. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Funds' Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Funds' most significant investment policies are described in
the Prospectus.
|X| Do the Funds Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Funds.
|_| No Fund can buy securities issued or guaranteed by any one issuer if
(i) more than 5% of its total assets would be invested in securities of that
issuer or (ii) it would then own more than 10% of that issuer's voting
securities, or (iii) it would then own more than 10% in principal amount of that
issuer's outstanding debt securities. The restriction on debt securities does
not apply to Strategic Bond Fund/VA. All of the restrictions apply only to 75%
of each Fund's total assets. The limits do not apply to securities issued by the
U.S. Government or any of its agencies or instrumentalities.
|_| The Funds cannot lend money. However, they can invest in all or a
portion of an issue of bonds, debentures, commercial paper or other similar
corporate obligations of the types that are usually purchased by institutions,
whether or not they are publicly distributed. The Funds may also enter into
repurchase agreements, and make loans of portfolio securities.
|_| The Funds cannot concentrate investments. That means they cannot invest
25% or more of their total assets in companies in any one industry. Obligations
of the U.S. government, its agencies and instrumentalities are not considered to
be part of an "industry" for the purposes of this restriction. This policy does
not limit investments by Money Fund/VA in obligations issued by banks.
|_| The Funds cannot buy or sell real estate or interests in real estate.
However, the Funds can purchase debt securities secured by real estate or
interests in real estate, or issued by companies, including real estate
investment trusts, which invest in real estate or interests in real estate.
|_| The Funds cannot underwrite securities of other companies. A permitted
exception is in case a Fund is deemed to be an underwriter under the Securities
Act of 1933 when reselling any securities held in its own portfolio.
|_| The Funds cannot invest in commodities or commodity contracts, other
than the hedging instruments permitted by any of its other fundamental policies.
It does not matter whether the hedging instrument is considered to be a
commodity or commodity contract.
|_| The Funds cannot invest in the securities issued by any company for the
purpose of exercising control of management of that company.
|_| The Funds cannot invest in or hold securities of any issuer if officers
and Trustees of the Funds or the Manager individually beneficially own more than
1/2 of 1% of the securities of that issuer and together own more than 5% of the
securities of that issuer.
|_| The Funds cannot mortgage, pledge, hypothecate or otherwise encumber any of
its assets to secure a debt or a loan. However, this does not prohibit the Funds
from entering into an escrow, collateral or margin arrangement with any of its
investments.
|_| The Funds cannot invest in oil, gas or other mineral explorations or
development programs. However, the Funds may purchase options, futures
contracts, swaps and other investments which are backed by, or the investment
return from which are linked to oil, gas and mineral values.
|_| The Funds cannot issue "senior securities," but this does not prohibit
certain investment activities for which assets of the Funds are designated as
segregated, or margin, collateral or escrow arrangements are established, to
cover the related obligations. Examples of those activities include borrowing
money, reverse repurchase agreements, delayed-delivery and when-issued
arrangements for portfolio securities transactions, and contracts to buy or sell
derivatives, hedging instruments, options or futures.
Unless the Prospectus or this Statement of Additional Information states that a
percentage restriction applies on an ongoing basis, it applies only at the time
the Fund makes an investment. The Fund need not sell securities to meet the
percentage limits if the value of the investment increases in proportion to the
size of the Fund.
For purposes of the Funds' policy not to concentrate its investments as
described above, the Funds have adopted the industry classifications set forth
in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.
How the Funds Are Managed
Organization and History. Each Fund is an investment portfolio, or "series" of
Oppenheimer Variable Account Funds (the "Trust"), a multi-series open-end
diversified management investment company organized as a Massachusetts business
trust that presently includes ten series. Money Fund/VA, Bond Fund/VA and
Capital Appreciation Fund/VA were all organized in 1983, High Income Fund/VA,
Aggressive Growth Fund/VA and Multiple Strategies Fund/VA, were all organized in
1986, Global Securities Fund/VA was organized in 1990, Strategic Bond Fund/VA
was organized in 1993, Main Street Growth & Income Fund/VA was organized in
1995, and Small Cap Growth Fund/VA was organized in 1998. The suffix "VA" was
added to each Fund's name on May 1, 1999. Prior to that date, Oppenheimer
Capital Appreciation Fund/VA was named "Oppenheimer Growth Fund," and
Oppenheimer Main Street Growth & Income Fund/VA was named "Oppenheimer Growth &
Income Fund." Prior to May 1, 1998, Oppenheimer Aggressive Growth Fund/VA was
named "Oppenheimer Capital Appreciation Fund." All references to the Fund's
Board of Trustees and Officers refer to the Trustees and Officers, respectively,
of Oppenheimer Variable Account Funds.
The Funds are 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
their performance, and review the actions of the Manager. Although the Funds
will not normally hold annual meetings of its shareholders, they 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 Declaration of Trust of Oppenheimer Variable Account Funds.
|X| Classes of Shares. The Board of Trustees has the power, without
shareholder approval, to divide unissued shares of any Fund into two or more
classes. While the Board has done so, and each Fund currently has two classes of
shares: Class 2 shares, and a class of shares without numerical designation, no
Class 2 shares of any Fund are outstanding or have ever been offered as of the
date of this Statement of Additional Information. All classes invest in the same
investment portfolio. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which interests of one class are
different from interests of another class, and
o votes as a class on matters that affect that class alone.
Shares are freely transferable, and each share of each class has one vote
at shareholder meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Each share of each Fund represents an
interest in that Fund proportionately equal to the interest of each other share
of the same class.
The Trustees are authorized to create new series and classes of shares. The
Trustees may reclassify unissued shares of the Funds into additional series or
classes of shares. The Trustees also may divide or combine the shares of a class
into a greater or lesser number of shares without changing the proportionate
beneficial interest of a shareholder in the Funds. Shares do not have cumulative
voting rights or preemptive or subscription rights. Shares may be voted in
person or by proxy at shareholder meetings.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Funds
are not required to hold, and do not plan to hold, regular annual meetings of
shareholders. The Funds will hold meetings when required to do so by the
Investment Company Act or other applicable law. They will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of all the Funds, 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 all outstanding shares.
If the Trustees receive a request from at least 10 shareholders stating that
they wish to communicate with other shareholders to request a meeting to remove
a Trustee, the Trustees will then either make the shareholder list available to
the applicants or mail their communication to all other shareholders at the
applicants' expense. The shareholders making the request must have been
shareholders for at least six months and must hold shares of the Funds valued at
$25,000 or more or constituting at least 1% of the Funds' outstanding shares,
whichever is less. The Trustees may also take other action as permitted by the
Investment Company Act.
|X| Shareholder and Trustee Liability. The Declaration of Trust contains an
express disclaimer of shareholder or Trustee liability for the Funds'
obligations. It also provides for indemnification and reimbursement of expenses
out of a Fund's property for any shareholder held personally liable for its
obligations. The Declaration of Trust also states that upon request, a Fund
shall assume the defense of any claim made against a shareholder for any act or
obligation of the Fund and shall satisfy any judgment on that claim.
Massachusetts law permits a shareholder of a business trust (such as the Trust)
to be held personally liable as a "partner" under certain circumstances.
However, the risk that a Fund shareholder will incur financial loss from being
held liable as a "partner" of the Fund is limited to the relatively remote
circumstances in which a Fund would be unable to meet its obligations.
The Funds' contractual arrangements state that any person doing business
with the Funds (and each shareholder of the Funds) agrees under its Declaration
of Trust to look solely to the assets of the Fund for satisfaction of any claim
or demand that may arise out of any dealings with that Fund. The contracts
further state that the Trustees shall have no personal liability to any such
person, to the extent permitted by law.
Trustees and Officers of the Funds. The Trustees and officers of the Funds, and
their principal occupations and business affiliations during the past five years
are listed below. Trustees denoted with an asterisk (*) below are deemed to be
"interested persons" of the Funds under the Investment Company Act. All of the
Trustees are also trustees, directors or managing general partners of the
following Denver-based Oppenheimer funds 1:
Oppenheimer Cash Reserves Oppenheimer Total Return Fund, Inc.
Oppenheimer Champion Income Fund Oppenheimer Variable Account Funds
Oppenheimer Capital Income Fund Panorama Series Fund, Inc.
Oppenheimer High Yield Fund Centennial America Fund, L. P.
Oppenheimer International
Bond Fund Centennial California Tax Exempt Trust
Oppenheimer Integrity Funds Centennial Government Trust
Oppenheimer Limited-Term
Government Fund Centennial Money Market Trust
Oppenheimer Main Street
Funds, Inc. Centennial New York Tax Exempt Trust
Oppenheimer Municipal Fund Centennial Tax Exempt Trust
Oppenheimer Real Asset Fund The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Strategic Income Fund
Ms. Macaskill and Messrs. Swain, Bishop, Donohue, Farrar and Zack, who are
officers of the Fund, respectively hold the same offices with the other
Denver-based Oppenheimer funds. As of April 1, 1999, the Trustees and officers
of the Fund as a group did not beneficially own any shares of the Fund.
Robert G. Avis,* Trustee; Age: 67
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: 84
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age: 68
1501 Quail Street, Newport Beach, CA 92660
Chairman and CEO of Universal Space Lines, Inc. (a space services
management company); formerly Vice President of McDonnell Douglas
Space Systems Co., prior to which he was associated with the National
Aeronautics and Space Administration.
Jon S. Fossel, Trustee; Age: 56
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly Chairman and a director of the Manager, President and a director
of Oppenheimer Acquisition Corp., Shareholder Services,
Inc. and Shareholder Financial Services, Inc.
Sam Freedman, Trustee; Age: 58
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds
Services, Chairman, Chief Executive Officer and a director of
Shareholder Services, Inc. and Shareholder Financial Services, Inc., Vice
President and a director of Oppenheimer Acquisition Corp.
and a director of the Manager.
Raymond J. Kalinowski, Trustee; Age: 69
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products
training company).
C. Howard Kast, Trustee; Age: 76
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee; Age: 77
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
James C. Swain, Chairman, Chief Executive Officer and Trustee*; Age 65
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager (since September 1988); formerly President
and a director of Centennial Asset Management Corporation,
and Chairman of the Board of Shareholder Services, Inc.
Bridget A. Macaskill, President; Age: 50
Two World Trade Center, New York, New York 10048
President (since June 1991), Chief Executive Officer (since September
1995) and a director (since December 1994) of the Manager;
President and a director (since June 1991) of HarbourView Asset
Management Corp.; Chairman and a director (since August 1994) of
Shareholder Services, Inc. and (since September 1995) Shareholder
Financial Services, Inc.; President (since September 1995) and a
director (since October 1990) of Oppenheimer Acquisition Corp.;
President (since September 1995) and a director (since November
1989) of Oppenheimer Partnership Holdings, Inc., a holding company
subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore
fund management subsidiary of the Manager, and Oppenheimer Millennium
Funds plc; President and a director of other Oppenheimer
funds; a director of Hillsdown Holdings plc (a U.K. food company).
Ned M. Steel, Trustee; Age: 84
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
Charles Albers, Vice President and Main Street Growth & Income Fund/VA
Portfolio Manager, Age: 59.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since April 1998); an officer of
other Oppenheimer funds; a Certified Financial Analyst;
formerly a Vice President and portfolio manager for Guardian Investor
Services, the investment management subsidiary of The Guardian
Life Insurance Company (since 1972).
Bruce L. Bartlett, Vice President and Aggressive Growth Fund/VA Portfolio
Manager, Age: 49
Two World Trade Center, New York, New York 10048
Senior Vice President of the Manager (since January 1998); an officer of
other Oppenheimer funds; formerly a Vice President and
Senior Portfolio Manager at First of America Investment Corp.
John P. Doney, Vice President and Multiple Strategies Fund/VA Portfolio
Manager, Age: 69.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since June 1992); an officer of other
Oppenheimer funds; formerly Senior Vice President and Chief
Investment Officer - Equities of National Securities & Research (mutual
fund adviser) and Vice President of the National Affiliated
Investment Companies.
Alan Gilston, Vice President and Small Cap Growth Fund/VA Portfolio Manager,
Age: 41
Two World Trade Center, New York, New York 10048
Vice President of the Manager (since September 1997); formerly a Vice
President and portfolio manager at Schroder Capital Management
International, Inc.
John S. Kowalik, Vice President and Bond Fund/VA Portfolio Manager, Age: 42
Two World Trade Center, New York, New York 10048
Senior Vice President of the Manager (since July 1998); an officer of other
Oppenheimer funds; formerly Managing Director and Senior
Portfolio Manager at Prudential Global Advisors (1989-1998).
Michael S. Levine, Vice President and Multiple Strategies Fund/VA Portfolio
Manager, Age: 33
Two World Trade Center, New York, New York 10048
Vice President of the Manager (since April 1996); formerly Assistant
Portfolio Manager of the Manager (from June 1994 to April 1996)
and formerly portfolio manager and research associate for Amas Securities,
Inc. (from February 1990 to February 1994).
Nikolaos D. Monoyios, Vice President and Main Street Growth & Income Fund/VA
Portfolio Manager, Age: 60.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since April 1998); an officer of other
Oppenheimer funds; a Certified Financial Analyst; formerly a
Vice President and portfolio manager for Guardian Investor Services,
the investment management subsidiary of The Guardian Life
Insurance Company (since 1979).
David P. Negri, Vice President and High Income Fund/VA, Bond Fund/VA,
Strategic Bond Fund/VA Portfolio Manager, Age: 45
Two World Trade Center, New York, New York 10048
Senior Vice President of the Manager (since June 1989); an officer of other
Oppenheimer funds.
Jane Putnam, Vice President and Capital Appreciation Fund/VA Portfolio
Manager, Age: 38
Two World Trade Center, New York, New York 10048
Vice President of the Manager (since October 1995); an officer of other
Oppenheimer funds; previously a portfolio manager and equity
research analyst for Chemical Bank.
Thomas P. Reedy, Vice President and High Income Fund/VA Portfolio Manager,
Age: 37.
Two World Trade Center, New York, New York 10048
Vice President of the Manager (since June 1993); an officer of other
Oppenheimer funds.
Richard H. Rubinstein, Vice President and Multiple Strategies Fund/VA
Portfolio Manager, Age: 50
Two World Trade Center, New York, New York 10048
Senior Vice President of the Manager (since October 1995); an officer of
other Oppenheimer funds (since June 1990).
Arthur P. Steinmetz, Vice President and Strategic Bond Fund/VA Portfolio
Manager, Age: 40
Two World Trade Center, New York, New York 10048
Senior Vice President of the Manager (since March 1993); an officer of other
Oppenheimer funds.
Jay W. Tracey III, Vice President and Small Cap Growth Fund/VA Portfolio
Manager, Age: 45
Two World Trade Center, New York, New York 10048
Vice President of the Manager (since September 1994); an officer of
other OppenheimerFunds; formerly a Managing Director of
Buckingham Capital Management (February 1994-September 1994), prior to
which he was Portfolio Manager and Vice President of the Fund
and other Oppenheimer funds and a Vice President of the Manager (July
1991-February 1994).
Carol E. Wolf, Vice President and Money Fund/VA Portfolio Manager, Age: 47
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager and Centennial (since June 1990); an officer of
other Oppenheimer funds.
Arthur J. Zimmer, Vice President and Money Fund/VA Portfolio Manager, Age: 53
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President of the Manager (since June 1997); Vice President of
Centennial (since September 1991); an officer of other
Oppenheimer funds; formerly Vice President of the Manager (October 1990-June
1997).
William Wilby, Vice President and Global Securities Fund/VA Portfolio
Manager, Age: 54
Two World Trade Center, New York, NY 10048-0203
Senior Vice President and the Manager (since July 1994) and HarbourView
Asset Management Corporation (since October 1993); and
officer of other Oppenheimer funds; formerly International Investment
Strategist at Brown Brothers Harriman & Co., prior to which he
was a Managing Director and Portfolio Manager at AIG Global Investors.
Andrew J. Donohue, Vice President and Secretary; Age: 48
Two World Trade Center, New York, New York 10048
Executive Vice President (since January 1993), General Counsel (since
October 1991) and a Director (since September 1995) of the
Manager; Executive Vice President (since September 1993) and a director
(since January 1992) of the Distributor; Executive Vice
President, General Counsel and a director of HarbourView Asset Management
Corp., Shareholder Services, Inc., Shareholder Financial
Services, Inc. and Oppenheimer Partnership Holdings, Inc. (since
September 1995); President and a director of Centennial Asset
Management Corp. (since September 1995); President and a director of
Oppenheimer Real Asset Management, Inc. (since July 1996);
General Counsel (since May 1996) and Secretary (since April 1997) of
Oppenheimer Acquisition Corp.; Vice President and a Director of
OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
Brian W. Wixted, Treasurer; Age: 39
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (April 1999) of the Manger; formerly
Principal and Chief Operating Officer, Bankers Trust Company
- - Mutual Fund Services Division (March 1995 - March 1999); Vice President
and Chief Financial Officer of CS First Boston Investment
Management Corp. (September 1991 - March 1995); and Vice President and
Accounting Manager, Merrill Lynch Asset Management (November
1987 - September 1991).
Robert J. Bishop, Assistant Treasurer; Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant
Vice President of the Manager/Mutual Fund Accounting (April 1994-May 1996),
and a Fund Controller for the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 33
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996);
Assistant Treasurer of Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer funds; formerly an
Assistant Vice President of the Manager/Mutual Fund Accounting
(April 1994-May 1996), and a Fund Controller for the Manager.
Robert G. Zack, Assistant Secretary; Age: 50
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel
(since May 1981) of the Manager, Assistant Secretary of
Shareholder Services, Inc. (since May 1985), and Shareholder Financial
Services, Inc. (since November 1989); Assistant Secretary
(since October 1997) of Oppenheimer Millennium Funds plc and
OppenheimerFunds International Ltd.; an officer of other Oppenheimer
funds.
|X| Remuneration of Trustees. The officers of the Funds and a Trustee of
the Fund (Mr. Swain) are affiliated with the Manager and receive no salary or
fee from the Funds. The remaining Trustees of the Funds received the
compensation shown below. The compensation from the Funds were paid during their
fiscal year ended December 31, 1998. The compensation from all of the
Denver-based Oppenheimer funds includes the compensation from the Funds and
represents compensation received as a director, trustee, managing general
partner or member of a committee of the Board during the calendar year 1998.
Aggregate Compensation Total Compensation
from Oppenheimer Variable From all Denver-
Account Funds Based
Trustee's Name and Other OppenheimerFunds 1
Positions
Robert G. Avis $3,908 $67,998
William A. Baker $4,026 $69,998
Charles Conrad, Jr. $3,908 $67,998
Jon. S. Fossel $3,880 $67,496
Sam Freedman
Audit and Review Committee Member $4,253 $73,998
Raymond J. Kalinowski
Audit and Review
Committee Member $4,253 $73,998
C. Howard Kast
Audit and Review
Committee Chairman $4,429 $76,998
Robert M. Kirchner $3,908 $67,998
Ned M. Steel $3,908 $67,998
1. For the 1998 calendar year.
|X| Deferred Compensation Plan. The Board of Trustees has adopted a
Deferred Compensation Plan for disinterested Trustees that enables them to elect
to defer receipt of all or a portion of the annual fees they are entitled to
receive from the Funds. Under the plan, the compensation deferred by a Trustee
is periodically adjusted as though an equivalent amount had been invested in
shares of one or more Oppenheimer funds selected by the Trustee. The amount paid
to the Trustee under the plan will be determined based upon the performance of
the selected funds.
Deferral of Trustee's fees under the plan will not materially affect the
Funds' assets, liabilities and net income per share. The plan will not obligate
the fund to retain the services of any Trustee or to pay any particular level of
compensation to any Trustee. Pursuant to an Order issued by the Securities and
Exchange Commission, the Funds may invest in the funds selected by the Trustee
under the plan without shareholder approval for the limited purpose of
determining the value of the Trustee's deferred fee account.
- -- Major Shareholders. As of April 1, 1999 the holders of 5% or more of the
outstanding shares of any Fund were separate accounts of the following insurance
companies and their respective affiliates: (i) Monarch Life Insurance Company
("Monarch"), Springfield, MA; (ii) ReliaStar Bankers Security Life Insurance
Company ("ReliaStar"), Minneapolis, MN; (iii) GE Life & Annuity Assurance
Company ("GE"), Richmond, VA; (iv) Nationwide Life Insurance Company
("Nationwide"), Columbus, OH; (v) Aetna Life Insurance and Annuity Company
("Aetna"), Hartford, CT; (vi) Massachusetts Mutual Life Insurance Company,
Springfield, MA ("MassMutual"), (vii) Jefferson-Pilot Life Insurance Company,
Greensboro, NC and Alexander Hamilton Life Insurance Company of America,
Concord, NH (collectively, "Jefferson Pilot"); (viii) CUNA Mutual Group
("CUNA"), Madison, WI; (ix) American General Annuity Insurance Company, Houston,
TX ("American General"); and (x) Protective Life Insurance Company, Birmingham,
AL ("Protective"). Such shares were held as shown in Appendix C. No shares of
Class 2 shares of any Fund were outstanding as of that date.
The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company. 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 the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
enforced by the Manager.
|X| The Investment Advisory Agreements. The Manager provides investment
advisory and management services to each Fund under an investment advisory
agreement between the Manager and the Trust for each Fund. The Manager selects
securities for the Funds' portfolios and handles their day-to-day business. The
portfolio managers of the Funds are employed by the Manager and are the persons
who are principally responsible for the day-to-day management of the Funds'
portfolios. Other members of the Manager's Teams provide the portfolio managers
with counsel and support in managing the Funds' portfolios. For Global
Securities Fund/VA, this includes George Evans and Frank Jennings. Similarly,
other members of the Manager's Fixed Income Portfolio Department, particularly
portfolio analysts, traders and other portfolio managers having broad experience
with domestic and international government and fixed-income securities, provide
the portfolio managers of the High Income Fund/VA, Bond Fund/VA and Strategic
Bond Fund/VA with support in managing the portfolios of those Funds.
The agreements require the Manager, at its expense, to provide the Funds
with adequate office space, facilities and equipment. It also requires the
Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Funds.
Those responsibilities include the compilation and maintenance of records with
respect to operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for continuous public
sale of shares of the Funds.
The Funds pay expenses not expressly assumed by the Manager under the
advisory agreement. The advisory agreement lists examples of expenses paid by
the Funds. The major categories 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. The management
fees paid by the Funds to the Manager are calculated at the rates described in
the Prospectus, which are applied to the assets of each Fund as a whole. Prior
to May 1, 1999, the advisory agreement for Aggressive Growth Fund/VA did not
include a breakpoint above $800 million. In the event more than one class of
shares is issued, the fees would be allocated to each class of shares based upon
the relative proportion of a Fund's net assets represented by that class.
Management Fees for the Fiscal Year Ended December 31:
Fund: 1996 1997 1998
Money Fund/VA $ 445,899 $601,698 $ 619,030
High Income Fund/VA $1,777,754 $1,667,490 $2,383,008
Bond Fund/VA $2,188,350 $3,281,556 $4,218,231
Aggressive
Growth Fund/VA $3,382,840 $5,324,309 $6,564,650
Capital Appreciation
Fund/VA $1,139,2551 $2,859,202 $4,369,487
Multiple Strategies
Fund $3,132,569 $4,068,887 $4,584,184
Global Securities
Fund/VA $ 3,395,740 $5,615,606 $7,167,836
Strategic Bond Fund/VA $ 618,338 $1,197,613 $1,860,227
Main Street Growth
& Income Fund/VA $ 160,819 $ 790,577 $1,742,253
Small Cap
Growth Fund/VA N/A N/A $ 2,2192
____________________
(1) During the fiscal year ended December 31, 1996, the Manager
reimbursed Oppenheimer Capital Appreciation Fund/VA $27,276 for
certain SEC registration fees incurred in connection with the acquisition by
that Fund of J.P. Capital Appreciation Fund, Inc.
(2)From May 1, 1998 (commencement of operations) to December 31, 1998.
The investment advisory agreements state that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment advisory
agreement, the Manager is not liable for any loss resulting from a good faith
error or omission on its part with respect to any of its duties under the
agreement.
The agreements permit the Manager to act as investment advisor 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 or general distributor. If the Manager shall no longer act as investment
advisor to a Fund, the Manager may withdraw the right of that Fund to use the
name "Oppenheimer" as part of its name.
Brokerage Policies of the Funds
Brokerage Provisions of the Investment Advisory Agreements. One of the duties of
the Manager under the investment advisory agreements is to arrange the portfolio
transactions for the Funds. The advisory agreements contain provisions relating
to the employment of broker-dealers to effect the Funds' portfolio transactions.
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. The Manager may employ broker-dealers that the Manager thinks, in
its best judgment based on all relevant factors, will implement the policy of
the Funds to obtain, at reasonable expense, the "best execution" of the Funds'
portfolio transactions. "Best execution" means prompt and reliable execution at
the most favorable price obtainable. The Manager need not seek competitive
commission bidding. However, it is expected to be aware of the current rates of
eligible brokers and to minimize the commissions paid to the extent consistent
with the interests and policies of the Funds as established by its Board of
Trustees.
Under the investment advisory agreements, the Manager may select brokers
(other than affiliates) 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 charge, if the Manager makes a good faith
determination that the commission is fair and reasonable in relation to the
services provided. Subject to those considerations, as a factor in selecting
brokers for the Funds' portfolio transactions, the Manager may also consider
sales of shares of the Funds and other investment companies for which the
Manager or an affiliate serves as investment adviser.
Brokerage Practices Followed by the Manager. The Manager allocates
brokerage for the Funds subject to the provisions of the investment advisory
agreements and the procedures and rules described above. Generally, the
Manager's portfolio traders allocate brokerage based upon recommendations from
the Manager's portfolio managers. In certain instances, portfolio managers may
directly place trades and allocate brokerage. In either case, the Manager's
executive officers supervise the allocation of brokerage.
Transactions in securities other than those for which an exchange is the
primary market are generally done with principals or market makers. In
transactions on foreign exchanges, the Funds may be required to pay fixed
brokerage commissions and therefore would not have the benefit of negotiated
commissions available in U.S. markets. Brokerage commissions are paid primarily
for transactions in listed securities or for certain fixed-income agency
transactions in the secondary market. Otherwise brokerage commissions are paid
only if it appears likely that a better price or execution can be obtained by
doing so. In an option transaction, the Funds ordinarily use the same broker for
the purchase or sale of the option and any transaction in the securities to
which the option relates.
Other funds advised by the Manager have investment policies similar to
those of the Funds. Those other funds may purchase or sell the same securities
as the Funds at the same time as the Funds, which could affect the supply and
price of the securities. If two or more funds advised by the Manager purchase
the same security on the same day from the same dealer, the transactions under
those combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account.
Most purchases of debt obligations are principal transactions at net
prices. This affects a substantial portion of the portfolio transactions of
Money Fund/VA, High Income Fund/VA, Bond Fund/VA and Strategic Bond Fund/VA.
Instead of using a broker for those transactions, the Funds normally deal
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 the
services of a broker. Purchases of portfolio 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 investment advisory agreements permit the Manager to allocate brokerage
for research services. 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. The investment research received for the commissions of those other
accounts may be useful both to one of the Funds and one or more of the Manager's
other accounts. Investment research may be supplied to the Manager by a third
party at the instance of a broker through which trades are placed.
Investment research services include information and analysis on particular
companies and industries as well as market or economic trends and portfolio
strategy, 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 stated commissions on
secondary fixed-income agency trades to obtain research if the broker represents
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 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 research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager to
obtain market information for the valuation of securities that are either held
in the Fund's portfolio or are being considered for purchase. The Manager
provides information to the Board about the commissions paid to brokers
furnishing such services, together with the Manager's representation that the
amount of such commissions was reasonably related to the value or benefit of
such services.
The (i) total brokerage commissions paid by the Funds (other than Money
Fund/VA, which paid no brokerage commissions), not including spreads or
concessions on principal transactions on a net trade basis, for the Funds'
fiscal year ended December 31, 1996, 1997 and 1998; and (ii) for the Funds'
fiscal year ended December 31, 1998, the amount of transactions directed to
brokers for research services, and the amount of the commissions paid to
broker-dealers for those services, is shown in the chart below:
<TABLE>
<CAPTION>
Total Amount Commissions Paid
Total Brokerage Commissions of Transactions For
Paid by the Funds
Fund 1996 1997 1998 1998 1998
<S> <C> <C> <C> <C> <C>
High Income $ 24,248 $ 20,256 $62,251 $ 1,781,914 $ 447
Fund/VA
Bond Fund/VA $ 13,852 $ 26,799 $91,170 $ 17,835,169 $ 1,500
Strategic Bond
Fund/VA $ 11,995 $ 17,121 $219,537 $ 13,052,225 $ 7,186
Aggressive Growth
Fund/VA $ 507,501 $810,749 $1,264,440 $244,597,427 $ 398,286
Capital Appreciation
Fund/VA $215,286 $506,443 $805,082 $332,363,432 $ 483,496
Small Cap Growth
Fund/VA -- -- $ 839 $ 19,016 $ 66
Global Securities
Fund/VA $2,101,076 $2,114,523 $2,900,162 $977,222,013 $2,552,195
Multiple Strategies
Fund/VA $ 351,373 $ 500,783 $430,211 $119,112,266 $ 238,988
Main Street Growth
& Income Fund/VA $ 71,023 $ 209,630 $458,120 $144,672,877 $ 293,175
</TABLE>
Distribution and Service Plans
The Distributor. Under its General Distributor's Agreements with the Funds,
OppenheimerFunds Distributor, Inc. will act as the principal underwriter of the
Funds, Class 2 shares, if and when shares of that class are issued. There is no
general distributor for the Funds' shares without numerical designation.
Class 2 Service Plans
Each Fund has adopted a Service Plan for its Class 2 shares under Rule
12b-1 of the Investment Company Act, pursuant to which each Fund would make
payments to the Distributor in connection with the distribution and/or servicing
of the shares of Class 2. Each Class 2 Plan has been approved by a vote of (i)
the Board of Trustees of the Trust, including a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on that
Plan, and (ii) the Manager as the then-sole initial holder of such shares. As of
the date of this Statement of Additional Information, no Class 2 shares have
been issued and therefore no payments have been made under the Plans.
Under the Class 2 Plans, no payment will be made to any insurance company
separate account sponsor or affiliate thereof under a Fund's Class 2 Plan (each
is referred to as a "Recipient") in any quarter if the aggregate net assets of a
Fund's shares held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time by a majority
of the Trust's Independent Trustees. Initially, the Board of Trustees has set
the fee at 0.10% of average annual net assets and set no minimum amount.
Under the Plans, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time may use their own
resources (which, as to the Manager, may include profits derived from the
advisory fee it receives from each respective Fund) to make payments to
Recipients for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or decrease
the amount of distribution assistance payments they make to Recipients from
their own assets.
Unless terminated as described below, each Class 2 Plan continues in effect
from year to year but only as long as such continuance is specifically approved
at least annually by the Trust's Board of Trustees and its Independent Trustees
by a vote cast in person at a meeting called for the purpose of voting on such
continuance. Any Class 2 Plan may be terminated at any time by the vote of a
majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of that class. For purposes of voting with respect to the Class 2 Plans, Account
owners are considered to be shareholders of a Fund's shares. No Class 2 Plan may
be amended to increase materially the amount of payments to be made unless such
amendment is approved by Account owners of the class affected by the amendment.
All material amendments must be approved by the Board and a majority of the
Independent Trustees.
While the plans are in effect and Class 2 shares are outstanding, the
Treasurer of the Trust must provide separate written reports to the Trust's
Board of Trustees at least quarterly describing the amount of payments made
pursuant to each Plan and the purposes for which the payments were made. These
reports are subject to the review and approval of the Independent Trustees.
The Class 2 Plans provide for the Distributor to be reimbursed for its
distribution related services. The Distributor will pay insurance company
separate account sponsors that offer Class 2 shares for certain activities, as
described in the Prospectus.
Performance of the Funds
Explanation of Performance Terminology. The Funds use a variety of terms to
illustrate their investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how total
returns are calculated is set forth below. The charts below show the Funds'
performance as of the Funds' most recent fiscal year end. You can obtain current
performance information by calling the Funds' Transfer Agent at 1-888-470-0861.
The Funds' illustrations of their performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by a Fund of its performance data must
include the average annual total returns for the advertised class of shares of
that Fund. Those returns must be shown for the 1, 5 and 10-year periods (or the
life of the class, if less) ending as of the most recently ended calendar
quarter prior to the publication of the advertisement (or its submission for
publication).
Use of standardized performance calculations enables an investor to compare
the Funds' performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using the Funds'
performance information as a basis for comparison with other investments:
|_| Total returns measure the performance of a hypothetical account in a
Fund over various periods and do not show the performance of each shareholder's
account. Your account's performance will vary from the model performance data if
you buy or sell shares during the period, or you bought your shares at a
different time and price than the shares used in the model.
|_| The Fund's performance does not reflect the charges deducted from an
investor's separate account by the insurance company or other sponsor of that
separate account, which vary from product to product. If these charges were
deducted, performance will be lower than as described in the Fund's Prospectus
and Statement of Additional Information. In addition, the separate accounts may
have inception dates different from those of the Funds.
|_| An investment in the Fund is not insured by the FDIC or any other government
agency.
|_| The Funds' performance returns do not reflect the effect of taxes on
dividends and capital gains distributions.
|_| The principal value of the Funds' shares and total returns are not
guaranteed and normally will fluctuate on a daily basis.1
|_| When an investor's shares are redeemed, they may be worth more or less than
their original cost.1
|_| Total returns for any given past period represent historical performance
information and are not, and should not be considered, a prediction of future
returns. The Funds' total returns should not be expected to be the same as the
returns of other Oppenheimer funds, whether or not such other funds have the
same portfolio managers and/or similar names.
The Funds' total returns are affected by market conditions, the quality of that
Funds' investments, the maturity of debt investments, the types of investments
that Fund holds, and its operating expenses.
|X| Total Return Information. There are different types of "total returns"
to measure the Funds' performance. Total return is the change in value of a
hypothetical investment in a Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. 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 actual
year-by-year performance. The Funds use standardized calculations for its total
returns as prescribed by the SEC. The methodology is discussed below.
_________________
1. These statements do not apply to Money Fund/VA, which seeks to maintain a
stable net asset value of $1.00 per shares. There can be no assurance that Money
Fund/VA will be able to do so.
|_| Average Annual Total Return. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n" in the formula) to achieve an Ending Redeemable Value
("ERV" in the formula) of that investment, according to the following formula:
( ) 1/n
( ERV )
( ______ ) - 1 = Average Annual Total Return
( P )
|_| Cumulative Total Return. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. 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
The Funds' Total Returns for the Periods Ended 12/31/98
Average Annual Total Return For:
<TABLE>
<CAPTION>
Five Year Ten Year Cumulative
Fiscal Year Period Ended Period Inception Total Return
Ended 12/31/98 Ended to From Inception 1
Fund 12/31/98 12/31/98 12/31/98 to 12/31/98
<S> <C> <C> <C> <C> <C>
High Income Fund/VA .31% 8.62% 12.71% 12.26% 230.92%
Bond Fund/VA 6.80% 7.01% 9.28% 9.66% 142.96%
Aggressive Growth
Fund/VA 12.36% 13.06% 16.12% 15.07% 345.69%
Capital Appreciation
Fund/VA 24.00% 22.10% 16.85% 16.03% 374.69%
Multiple Strategies
Fund/VA 6.66% 11.43% 11.22% 11.57% 189.65%
Global Securities
Fund/VA 14.11% 9.67% n/a 12.49% 160.49%
Strategic Bond
Fund/VA 2.90% 6.83% n/a 6.79% 45.03%
Main Street Growth &
Income Fund/VA 4.70% n/a n/a 27.00% 130.22%
Small Cap Growth
Fund/VA -4.00% n/a n/a -4.00% -4.00%
</TABLE>
_____________
(1)Inception dates are as follows: 4/30/86 for High Income Fund/VA; 4/3/85
for Bond Fund/VA and Capital Appreciation Fund/VA; 8/15/86
for Aggressive Growth Fund/VA; 2/9/87 for Multiple Strategies Fund/VA;
11/12/90 for Global Securities Fund/VA; 5/3/93 for Strategic
Bond Fund/VA; 7/5/95 for Main Street Growth & Income Fund/VA and 5/1/98 for
Small Cap Growth Fund/VA.
|_| Standardized Yield. The "standardized yield" (sometimes referred to
just as "yield") is shown for a stated 30-day period. It is not based on actual
distributions paid by the Fixed Income Funds to shareholders in the 30-day
period, but is a hypothetical yield based upon the net investment income from
the Fund's portfolio investments for that period. It may therefore differ from
the "dividend yield" for the same class of shares, described below.
Standardized yield is calculated using the following formula set forth in
rules adopted by the Securities and Exchange Commission, designed to assure
uniformity in the way that all funds calculate their yields:
a - b 6
Standardized 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
assumptions).
c = the average daily number of shares of that class
outstanding during the 30-day period that were entitled to
receive dividends.
d = the maximum offering price per share of that class on the
last day of the period, adjusted for undistributed net
investment income.
The standardized yield for a particular 30-day period may differ from the
yield for other periods. The SEC formula assumes that the standardized 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. Additionally, because each class
of shares is subject to different expenses, it is likely that the standardized
yields of the Fund's classes of shares will differ for any 30-day period.
|_| Dividend Yield. The Fixed Income Funds may quote a "dividend yield" for
each class of its shares. Dividend yield is based on the dividends paid on a
class of shares during the actual dividend period. To calculate dividend yield,
the dividends of a class declared during a stated period are added together, and
the sum is multiplied by 12 (to annualize the yield) and divided by the maximum
offering price on the last day of the dividend period. The formula is shown
below:
Dividend Yield = dividends paid x 12/maximum offering price (payment date)
Yields for the 30-Day Periods Ended 12/31/98
Fund Standardized Yield Dividend Yield
High Income Fund/VA 9.47% 8.77%
Bond Fund/VA 6.24% 6.81%
Strategic Bond Fund/VA 8.38% 7.03%
|_| Money Fund/VA Yields. The current yield for Money Fund/VA is calculated
for a seven-day period of time 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 the
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 (1)
adding 1 to the base period return (obtained as described above), (2) raising
the sum to a power equal to 365 divided by 7, and (3) subtracting 1 from the
result.
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. 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. Therefore,
the return on dividends declared during a period may not be the same on an
annualized basis as the yield for that period.
Other Performance Comparisons. The Funds may compare their performance annually
to that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer Agent
at the addresses or telephone numbers shown on the cover of this Statement of
Additional Information. The Funds may also compare their performance to that of
other investments, including other mutual funds, or use rankings of its
performance by independent ranking entities. Examples of these performance
comparisons are set forth below.
|X| Lipper Rankings. From time to time the Funds may publish the rankings
of their performance by Lipper Analytical Services, Inc. Lipper is a
widely-recognized independent mutual fund monitoring 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. Lipper currently ranks the Funds' performance against
other funds in the same investment category. The Lipper performance rankings are
based on total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or taxes into
consideration. Lipper also publishes "peer-group" indices of the performance of
all mutual funds in a category that it monitors and averages of the performance
of the funds in particular categories.
|X| Morningstar Ratings and Rankings. From time to time the star rating and
ranking of the performance of separate accounts that hold Fund shares will be
determined by Morningstar, an independent mutual fund monitoring service.
Morningstar rates and ranks separate accounts that hold mutual funds in broad
investment categories. The results may be published by or for the Funds or the
separate account sponsors.
Morningstar proprietary star ratings reflect historical risk-adjusted total
investment return. Investment return measures one-, three-, five- and ten-year
average annual total returns (depending on the inception of the separate
account) in excess of 90-day U.S. Treasury bill returns after considering the
fund's sales charges and expenses. Risk measures a separate account performance
below 90-day U.S. Treasury bill returns. Risk and investment return are combined
to produce star ratings reflecting performance relative to the average fund in a
fund's category. Five stars is the highest rating (top 10% of separate accounts
in a category), 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%). The current overall star rating is the separate account's
3-year rating or its combined 3- and 5-year rating (weighted 60%/40%
respectively), or its combined 3-, 5-, and 10- year rating (weighted 40%, 30%
and 30%, respectively), depending on the inception date of the separate
accounts. Ratings are subject to change monthly.
The total return rating of a separate account holding shares of a Fund may
also be compared to that of other separate accounts in its Morningstar category,
in addition to its star ratings. Those total return ratings are percentages from
one percent to one hundred percent and are not risk adjusted. For example, if a
separate account is in the 94th percentile, that means that 94% of the separate
accounts in the same category performed better than it did.
|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Funds may include in advertisements and
sales literature performance information about the Funds cited in newspapers and
other periodicals such as The New York Times, The Wall Street Journal, Barron's,
or similar publications. That information may include performance quotations
from other sources, including Lipper and Morningstar. The Funds' performance may
be compared in publications to the performance of various market indices or
other investments, and averages, performance rankings or other benchmarks
prepared by recognized mutual fund statistical services.
Investors may also wish to compare the returns on the Funds' shares to the
return on fixed-income investments available from banks and thrift institutions.
Those include certificates of deposit, ordinary interest-paying checking and
savings accounts, and other forms of fixed or variable time deposits, and
various other instruments such as Treasury bills. However, the Funds' returns
and share price are not guaranteed or insured by the FDIC or any other agency
and will fluctuate daily,1 while bank depository obligations may be insured by
the FDIC and may provide fixed rates of return. Repayment of principal and
payment of interest on Treasury securities is backed by the full faith and
credit of the U.S. government.
From time to time, the Funds may publish rankings or ratings of the
Manager or Transfer Agent, and of the investor services provided by them to
shareholders of the Oppenheimer funds, other than performance rankings of
the Oppenheimer funds themselves. Those ratings or rankings of shareholder
and investor services by third parties may include comparisons of their
services to those provided by other mutual fund families selected by the
rating or ranking services. They may be based upon the opinions of the
rating or ranking service itself, using its research or judgment, or based
upon surveys of investors, brokers, insurance sponsors, shareholders or
others.
ABOUT YOUR ACCOUNT
How to Buy and Sell Shares
Shares of the Funds are sold to provide benefits under variable life
insurance policies and variable annuity and other insurance company
separate accounts, as explained in the Funds' Prospectuses for the Funds
and for the insurance product you have selected. Therefore, instructions
from an investor to buy or sell shares of the Funds should be directed to
the insurance sponsor for the investor's separate account, or that
insurance sponsor's agent.
|X| Allocation of Expenses. The Funds pay expenses related to its
daily operations, such as custodian bank fees, Trustees' fees, transfer
agency fees, legal fees and auditing costs. Those expenses are paid out of
the Fund's 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.
If and when more than one class of the Funds' shares are issued, the
methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes would recognize two types of
expenses. General expenses that do not pertain specifically to any one
class would be allocated pro rata to the shares of all classes. The
allocation would be based on the percentage of the Fund's total assets that
is represented by the assets of each class, and then equally to each
outstanding share within a given class. Such general expenses include
management fees, legal, bookkeeping and audit fees, printing and mailing
costs of shareholder reports, Prospectuses, Statements of Additional
Information and other materials for current shareholders, fees to
unaffiliated Trustees, custodian bank expenses, share issuance costs,
organization and start-up costs, interest, taxes and brokerage commissions,
and non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a particular class
would be allocated equally to each outstanding share within that class.
Examples of such expenses include service plan (12b-1) fees of Class 2
shares, transfer and shareholder servicing agent fees and expenses, and
shareholder meeting expenses (to the extent that such expenses pertain only
to a specific class).
Determination of Net Asset Values Per Share. The net asset values per share of
each class of shares of the Funds are determined as of the close of business of
The New York Stock Exchange on each day that the Exchange is open. The
calculation is done by dividing the value of the Fund's net assets attributable
to a class by the number of shares of that class that are outstanding. The
Exchange normally closes at 4:00 P.M., New York time, but may close earlier on
some other 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,
Martin Luther King, Jr. Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It may also close on other days.
Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
U.S. holidays) or after 4:00 P.M. on a regular business day. The Funds' net
asset values will not be calculated on those days, and the values of some
of the Fund's portfolio securities may change significantly on those days,
when shareholders may not purchase or redeem shares. Additionally, trading
on European and Asian stock exchanges and over-the-counter markets normally
is completed before the close of The New York Stock Exchange.
Changes in the values of securities traded on foreign exchanges or
markets as a result of events that occur after the prices of those
securities are determined, but before the close of The New York Stock
Exchange, will not be reflected in the Funds' calculation of their net
asset values that day unless the Board of Trustees determines that the
event is likely to effect a material change in the value of the security.
The Manager may make that determination, under procedures established by
the Board.
|X| Securities Valuation.1 The Funds' Board of Trustees has
established procedures for the valuation of the Funds' securities. In
general those procedures are as follows:
|_| Equity securities traded on a U.S. securities exchange or on
NASDAQ are valued as follows:
(1) if last sale information is regularly reported, they are valued at
the last reported sale price on the principal exchange on which they are
traded or on NASDAQ, as applicable, on that day, or
(2) if last sale information is not available on a valuation date,
they are valued at the last reported sale price preceding the valuation
date if it is within the spread of the closing "bid" and "asked" prices on
the valuation date or, if not, at the closing "bid" price on the valuation
date.
|_| Equity securities traded on a foreign securities exchange
generally are valued in one of the following ways: (1) at the last sale
price available to the pricing service approved by the Board of Trustees,
or
(2) at the mean between the "bid" and "asked" prices obtained from the
principal exchange on which the security is traded or, on the basis of
reasonable inquiry, from two market makers in the security.
|_| Long-term debt securities having a remaining maturity in excess of
60 days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Funds' Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
|_| The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Funds' Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry:
________________
1. These statements do not apply to Money Fund/VA, which seeks to
maintain a stable net asset value of $1.00 per shares. There can
be no assurance that Money Fund/VA will be able to do so.
(1) debt instruments that have a maturity of more than 397 days when issued,
(2) debt instruments that had a maturity of 397 days or less when issued and
have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or less
when issued and which have a remaining maturity of 60 days or less.
|_| The following securities are valued at cost, adjusted for amortization of
premiums and accretion of discounts: (1) money market debt securities held by a
non-money market fund that had a maturity of less than 397 days when issued that
have a remaining maturity of 60 days or less, and (2) debt instruments held by a
money market fund that have a remaining maturity of 397 days or less.
|_| Securities (including restricted securities) not having readily-available
market quotations are valued at fair value determined under the Board's
procedures. If the Manager is unable to locate two market makers willing to give
quotes, a security may be priced at the mean between the "bid" and "asked"
prices provided by a single active market maker (which in certain cases may be
the "bid" price if no "asked" price is available).
In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale
information is not generally available, the Manager may use pricing
services approved by the Board of Trustees. The pricing service may use
"matrix" comparisons to the prices for comparable instruments on the basis
of quality, yield, and maturity. Other special factors may be involved
(such as the tax-exempt status of the interest paid by municipal
securities). The Manager will monitor the accuracy of the pricing services.
That monitoring may include comparing prices used for portfolio valuation
to actual sales prices of selected securities.
The closing prices in the London foreign exchange market on a
particular business day that are provided to the Manager by a bank, dealer
or pricing service that the Manager has determined to be reliable are used
to value foreign currency, including forward contracts, and to convert to
U.S. dollars securities that are denominated in foreign currency.
Puts, calls, and futures are valued at the last sale 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. If there were no sales that day, they shall be valued at the last
sale price on the preceding trading day if it is within the spread of the
closing "bid" and "asked" prices on the principal exchange or on NASDAQ on
the valuation date. If not, the value shall be the closing bid price on the
principal exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be valued by the
mean between "bid" and "asked" prices obtained by the Manager from two
active market makers. In certain cases that may be at the "bid" price if no
"asked" price is available.
When a Fund writes an option, an amount equal to the premium received
is included in that Fund's Statement of Assets and Liabilities as an asset.
An equivalent credit is included in the liability section. The credit is
adjusted ("marked-to-market") to reflect the current market value of the
option. In determining the Fund's gain on investments, if a call or put
written by a 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 that Fund enters into a closing purchase
transaction, it will have a gain or loss, depending on whether the premium
received 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/VA Net Asset Valuation Per Share. Money Fund/VA will seek to maintain
a net asset value of $1.00 per share for purchases and redemptions. There can be
no assurance it will do so. Money Fund/VA operates under Rule 2a-7 under which
it may use the amortized cost method of valuing their shares. The Funds' Board
of Trustees has adopted procedures for that purpose. 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. This
method does not take into account unrealized capital gains or losses.
The Funds' Board of Trustees has established procedures intended to
stabilize Money Fund/VA's net asset value at $1.00 per share. If Money
Fund/VA'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 shares of that Fund without monetary consideration,
or calculating net asset value per share by using available market
quotations.
As long as Money Fund/VA uses Rule 2a-7, it must abide by certain
conditions described in the Prospectus which limit the maturity of
securities that Fund buys. Under Rule 2a-7, 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 rate demand and
floating rate instruments. Repurchase agreements and securities loan
agreements are, in general, treated as having maturity equal to the period
scheduled until repurchase or return, or if subject to demand, equal to the
notice period.
While 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 Money Fund/VA would
receive if it sold the instrument. During periods of declining interest
rates, the daily yield on shares of that Fund may tend to be lower (and net
investment income and daily dividends higher) than market prices or
estimates of market prices for its portfolio. Thus, if the use of amortized
cost by the funds resulted in a lower aggregate portfolio value on a
particular day, a prospective investor in Money Fund/VA would be able to
obtain a somewhat higher yield than would result from investment in a fund
utilizing solely market values, and existing investors in that Fund would
receive less investment income than if Money Fund/VA were priced at market
value. Conversely, during periods of rising interest rates, the daily yield
on shares of that Fund will tend to be higher and its aggregate value lower
than that of a portfolio priced at market value. A prospective investor
would receive a lower yield than from an investment in a portfolio priced
at market value, while existing investors in Money Fund/VA would receive
more investment income than if that Fund were priced at market value.
Dividends, Capital Gains and Taxes
Dividends and Distributions. The dividends and distributions paid by a
class of shares will vary from time to time depending on market conditions,
the composition of the Funds' portfolios, and expenses borne by the Funds
or borne separately by a class (if more than one class of shares are
outstanding). Dividends are calculated in the same manner, at the same
time, and on the same day for each class of shares. However, if and when
Class 2 shares are ever issued, dividends on Class 2 shares are expected to
be lower. That is because of the effect of the service fee on Class 2
shares. Those dividends will also differ in amount as a consequence of any
difference in the net asset values of the different classes of shares.
Tax Status of the Fund's Dividends and Distributions. The federal tax treatment
of the Funds' dividends and capital gains distributions is briefly highlighted
in the Prospectus, and may also be explained in the prospectus for the insurance
product you have selected.
The Funds intend to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to qualify).
If the Funds qualify as "regulated investment companies" under the Internal
Revenue Code, they will not be liable for federal income taxes on amounts
paid by it as dividends and distributions. The Funds qualified as regulated
investment companies in its last fiscal year. The Internal Revenue Code
contains a number of complex tests relating to qualification which the
Funds might not meet in any particular year. If it did not so qualify, the
Funds would be treated for tax purposes as an ordinary corporation and
receive no tax deduction for payments made to shareholders.
Additional Information About the Funds
The Transfer Agent. OppenheimerFunds Services, Inc., the Fund's Transfer Agent,
is a division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders of record (the participating
insurance companies that hold shares in their separate accounts). It also
handles administrative functions. It acts on an "at-cost" basis. It also acts as
shareholder servicing agent for the other Oppenheimer funds. Contract owners
should refer inquiries about their accounts as directed by the instructions in
the prospectus of their insurance product.
The Custodian Bank. The Bank of New York is the custodian bank for the Funds'
assets. The custodian bank's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the delivery of such
securities to and from the Funds. It will be the practice of the Funds to deal
with the custodian bank in a manner uninfluenced by any banking relationship the
custodian bank may have with the Manager and its affiliates. The Funds' cash
balances with the custodian bank in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may be substantial.
Independent Auditors. Deloitte & Touche LLP are the independent auditors of the
Funds. They audit the Funds' financial statements and perform other related
audit services. They also act as auditors for certain other funds advised by the
Manager and its affiliates.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
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 Aggressive Growth Fund (formerly
Oppenheimer Capital Appreciation Fund), Oppenheimer Growth Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer Global Securities Fund, Oppenheimer
Strategic Bond Fund, Oppenheimer Growth & Income Fund and Oppenheimer Small Cap
Growth Fund (all of which are series of Oppenheimer Variable Account Funds) as
of December 31, 1998, the related statements of operations for the year then
ended, the statements of changes in net assets for the years ended December 31,
1998 and 1997, and the financial highlights for the applicable periods ended
December 31, 1998, 1997, 1996, 1995 and 1994. 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 as of
December 31, 1998 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
Aggressive Growth Fund, Oppenheimer Growth Fund, Oppenheimer Multiple Strategies
Fund, Oppenheimer Global Securities Fund, Oppenheimer Strategic Bond Fund,
Oppenheimer Growth & Income Fund and Oppenheimer Small Cap Growth Fund as of
December 31, 1998, the results of its operations, the changes in its 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 25, 1999
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
NOTE 1
- -------------------------------------------------------------------------------------------
<S> <C>
<C>
REPURCHASE AGREEMENTS - 1.2%
- -------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 6.25%, dated
12/31/98, to be repurchased at $1,801,250 on 1/4/99,
collateralized by Federal National Mortgage Assn.
Participation Nts., 6% 12/1/13, with a value of $1,842,032 $ 1,800,000
$ 1,800,000
- -------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 2.0%
- -------------------------------------------------------------------------------------------
Societe Generale, 5.80%, 3/31/99
3,000,000 3,000,215
- -------------------------------------------------------------------------------------------
LETTERS OF CREDIT - 9.6%
- -------------------------------------------------------------------------------------------
Abbey National plc, guaranteeing commercial paper of Abbey
National North America Corp., 5.50%, 2/4/99
3,500,000 3,481,820
- -------------------------------------------------------------------------------------------
Bank of America, NT & SA, guaranteeing commercial paper of
Minmetals Capitals & Securities, Inc., 4.95%, 3/8/99
4,000,000 3,963,700
- -------------------------------------------------------------------------------------------
Barclays Bank plc, guaranteeing commercial paper of:
Banca Serfin, SA, Institucion de Banca Multiple, Grupo
Financiero Serfin, Nassau Branch, 5.42%, 5/26/99
1,500,000 1,467,254
Pactual Overseas Corp., 5.05%, 5/14/99
2,750,000 2,698,693
- -------------------------------------------------------------------------------------------
Bayerische Veriensbank AG, guaranteeing commercial paper of
Unibanco-Uniao de Bancos Brasileiros, Series D, 5.05%,
4/16/99
3,000,000 2,955,813
- ---------------
Total Letters of
Credit 14,567,280
- -------------------------------------------------------------------------------------------
SHORT-TERM NOTES - 86.9%
- -------------------------------------------------------------------------------------------
ASSET-BACKED - 11.1%
Atlantis One Funding Corp., 5.20%, 5/14/99(1)
2,500,000 2,451,326
- -------------------------------------------------------------------------------------------
Cooperative Assn. of Tractor Dealers, Inc.:
Series A, 4.92%, 4/21/99
1,500,000 1,477,450
Series B, 4.92%, 4/23/99
1,000,000 984,693
- -------------------------------------------------------------------------------------------
Park Avenue Receivables Corp., 5.60%, 1/13/99(1)
4,000,000 3,992,600
- -------------------------------------------------------------------------------------------
Preferred Receivables Funding Corp., 4.93%, 6/21/99(1)
3,000,000 2,929,890
- -------------------------------------------------------------------------------------------
Sigma Finance, Inc.:
5.50%, 1/29/99(1)
2,500,000 2,489,500
5.50%, 2/12/99(1)
2,500,000 2,483,958
- ---------------
16,809,417
- -------------------------------------------------------------------------------------------
BANK HOLDING COMPANIES - 4.5%
Bankers Trust Co., New York:
5.01%, 7/15/99
2,000,000 1,945,725
5.05%, 6/2/99
5,000,000 4,893,389
- ---------------
6,839,114
- -------------------------------------------------------------------------------------------
BEVERAGES - 2.3%
Coca-Cola Enterprises, Inc., 5.11%, 3/4/99(1)
3,500,000 3,469,198
- -------------------------------------------------------------------------------------------
BROKER/DEALERS - 17.5%
Bear Stearns Cos., Inc., 4.92%, 2/18/99(2)
2,000,000 2,000,000
- -------------------------------------------------------------------------------------------
Goldman Sachs Group, LP:
5%, 4/20/99
4,000,000 3,939,445
5.10%, 3/22/99
3,000,000 2,966,000
</TABLE>
21
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
NOTE 1
<S> <C>
<C>
- -------------------------------------------------------------------------------------------
BROKER/DEALERS (CONTINUED)
Lehman Brothers Holdings, Inc., 5.495%, 2/25/99 $ 1,000,000
$ 991,605
- -------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
5.50%, 2/26/99
3,000,000 2,974,333
5.51%, 2/12/99
2,500,000 2,483,929
- -------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co., 5.50%, 1/4/99(2)
4,300,000 4,300,000
- -------------------------------------------------------------------------------------------
NationsBanc Montgomery Securities, LLC, 5.70%, 1/4/99(2)
5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc., 5.15%, 2/18/99
2,000,000 1,986,267
- ---------------
26,641,579
- -------------------------------------------------------------------------------------------
COMMERCIAL FINANCE - 12.6%
Countrywide Home Loans:
5.25%, 2/27/99(2)
1,200,000 1,200,000
5.50%, 1/8/99
4,000,000 3,995,722
- -------------------------------------------------------------------------------------------
FINOVA Capital Corp.:
5.32%, 5/7/99
2,300,000 2,257,174
5.33%, 2/26/99
1,250,000 1,239,597
5.38%, 5/21/99
1,000,000 979,311
- -------------------------------------------------------------------------------------------
Heller Financial, Inc.:
5.289%, 1/11/99(2)
1,500,000 1,500,000
6.51%, 9/20/99
2,080,000 2,095,221
- -------------------------------------------------------------------------------------------
Safeco Cedit Co., 4.95%, 6/11/99
2,000,000 1,955,725
- -------------------------------------------------------------------------------------------
TransAmerica Finance Corp., 5.11%, 3/1/99
4,000,000 3,966,501
- ---------------
19,189,251
- -------------------------------------------------------------------------------------------
CONSUMER FINANCE - 2.6%
Sears Roebuck Acceptance Corp., 4.90%, 6/23/99
4,000,000 3,905,811
- -------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 7.5%
General Motors Acceptance Corp.:
5.48%, 1/28/99
3,000,000 2,987,603
5.50%, 2/19/99
1,500,000 1,488,771
- -------------------------------------------------------------------------------------------
Household Finance Corp., 4.948%, 3/29/99(2)
5,000,000 4,999,178
- -------------------------------------------------------------------------------------------
Household International, Inc., 5.21%, 2/3/99(1)
2,000,000 1,990,448
- ---------------
11,466,000
- -------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 4.6%
Atlas Copco AB:
5.27%, 4/21/99(1)
3,000,000 2,951,692
5.42%, 1/19/99(1)
4,000,000 3,989,160
- ---------------
6,940,852
- -------------------------------------------------------------------------------------------
INSURANCE - 17.8%
AIG Life Insurance Co., 5.62%, 1/4/99(2)(3)
3,000,000 3,000,000
- -------------------------------------------------------------------------------------------
General American Life Insurance Co., 5.24%, 1/4/99(2)
5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Pacific Life Insurance Co., 4.73%, 1/4/99(2)(3)
5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Protective Life Insurance Co., 5.577%, 1/4/99(2)
5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Safeco Corp., 4.90%, 6/17/99
2,000,000 1,954,539
- -------------------------------------------------------------------------------------------
Security Benefit Life Insurance Co., 5.577%, 1/4/99(2)
5,000,000 5,000,000
</TABLE>
22
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
NOTE 1
- -------------------------------------------------------------------------------------------
<S> <C>
<C>
INSURANCE (CONTINUED)
Travelers Insurance Co., 5.034%, 1/4/99(2)(3) $ 2,000,000
$ 2,000,000
- ---------------
26,954,539
- -------------------------------------------------------------------------------------------
LEASING & FACTORING - 4.4%
American Honda Finance Corp., 5.219%, 1/20/99(2)(4)
3,000,000 3,000,000
- -------------------------------------------------------------------------------------------
International Lease Finance Corp., 6.625%, 4/1/99
3,675,000 3,685,758
- ---------------
6,685,758
- -------------------------------------------------------------------------------------------
SPECIAL PURPOSE FINANCIAL - 2.0%
SMM Trust, Series 1998-I, 5.624%, 5/28/99(2)(3)
3,000,000 3,000,000
- ---------------
Total Short-Term
Notes 131,901,519
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
99.7% 151,269,014
- -------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES
0.3 529,786
-----------
- ---------------
NET ASSETS 100.0%
$ 151,798,800
-----------
- ---------------
-----------
- ---------------
</TABLE>
Short-term notes and letters of credit are generally traded on a discount
basis;
the interest rate is the discount rate received by the Fund at the time of
purchase. Other securities normally bear interest at the rates shown.
1. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $26,747,772, or 17.62% of
the
Fund's net assets, and have been determined to be liquid pursuant to
guidelines
adopted by the Board of Trustees.
2. Floating or variable rate obligation. 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, 1998. This instrument
may
also have a demand feature which allows, on up to 30 days' notice, the
recovery
of principal at any time, or at specified intervals not exceeding one year.
Maturity date shown represents effective maturity based on variable rate and,
if
applicable, demand feature.
3. Identifies issues considered to be illiquid or restricted -- See applicable
note of Notes to Financial Statements.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $3,000,000, or 1.98% of the Fund's net
assets as of December 31, 1998.
See accompanying Notes to Financial Statements.
23
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 2.5%
- -------------------------------------------------------------------------
AMRESCO Commercial Mortgage Funding
I Corp., Multiclass Mtg.
Pass-Through Certificates, Series
1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 137,562
- -------------------------------------------------------------------------
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-D4:
Cl. B1, 7.525%, 4/14/29(3) 167,000 133,913
Cl. B2, 7.525%, 4/14/29(3) 167,000 129,477
Cl. B3, 7.525%, 4/14/29(3) 166,000 117,186
- -------------------------------------------------------------------------
CBA Mortgage Corp., Mtg.
Pass-Through Certificates, Series
1993-C1:
Cl. E, 7.76%, 12/25/03(2)(3) 250,000 232,969
Cl. F, 7.76%, 12/25/03(2)(3) 700,000 571,594
- -------------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C1:
Cl. F, 7.50%, 6/20/13(2) 300,000 233,906
Cl. G, 7.50%, 6/20/14(2) 500,000 357,969
Cl. H, 7.50%, 8/20/14(2) 225,000 154,406
- -------------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1,
8.098%, 2/25/11-5/25/08(2)(3) 1,800,000 1,423,500
- -------------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl.
E, 7.436%, 3/15/06(2)(3) 835,342 781,567
- -------------------------------------------------------------------------
Mortgage Capital Funding, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl.
F, 7.452%, 5/20/07(2) 254,890 211,768
- -------------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. E, 8%, 6/25/26 638,732 629,102
Series 1994-C2, Cl. G, 8%, 4/25/25 702,303 684,746
Series 1995-C1, Cl. F, 6.90%,
2/25/27 574,328 537,401
- -------------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B, Cl.
1, 7.132%, 4/25/26(2) 1,452,915 1,072,433
- -------------------------------------------------------------------------
Structured Asset Securities Corp.,
Multiclass Pass-Through
Certificates, Series 1996-C3, Cl.
E, 8.458%, 6/25/30(4) 650,000 628,977
---------------
Total Mortgage-Backed Obligations
(Cost $7,948,598) 8,038,476
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
2.2%
- -------------------------------------------------------------------------
Argentina (Republic of) Bonds,
Bonos de Consolidacion de Deudas,
Series I, 3.011%, 4/1/07(3)(ARP) 2,880,683 1,856,930
- -------------------------------------------------------------------------
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 588,810 351,814
- -------------------------------------------------------------------------
Brazil (Federal Republic of)
Eligible Interest Bonds, 6.125%,
4/15/06(3) 1,056,000 681,120
- -------------------------------------------------------------------------
Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds,
Tranche A, 2.50%, 7/28/12(5) 500,000 286,250
- -------------------------------------------------------------------------
Bulgaria (Republic of) Interest
Arrears Bonds, 6.688%, 7/28/11(3) 1,450,000 975,125
- -------------------------------------------------------------------------
Germany (Republic of) Treasury
Bills, Zero Coupon, 3.404%,
1/15/99(6)(DEM) 3,000,000 1,799,162
- -------------------------------------------------------------------------
Panama (Government of) Interest
Reduction Bonds, 4%, 7/17/14(5) 275,000 205,563
- -------------------------------------------------------------------------
Peru (Republic of) Past Due
Interest Bonds, Series 20 yr., 4%,
3/7/17(5) 400,000 252,000
</TABLE>
24
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS
(CONTINUED)
- -------------------------------------------------------------------------
Philippines (Republic of) Debs.,
6%, 12/1/09(3) $ 149,600 $ 122,298
- -------------------------------------------------------------------------
PT Hutama Karya Promissory Nts.,
Zero Coupon, 2/10/98 (2)(7)(IDR) 1,000,000,000 31,250
- -------------------------------------------------------------------------
Russia (Government of) Debs.,
5.969%, 12/15/15(3) 17,680 1,956
- -------------------------------------------------------------------------
Russia (Government of) Principal
Loan Debs., Series 24 yr., 5.969%,
12/15/20(3) 1,050,000 64,982
- -------------------------------------------------------------------------
United Mexican States Sr. Nts.,
8.625%, 3/12/08 500,000 463,750
---------------
Total Foreign Government
Obligations (Cost $7,573,982) 7,092,200
- -------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 77.1%
- -------------------------------------------------------------------------
AEROSPACE/DEFENSE - 3.5%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 1,000,000 1,045,000
- -------------------------------------------------------------------------
Amtran, Inc.:
9.625% Nts., 12/15/05 800,000 804,000
10.50% Sr. Nts., 8/1/04 700,000 731,500
- -------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08(2) 1,325,000 1,328,312
9.375% Sr. Nts., 11/15/06(4) 1,000,000 1,025,000
10.75% Sr. Nts., 8/1/05 700,000 738,500
- -------------------------------------------------------------------------
BE Aerospace, Inc., 9.50% Sr. Sub.
Nts., 11/1/08(4) 1,840,000 1,959,600
- -------------------------------------------------------------------------
Constellation Finance LLC, 9.80%
Airline Receivable Asset-Backed
Nts., Series 1997-1, 1/1/01(2) 800,000 784,000
- -------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc.,
Units (each unit consists of $1,000
principal amount of 12% sr. sub.
nts., 9/30/08 and one warrant to
purchase 1.55 shares of common
stock)(4)(8) 1,750,000 1,758,750
- -------------------------------------------------------------------------
Pegasus Aircraft Lease
Securitization Trust, 11.76% Sr.
Nts., Series 1997-A, Cl. B,
6/15/04(2) 317,051 338,104
- -------------------------------------------------------------------------
Trans World Airlines Lease, 14%
Equipment Trust, 7/2/08(2) 855,765 847,208
---------------
11,359,974
- -------------------------------------------------------------------------
CHEMICALS - 1.5%
Brunner Mond Group plc, 12.50% Sr.
Sub. Nts., 7/15/08(4)(GBP) 1,200,000 1,840,381
- -------------------------------------------------------------------------
ClimaChem, Inc., 10.75% Sr. Unsec.
Nts., Series B, 12/1/07 500,000 505,000
- -------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 275,000 257,125
- -------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., Series B, 9/15/07 330,000 265,650
- -------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25%
Sec. Nts., 10/15/07 500,000 387,500
- -------------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 400,000 322,000
- -------------------------------------------------------------------------
Sovereign Specialty Chemicals,
Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 795,000 810,900
- -------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.25%
Sr. Sub. Nts., 4/1/07 250,000 211,250
- -------------------------------------------------------------------------
Texas Petrochemicals Corp., 11.125%
Sr. Sub. Nts., 7/1/06 280,000 277,200
---------------
4,877,006
- -------------------------------------------------------------------------
CONSUMER DURABLES - 0.3%
Holmes Products Corp., 9.875% Sr.
Unsec. Sub. Nts., Series B,
11/15/07 425,000 403,750
</TABLE>
25
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------
CONSUMER DURABLES (CONTINUED)
TAG Heuer International SA, 12% Sr.
Sub. Nts., 12/15/05(2) $ 350,000 $ 406,353
---------------
810,103
- -------------------------------------------------------------------------
CONSUMER NON-DURABLES - 3.0%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs.,
7/1/09(4)(9) 1,080,000 426,600
10.50% Sr. Nts., 7/1/08(4) 1,000,000 955,000
- -------------------------------------------------------------------------
American Pad & Paper Co., 13% Sr.
Sub. Nts., Series B, 11/15/05 880,000 506,000
- -------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Sub.
Nts., 8/15/08(4) 900,000 918,000
- -------------------------------------------------------------------------
Globe Manufacturing, Inc., 10% Sr.
Sub. Nts., 8/1/08(4) 900,000 819,000
- -------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50%
Sr. Unsec. Sub. Nts., 5/1/08 720,000 723,600
- -------------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 2,200,000 2,013,000
9% Sr. Nts., 11/1/06(4) 1,000,000 1,000,000
- -------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts., Series B,
11.41%, 3/15/01(6) 1,250,000 718,750
- -------------------------------------------------------------------------
Salton/Maxim Housewares, Inc.,
10.75% Sr. Sub. Nts., 12/15/05(4) 1,000,000 1,011,250
- -------------------------------------------------------------------------
Styling Technology Corp., 10.875%
Sr. Sub. Nts., 7/1/08 600,000 573,000
- -------------------------------------------------------------------------
William Carter Co., 10.375% Sr.
Sub. Nts., Series A, 12/1/06 235,000 249,100
---------------
9,913,300
- -------------------------------------------------------------------------
ENERGY - 4.0%
AEI Resources, Inc., 11.50% Sr.
Sub. Nts., 12/15/06(4) 750,000 744,375
- -------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr.
Sub. Nts., 6/15/07 480,000 391,200
- -------------------------------------------------------------------------
Clark Refinancing & Marketing,
Inc., 8.875% Sr. Sub. Nts.,
11/15/07 1,040,000 930,800
- -------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts.,
Series B, 12/1/05 275,000 254,375
- -------------------------------------------------------------------------
Dailey International, Inc., 9.50%
Sr. Unsec. Nts., Series B, 2/15/08 800,000 356,000
- -------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr.
Sub. Nts., 3/1/08 800,000 676,000
- -------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50%
Sr. Debs., 6/15/05(4) 1,000,000 685,000
- -------------------------------------------------------------------------
Gothic Production Corp., 11.125%
Sr. Sec. Nts., Series B, 5/1/05(4) 500,000 392,500
- -------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/15/08 1,025,000 702,125
- -------------------------------------------------------------------------
National Energy Group, Inc., 10.75%
Sr. Nts., Series D, 11/1/06(7) 810,000 303,750
- -------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr.
Sec. Nts., 6/1/08 1,420,000 1,143,100
- -------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 1,800,000 1,827,000
- -------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sr. Sub. Debs., 2/1/06 1,175,000 1,104,500
- -------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub.
Nts., 5/15/07 800,000 744,000
- -------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec.
Nts., 2/15/08 1,060,000 747,300
- -------------------------------------------------------------------------
Statia Terminals
International/Statia Terminals
(Canada), Inc., 11.75% First Mtg.
Nts., Series B, 11/15/03 225,000 226,125
- -------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 735,000 712,950
- -------------------------------------------------------------------------
Universal Compression Holdings,
Inc.:
0%/9.875% Sr. Disc. Nts.,
2/15/08(9) 1,325,000 801,625
</TABLE>
26
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
Universal Compression Holdings,
Inc.: (Continued)
0%/11.375% Sr. Disc. Nts.,
2/15/09(9) $ 720,000 $ 432,000
---------------
13,174,725
- -------------------------------------------------------------------------
FINANCIAL - 1.5%
Bakrie Investindo, Zero Coupon
Promissory Nts., 3/26/98(2)(7)(IDR) 1,000,000,000 31,250
- -------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts.,
7/18/07 517,000 416,185
- -------------------------------------------------------------------------
CB Richard Ellis Services, Inc.,
8.875% Sr. Unsec. Sub. Nts., 6/1/06 900,000 886,500
- -------------------------------------------------------------------------
ECM Fund, L.P. I., 14% Sub. Nts.,
6/10/02(2) 36,714 36,807
- -------------------------------------------------------------------------
Local Financial Corp., 11% Sr.
Nts., 9/8/04(4) 800,000 812,000
- -------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875%
Capital Nts., 8/1/27 450,000 362,250
- -------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 24% Nts.,
6/19/03(IDR) 657,200,000 9,858
- -------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 9.75% Sr. Sec. Nts., Series
B, 4/1/08 2,000,000 1,870,000
- -------------------------------------------------------------------------
Southern Pacific Funding Corp.,
11.50% Sr. Nts., 11/1/04(7) 300,000 81,000
- -------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts.,
1/1/28 550,000 496,375
---------------
5,002,225
- -------------------------------------------------------------------------
FOOD & DRUG - 1.7%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B,
12/1/04 300,000 285,000
10.625% Sr. Sub. Nts., Series B,
7/31/07 1,135,000 1,064,062
- -------------------------------------------------------------------------
Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03(9) 2,710,000 2,235,750
12.625% Sub. Nts., 6/15/02 900,000 882,000
- -------------------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., Series B,
7/1/07 1,060,000 1,152,750
---------------
5,619,562
- -------------------------------------------------------------------------
FOOD/TOBACCO - 1.6%
Aurora Foods, Inc., 8.75% Sr. Sub.
Nts., Series B, 7/1/08 520,000 543,400
- -------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr.
Disc. Nts., Series B, 12/15/07(9) 750,000 517,500
- -------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/1/05 1,600,000 1,608,000
- -------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec.
Sub. Nts., 3/15/10 400,000 410,000
- -------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr.
Unsec. Sub. Nts., 2/15/08 925,000 934,250
- -------------------------------------------------------------------------
Sparkling Spring Water Group Ltd.,
11.50% Sr. Sec. Sub. Nts., 11/15/07 1,175,000 1,139,750
---------------
5,152,900
- -------------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 1.0%
Ball Corp.:
7.75% Sr. Nts., 8/1/06(4) 700,000 735,000
8.25% Sr. Sub. Nts., 8/1/08(4) 800,000 836,000
- -------------------------------------------------------------------------
Four M Corp., 12% Sr. Sec. Nts.,
Series B, 6/1/06 190,000 141,550
- -------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 1,330,000 1,323,350
10.875% Sr. Sub. Nts., 4/1/08 200,000 182,000
</TABLE>
27
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
FOREST PRODUCTS/CONTAINERS
(CONTINUED)
SF Holdings Group, Inc., 0%/12.75%
Sr. Disc. Nts., 3/15/08(9) $ 600,000 $ 213,000
---------------
3,430,900
- -------------------------------------------------------------------------
GAMING/LEISURE - 5.5%
AP Holdings, Inc., 0%/11.25% Sr.
Disc. Nts., 3/15/08(9) 450,000 245,250
- -------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub.
Nts., 3/15/08 940,000 869,500
- -------------------------------------------------------------------------
Capital Gaming International, Inc.,
11.50% Promissory Nts., 8/1/95(7) 9,500 --
- -------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 840,000 823,200
- -------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125%
Sr. Sub. Nts., 7/1/06 500,000 500,000
- -------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% First
Mtg. Sec. Nts., 12/1/03 630,000 689,850
- -------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr.
Sub. Nts., 4/1/05 1,600,000 1,608,000
- -------------------------------------------------------------------------
Harveys Casino Resorts, 10.625% Sr.
Unsec. Sub. Nts., 6/1/06 120,000 130,200
- -------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 1,300,000 1,348,750
- -------------------------------------------------------------------------
Intrawest Corp.:
9.75% Sr. Nts., 8/15/08 900,000 927,000
9.75% Sr. Unsec. Nts., 8/15/08(4) 600,000 618,000
- -------------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec.
Nts., Series B, 11/15/02 725,000 873,625
- -------------------------------------------------------------------------
Outboard Marine Corp., 10.75% Sr.
Nts., 6/1/08(4) 590,000 578,200
- -------------------------------------------------------------------------
Park Place Entertainment Corp.,
7.875% Sr. Sub. Nts., 12/15/05(4) 800,000 805,000
- -------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(9) 1,200,000 819,000
9.25% Sr. Nts., 4/1/06 600,000 623,250
- -------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
9.50% Sr. Sub. Nts., 4/15/07 1,000,000 1,110,000
10.625% Sr. Sub. Nts., 7/15/05 125,000 136,875
- -------------------------------------------------------------------------
Showboat Marina Casino
Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts.,
Series B, 3/15/03 1,125,000 1,276,875
- -------------------------------------------------------------------------
Six Flags Entertainment Corp.,
8.875% Sr. Nts., 4/1/06 1,000,000 1,031,250
- -------------------------------------------------------------------------
Station Casinos, Inc.:
8.875% Sr. Sub. Nts., 12/1/08(4) 1,250,000 1,275,000
9.625% Sr. Sub. Nts., 6/1/03 200,000 207,220
9.75% Sr. Sub. Nts., 4/15/07 800,000 840,000
10.125% Sr. Sub. Nts., 3/15/06 800,000 842,000
---------------
18,178,045
- -------------------------------------------------------------------------
HEALTHCARE - 2.1%
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 1,300,000 1,287,000
- -------------------------------------------------------------------------
Fresenius Medical Care Capital
Trust III, 7.375% Nts., 2/1/08(DEM) 1,225,000 775,957
- -------------------------------------------------------------------------
ICN Pharmaceutical, Inc., 8.75% Sr.
Nts., 11/15/08(4) 1,065,000 1,080,975
- -------------------------------------------------------------------------
Integrated Health Services, Inc.:
9.25% Sr. Sub. Nts., Series A,
1/15/08 90,000 84,600
9.50% Sr. Sub. Nts., 9/15/07 760,000 725,800
10.25% Sr. Sub. Nts., 4/30/06 35,000 34,475
- -------------------------------------------------------------------------
Magellan Health Services, Inc., 9%
Sr. Sub. Nts., 2/15/08 1,000,000 885,000
</TABLE>
28
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTHCARE (CONTINUED)
Oxford Health Plans, Inc., 11% Sr.
Nts., 5/15/05(4) $ 1,200,000 $ 1,134,000
- -------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 7/1/07 635,000 517,525
- -------------------------------------------------------------------------
Tenet Healthcare Corp., 8.125% Sr.
Sub. Nts., 12/1/08(4) 250,000 257,500
---------------
6,782,832
- -------------------------------------------------------------------------
HOUSING - 1.1%
Engle Homes, Inc., 9.25% Sr. Unsec.
Nts., Series C, 2/1/08 1,300,000 1,306,500
- -------------------------------------------------------------------------
Nortek, Inc.:
8.875% Sr. Nts., 8/1/08(4) 250,000 256,250
9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,449,000
9.25% Sr. Nts., Series B, 3/15/07 625,000 643,750
---------------
3,655,500
- -------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 1.2%
Covad Communications Group, Inc.,
0%/13.50% Sr. Disc. Nts.,
3/15/08(9) 900,000 499,500
- -------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts.,
Series B, 11/15/05 1,125,000 1,074,375
- -------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 625,000 628,125
- -------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts.,
10/15/04 275,000 320,375
- -------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec.
Disc. Nts., Series B, 3/1/05(9) 1,750,000 962,500
- -------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub.
Nts., 6/15/07 500,000 477,500
---------------
3,962,375
- -------------------------------------------------------------------------
MANUFACTURING - 2.8%
American Standard Cos., Inc.,
7.625% Sr. Nts., 2/15/10(10) 1,500,000 1,507,500
- -------------------------------------------------------------------------
Axia, Inc. (New), 10.75% Sr. Sub.
Nts., 7/15/08 420,000 428,400
- -------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr.
Sub. Nts., 8/15/07 400,000 390,000
- -------------------------------------------------------------------------
Eagle-Picher Industries, Inc.,
9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 803,250
- -------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub.
Nts., 5/1/08 635,000 574,675
- -------------------------------------------------------------------------
Hydrochem Industrial Services,
Inc., 10.375% Sr. Sub. Nts., 8/1/07 725,000 692,375
- -------------------------------------------------------------------------
Insilco Corp., Units (each unit
consists of $1,000 principal amount
of 12% Sr. Sub. Nts., 8/15/07 and
one warrant to purchase 0.52 shares
of common stock)(4)(8) 765,000 795,600
- -------------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 500,000 528,750
- -------------------------------------------------------------------------
MOLL Industries, Inc., 10.50% Sr.
Sub. Nts., 7/1/08(4) 560,000 551,600
- -------------------------------------------------------------------------
Polymer Group, Inc.:
8.75% Sr. Sub. Nts., 3/1/08 1,500,000 1,481,250
9% Sr. Sub. Nts., 7/1/07 250,000 248,750
- -------------------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Sr. Sub. Nts., Series
B, 6/15/07 560,000 546,000
- -------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub.
Nts., 4/1/08 630,000 620,550
---------------
9,168,700
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING -
2.3%
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 915,000 951,600
</TABLE>
29
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-BROADCASTING
(CONTINUED)
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series
B, 6/15/07 $ 975,000 $ 1,004,250
9% Sr. Sub. Nts., 10/1/08(4) 2,200,000 2,332,000
10.50% Sr. Sub. Nts., Series B,
1/15/07 450,000 495,000
- -------------------------------------------------------------------------
Jacor Communications, Inc., 8% Sr.
Sub. Nts., 2/15/10 1,180,000 1,250,800
- -------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts.,
Series B, 5/15/04(5) 400,000 402,000
- -------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 9%
Sr. Unsec. Sub. Nts., 7/15/07 1,085,000 1,112,125
- -------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
11% Sr. Nts., 3/15/04 25,000 26,625
---------------
7,574,400
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO - 5.0%
Adelphia Communications Corp.:
8.125% Sr. Nts., Series B, 7/15/03 1,000,000 1,028,750
8.375% Sr. Nts., Series B, 2/1/08 1,000,000 1,037,500
9.25% Sr. Nts., 10/1/02 390,000 413,400
9.875% Sr. Nts., Series B, 3/1/07 140,000 155,400
10.50% Sr. Unsec. Nts., Series B,
7/15/04 340,000 382,500
- -------------------------------------------------------------------------
CSC Holdings, Inc.:
7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 1,041,600
9.875% Sr. Sub. Debs., 4/1/23 1,000,000 1,117,500
9.875% Sr. Sub. Nts., 5/15/06 550,000 602,250
10.50% Sr. Sub. Debs., 5/15/16 250,000 295,000
- -------------------------------------------------------------------------
Diva Systems Corp., Units (each
unit consists of $1,000 principal
amount of 0%/12.625% sr. disc.
nts., 3/1/08 and three warrants to
purchase three shares of common
stock)(4)(8)(9) 500,000 207,500
- -------------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(9) 200,000 206,000
- -------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Sr. Sec.
Nts., 7/1/02 1,700,000 1,963,500
- -------------------------------------------------------------------------
EchoStar Satellite Broadcasting
Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(9) 2,005,000 2,010,012
- -------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285%
Sr. Disc. Debs., Series B,
4/15/10(9) 1,300,000 897,000
- -------------------------------------------------------------------------
Falcon Holding Group LP, 8.375% Sr.
Unsec. Debs., Series B, 4/15/10 2,200,000 2,288,000
- -------------------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03(3) 885,000 924,825
- -------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series
B, 2/15/05 1,020,000 1,014,900
- -------------------------------------------------------------------------
Rogers Communications, Inc., 8.75%
Sr. Nts., 7/15/07(CAD) 500,000 315,299
- -------------------------------------------------------------------------
United International Holdings,
Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(9)(10) 1,040,000 566,800
---------------
16,467,736
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA - 2.0%
Ackerley Group, Inc., 9% Sr. Sub.
Nts., 1/15/09(4) 1,250,000 1,275,000
- -------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg.
Bonds, 6/24/10(2) 452,782 461,956
- -------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625%
Sr. Sub. Nts., 8/1/07 225,000 167,062
- -------------------------------------------------------------------------
Regal Cinemas, Inc.:
8.875% Sr. Sub. Nts., 12/15/10(4) 1,250,000 1,246,875
</TABLE>
30
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA (CONTINUED)
Regal Cinemas, Inc.: (Continued)
9.50% Sr. Sub. Nts., 6/1/08(4) $ 750,000 $ 783,750
- -------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Sub. Nts., 12/1/08(4) 900,000 905,625
9.125% Sr. Unsec. Sub. Nts., Series
B, 2/1/08 1,800,000 1,791,000
---------------
6,631,268
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
- -16.3%
Amazon.Com, Inc., 0%/10% Sr. Unsec.
Disc. Nts., 5/1/08(9) 2,500,000 1,662,500
- -------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts.,
12/15/06(9) 225,000 190,125
7.625% Bonds, 7/31/08(DEM) 1,925,000 1,143,511
8.875% Sr. Nts., 11/30/07(DEM) 250,000 154,231
10.125% Sr. Nts., 11/30/07(GBP) 400,000 699,676
Units (each unit consists of $1,000
principal amount of 0%/12% sr.
disc. nts., 12/15/06 and one
warrant to purchase 7.8 common
shares)(8)(9) 1,775,000 1,499,875
- -------------------------------------------------------------------------
Concentric Network Corp., 12.75%
Sr. Unsec. Nts., 12/15/07 800,000 820,000
- -------------------------------------------------------------------------
Convergent Communications, Inc.,
13% Sr. Nts., 4/1/08 800,000 388,000
- -------------------------------------------------------------------------
Diamond Cable Communications plc,
0%/11.75% Sr. Disc. Nts.,
12/15/05(9) 2,100,000 1,748,250
- -------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr.
Nts., 2/1/08 400,000 384,000
- -------------------------------------------------------------------------
DTI Holdings, Inc., 0%/12.50% Sr.
Unsec. Disc. Nts., Series B,
3/1/08(9) 1,500,000 397,500
- -------------------------------------------------------------------------
e.spire Communications, Inc.,
13.75% Sr. Nts., 7/15/07 725,000 679,687
- -------------------------------------------------------------------------
Exodus Communications, Inc., 11.25%
Sr. Nts., 7/1/08 715,000 718,575
- -------------------------------------------------------------------------
FaciliCom International, Inc.,
10.50% Sr. Nts., Series B, 1/15/08 545,000 438,725
- -------------------------------------------------------------------------
FirstWorld Communications, Inc.,
0%/13% Sr. Disc. Nts., 4/15/08(9) 1,100,000 335,500
- -------------------------------------------------------------------------
Focal Communications Corp.,
0%/12.125% Sr. Unsec. Disc. Nts.,
2/15/08(9) 810,000 433,350
- -------------------------------------------------------------------------
Global Crossing Holdings Ltd.,
9.625% Sr. Nts., 5/15/08 950,000 1,011,750
- -------------------------------------------------------------------------
Globix Corp., 13% Sr. Unsec. Nts.,
5/1/05 1,800,000 1,485,000
- -------------------------------------------------------------------------
GST Telecommunications, Inc.:
0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(4)(9) 178,000 141,287
12.75% Sr. Sub. Nts., 11/15/07 1,250,000 1,168,750
- -------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/10% Sr. Unsec. Disc. Nts.,
2/15/08(9) 1,220,000 652,700
0%/12.50% Sr. Sec. Disc. Nts.,
5/1/06(9) 115,000 86,250
0%/13.50% Sr. Disc. Nts.,
9/15/05(9) 980,000 813,400
- -------------------------------------------------------------------------
Intermedia Communications, Inc.:
8.60% Sr. Unsec. Nts., Series B,
6/1/08 905,000 864,275
8.875% Sr. Nts., 11/1/07 460,000 446,200
- -------------------------------------------------------------------------
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08 1,000,000 980,000
11% Sr. Nts., 6/1/07 750,000 806,250
</TABLE>
31
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
(CONTINUED)
KMC Telecom Holdings, Inc.,
0%/12.50% Sr. Unsec. Disc. Nts.,
2/15/08(9) $ 2,455,000 $ 1,190,675
- -------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. 12/1/08(4)(9) 900,000 528,750
9.125% Sr. Unsec. Nts., 5/1/08 2,000,000 1,985,000
- -------------------------------------------------------------------------
Long Distance International, Inc.,
12.25% Sr. Nts., 4/15/08(4) 800,000 668,000
- -------------------------------------------------------------------------
Metromedia Fiber Network, Inc., 10%
Sr. Nts., 11/15/08(4) 1,600,000 1,652,000
- -------------------------------------------------------------------------
Netia Holdings BV, 0%/11% Sr. Disc.
Nts., 11/1/07(9)(DEM) 700,000 240,615
- -------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Unsec. Nts.,
4/15/08(9) 1,015,000 583,625
9% Sr. Nts., 3/15/08 800,000 756,000
9.625% Sr. Nts., 10/1/07 1,210,000 1,161,600
10.75% Sr. Nts., 11/15/08(4) 1,200,000 1,227,000
- -------------------------------------------------------------------------
NorthEast Optic Network, Inc.,
12.75% Sr. Nts., 8/15/08 750,000 738,750
- -------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts.,
4/1/08(4)(9) 350,000 218,750
0%/12.375% Sr. Nts., 10/1/08(4)(9) 3,400,000 2,146,250
7% Cv. Sub. Nts., 12/15/08(4) 1,500,000 1,623,750
10% Sr. Nts., Series B, 2/15/07 1,055,000 1,086,650
11.50% Sr. Nts., 10/1/08(4) 1,600,000 1,756,000
- -------------------------------------------------------------------------
Petersburg Long Distance, Inc., 9%
Cv. Sub. Nts., 6/1/06(4) 170,000 63,112
- -------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts.,
Series B, 2/15/05 3,170,000 3,154,150
- -------------------------------------------------------------------------
Qwest Communications International,
Inc., 0%/9.47% Sr. Disc. Nts.,
10/15/07(9) 1,460,000 1,135,150
- -------------------------------------------------------------------------
RSL Communications plc:
0%/10.125% Sr. Disc. Nts.,
3/1/08(9) 720,000 415,800
9.125% Sr. Unsec. Nts., 3/1/08 500,000 462,500
10.50% Sr. Nts., 11/15/08(4) 1,450,000 1,417,375
- -------------------------------------------------------------------------
TeleWest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(9) 990,000 831,600
11.25% Sr. Nts., 11/1/08(4) 1,610,000 1,811,250
- -------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr.
Nts., 7/15/08 1,300,000 1,371,500
- -------------------------------------------------------------------------
US Xchange LLC, 15% Sr. Nts.,
7/1/08 800,000 824,000
- -------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 1,480,000 1,457,800
11.25% Sr. Nts., 12/1/08(4) 1,300,000 1,313,000
13.50% Sr. Unsec. Nts., 6/15/04 385,000 417,725
- -------------------------------------------------------------------------
Viatel, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts.,
4/15/08(9) 765,000 455,175
11.25% Sr. Sec. Nts., 4/15/08 580,000 595,950
---------------
53,438,869
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS - 7.0%
Arch Communications, Inc., 12.75%
Sr. Nts., 7/1/07(4) 200,000 201,000
- -------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14%
Sr. Disc. Nts., 10/1/07(9) 2,319,000 591,345
</TABLE>
32
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS (CONTINUED)
Cellular Communications
International, Inc., 0%/9.50%
Bonds, 4/1/05(9)(XEU) $ 2,750,000 $ 2,728,674
- -------------------------------------------------------------------------
Centennial Cellular Corp., 10.75%
Sr. Sub. Nts., 12/15/08(4) 800,000 800,000
- -------------------------------------------------------------------------
Crown Castle International Corp.,
0%/10.625% Sr. Unsec. Disc. Nts.,
11/15/07(9) 940,000 662,700
- -------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr.
Deferred Coupon Nts., 4/15/08(9) 1,000,000 455,000
- -------------------------------------------------------------------------
Dobson Communications Corp., 11.75%
Sr. Nts., 4/15/07 240,000 246,000
- -------------------------------------------------------------------------
Geotek Communications, Inc., 0%/15%
Sr. Sec. Disc. Nts., Series B,
7/15/05(7)(9) 226,000 46,330
- -------------------------------------------------------------------------
ICO Global Communications
(Holdings) Ltd., Units (each unit
consists of $1,000 principal amount
of 15% sr. nts., 8/1/05 and one
warrant to purchase 19.85 shares of
common stock)(8) 700,000 525,000
- -------------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts., 6/1/06(9) 300,000 213,750
- -------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts.,
10/31/07(9) 1,130,000 689,300
0%/10.65% Sr. Disc. Nts.,
9/15/07(9) 1,095,000 703,538
- -------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts.,
Series A, 8/15/06 2,765,000 1,935,500
- -------------------------------------------------------------------------
Orange plc:
7.625% Sr. Nts., 8/1/08(GBP) 400,000 478,509
8% Sr. Nts., 8/1/08 2,600,000 2,639,000
- -------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 1,125,000 1,164,375
- -------------------------------------------------------------------------
Orion Network Systems, Inc.,
0%/12.50% Sr. Disc. Nts.,
1/15/07(9) 1,150,000 724,500
- -------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr.
Unsec. Disc. Nts., 3/15/08(9) 2,400,000 1,410,000
- -------------------------------------------------------------------------
Price Communications Cellular
Holdings, Inc., 11.25% Sr. Nts.,
8/15/08(11) 425,000 403,750
- -------------------------------------------------------------------------
Price Communications Wireless,
Inc.:
9.125% Sr. Sec. Nts., 12/15/06(4) 800,000 812,000
11.75% Sr. Sub. Nts., 7/15/07 425,000 450,500
- -------------------------------------------------------------------------
Real Time Data, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/13.50% sub. disc.
nts., 8/15/06 and one warrant to
purchase six common
shares)(4)(8)(9) 1,000,000 465,000
- -------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 1,900,000 1,914,250
- -------------------------------------------------------------------------
SBA Communications Corp., 0%/12%
Sr. Unsec. Disc. Nts., 3/1/08(9) 3,220,000 1,867,600
- -------------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12%
Sr. Disc. Nts., 7/15/08(4)(9) 1,640,000 828,200
---------------
22,955,821
- -------------------------------------------------------------------------
METALS/MINERALS - 2.1%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 885,000 924,825
- -------------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First
Mtg. Nts., 7/15/05 340,000 260,100
- -------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr.
Sec. Nts., 4/1/01 320,000 343,200
- -------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25%
Sr. Sub. Nts., Series B, 5/15/08 1,500,000 1,518,750
- -------------------------------------------------------------------------
International Utility Structures,
Inc., 10.75% Sr. Sub. Nts., 2/1/08 400,000 378,000
- -------------------------------------------------------------------------
Keystone Consolidated Industries,
Inc., 9.625% Sr. Sec. Nts., 8/1/07 850,000 816,000
</TABLE>
33
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
METALS/MINERALS (CONTINUED)
Metallurg Holdings, Inc., 0%/12.75%
Sr. Disc. Nts., 7/15/08(9) $ 2,000,000 $ 690,000
- -------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts.,
12/1/07 540,000 504,900
- -------------------------------------------------------------------------
Republic Engineered Steels, Inc.,
9.875% First Mtg. Nts., 12/15/01 1,400,000 1,438,500
---------------
6,874,275
- -------------------------------------------------------------------------
RETAIL - 1.5%
Boyds Collection Ltd., 9% Sr. Sub.
Nts., 5/15/08(4) 1,250,000 1,281,250
- -------------------------------------------------------------------------
Eye Care Centers of America, Inc.,
9.125% Sr. Sub. Nts., 5/1/08(4) 1,100,000 1,050,500
- -------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs.,
5/1/08 900,000 796,500
- -------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Nts., 5/1/08 600,000 555,000
- -------------------------------------------------------------------------
Home Interiors & Gifts, Inc.,
10.125% Sr. Sub. Nts., 6/1/08(4) 1,000,000 995,000
- -------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub.
Nts., 10/15/07 325,000 342,063
---------------
5,020,313
- -------------------------------------------------------------------------
SERVICE - 4.5%
Allied Waste North America, Inc.,
7.875% Sr. Nts., 1/1/09(4) 835,000 849,613
- -------------------------------------------------------------------------
Borg-Warner Security Corp., 9.625%
Sr. Sub. Nts., 3/15/07 125,000 135,625
- -------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc.
Nts., 10/1/06(9) 775,000 639,375
- -------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr.
Nts., Series B, 12/1/07 750,000 753,750
- -------------------------------------------------------------------------
Fisher Scientific International,
Inc.:
9% Sr. Sub. Nts., 2/1/08(4) 365,000 366,825
9% Sr. Unsec. Sub. Nts., 2/1/08 2,050,000 2,060,250
- -------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp.,
11.25% Sr. Sub. Nts., 8/15/08(4) 915,000 933,300
- -------------------------------------------------------------------------
Intermedia Communications, Inc.,
8.50% Sr. Nts., Series B, 1/15/08 660,000 630,300
- -------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 1,225,000 1,292,375
9.625% Sr. Sub. Nts., 12/1/06 815,000 876,125
- -------------------------------------------------------------------------
Newcor, Inc., 9.875% Sr. Unsec.
Sub. Nts., Series B, 3/1/08 1,500,000 1,402,500
- -------------------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds,
Series 1A, Cl. C2, 8/13/10(2) 1,500,000 1,500,000
- -------------------------------------------------------------------------
Protection One Alarm Monitoring,
Inc.:
6.75% Cv. Sr. Sub. Nts., 9/15/03 950,000 974,938
13.625% Sr. Sub. Disc. Nts.,
6/30/05 400,000 458,000
- -------------------------------------------------------------------------
United Rentals, Inc., 9.25% Sr.
Sub. Nts., 1/15/09(4) 2,000,000 2,015,000
---------------
14,887,976
- -------------------------------------------------------------------------
TRANSPORTATION - 4.1%
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., Series B, 7/15/07 500,000 432,500
- -------------------------------------------------------------------------
Coach USA, Inc., 9.375% Sr. Sub.
Nts., Series B, 7/1/07 390,000 399,750
- -------------------------------------------------------------------------
Collins & Aikman Products Co.,
11.50% Sr. Unsec. Sub. Nts.,
4/15/06 125,000 130,625
- -------------------------------------------------------------------------
Hayes Wheels International, Inc.,
11% Sr. Sub. Nts., 7/15/06 600,000 669,000
- -------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr.
Sub. Nts., 8/1/05(4) 950,000 859,750
- -------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub.
Nts., Series B, 3/15/07 25,000 23,500
</TABLE>
34
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION (CONTINUED)
Millenium Seacarriers, Inc., Units
(each unit consists of $1,000
principal amount of 12% first
priority ship mtg. nts., 7/15/05
and one warrant to purchase five
shares of common stock)(4)(8) $ 1,500,000 $ 1,207,500
- -------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg.
Nts., 6/30/07(4) 1,175,000 1,039,875
Units (each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants)(4)(8) 500,000 452,500
- -------------------------------------------------------------------------
Oxford Automotive, Inc.:
10.125% Sr. Sub. Nts., 6/15/07(2) 600,000 627,000
10.125% Sr. Unsec. Sub. Nts.,
6/15/07 1,525,000 1,586,000
- -------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc.,
11.50% First Preferred Ship Mtg.
Nts., 5/30/08 700,000 528,500
- -------------------------------------------------------------------------
Sea Containers Ltd., 7.875% Sr.
Nts., 2/15/08 1,500,000 1,432,500
- -------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50%
Sr. Sec. Nts., 12/15/04(10) 1,850,000 1,563,250
- -------------------------------------------------------------------------
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(9) 2,600,000 2,509,000
---------------
13,461,250
- -------------------------------------------------------------------------
UTILITY - 1.5%
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 545,000 553,175
10.50% Sr. Nts., 5/15/06 25,000 27,688
- -------------------------------------------------------------------------
El Paso Electric Co., 9.40% First
Mtg. Sec. Nts., Series E,
5/1/11(12) 555,000 645,188
- -------------------------------------------------------------------------
ESI Tractebel Acquisition Corp.,
7.99% Bonds, 12/30/11 1,000,000 987,312
- -------------------------------------------------------------------------
Niagara Mohawk Power Corp., 7.75%
Sr. Unsec. Nts., Series G, 10/1/08 2,400,000 2,637,211
---------------
4,850,574
---------------
Total Corporate Bonds and Notes
(Cost $261,935,960) 253,250,629
</TABLE>
<TABLE>
<CAPTION>
SHARES
- --------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS - 5.3%
- --------------------------------------------------------------------
CGA Group Ltd., Preferred Stock,
Series A(2)(11) 74,045 1,851,125
- --------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cum.
Cv.(4) 24,575 251,894
- --------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum.
Exchangeable(11) 430 362,275
- --------------------------------------------------------------------
Concentric Network Corp., 13.50%
Preferred, Series B(11) 532 456,190
- --------------------------------------------------------------------
Dobson Communications Corp., 12.25%
Sr. Exchangeable(11) 1,092 974,610
- --------------------------------------------------------------------
e.spire Communications, Inc.,
12.75% Jr. Redeemable Preferred
Stock 1,167 574,747
- --------------------------------------------------------------------
Eagle-Picher Holdings, Inc., Cum.
Exchangeable, Series B, 3/1/08,
Non-Vtg.(13) 8,000 406,000
- --------------------------------------------------------------------
EchoStar Communications Corp.,
12.125% Sr. Redeemable
Exchangeable, Series B,
Non-Vtg.(11) 819 952,087
- --------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale
California, l2% Non-Cum.
Exchangeable Perpetual Preferred
Stock, Series A 20 465
- --------------------------------------------------------------------
Global Crossing Holdings Ltd.,
10.50% Sr. Exchangeable Preferred,
12/1/08(4)(13) 15,000 1,473,750
- --------------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable(11) 264 291,060
- --------------------------------------------------------------------
Intermedia Communications, Inc.,
13.50% Exchangeable, Series B(11) 792 786,060
</TABLE>
35
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
- --------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25%
Cum. Exchangeable(11) 6,510 327,127
- --------------------------------------------------------------------
Nextel Communications, Inc.,
11.125% Exchangeable, Series E(11) 790 712,975
- --------------------------------------------------------------------
NEXTLINK Communications, Inc., 14%
Cum. Exchangeable, Vtg.(11) 32,362 1,723,277
- --------------------------------------------------------------------
Paxson Communications Corp., 13.25%
Cum. Jr. Exchangeable, Non-Vtg.(11) 40 341,000
- --------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
Jr. Cv. Preferred Stock(13) 3,963 6,935
- --------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable 10,000 965,000
9.20% Exchangeable, Series F 2,500 246,250
- --------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum.
Sr., Series B, Non-Vtg.(11) 1,057 985,653
- --------------------------------------------------------------------
SD Warren Co., 14% Cum.
Exchangeable, Series B,
Non-Vtg.(13) 25,000 1,281,250
- --------------------------------------------------------------------
SF Holdings Group, Inc., 13.75%
Cum. Nts., Series B, 3/15/09,
Non-Vtg.(11) 196 847,700
- --------------------------------------------------------------------
SFX Broadcasting, Inc./Capstar
Broadcasting Corp., 12.625% Cum.,
Series E, Non-Vtg.(11) 1,314 158,994
- --------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
14.25% Cum. Exchangeable,
Non-Vtg.(4)(11) 602 615,545
- --------------------------------------------------------------------
Viatel, Inc., 10% Cv., Series A(11) 672 74,088
- --------------------------------------------------------------------
Walden Residential Properties,
Inc.:
9.16% Cv., Series B 30,000 690,000
9.20% Preferred 8,950 194,663
---------------
Total Preferred Stocks (Cost
$21,439,498) 17,550,720
- --------------------------------------------------------------------
COMMON STOCKS - 0.2%
- --------------------------------------------------------------------
Celcaribe SA(4)(13) 121,950 259,144
- --------------------------------------------------------------------
Coinstar, Inc.(13) 5,250 56,437
- --------------------------------------------------------------------
ECM Fund, L.P. I.(2) 150 132,750
- --------------------------------------------------------------------
Equitable Bag, Inc.(2)(13) 3,723 3,723
- --------------------------------------------------------------------
Golden State Bancorp, Inc.(13) 15,626 259,782
- --------------------------------------------------------------------
Gulfstream Holding, Inc.(13) 56 --
- --------------------------------------------------------------------
Horizon Group Properties, Inc.(13) 851 3,298
- --------------------------------------------------------------------
Intermedia Communications, Inc.(13) 206 3,554
- --------------------------------------------------------------------
Omnipoint Corp.(13) 5,000 46,563
- --------------------------------------------------------------------
Optel, Inc.(13) 945 9
- --------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(13) 8,452 16,904
---------------
Total Common Stocks (Cost $542,407) 782,164
UNITS
- --------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.4%
- --------------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(2) 6,000 60
- --------------------------------------------------------------------
Ames Department Stores, Inc.,
Litigation Trust(2) 39,658 397
- --------------------------------------------------------------------
Australis Holdings PTY
Ltd./Australia Media Ltd. Wts.,
Exp. 5/00(2) 125 1
</TABLE>
36
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
UNITS NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES
(CONTINUED)
- --------------------------------------------------------------------
Capital Gaming International, Inc.
Wts., Exp. 2/99 21,112 $ --
- --------------------------------------------------------------------
CellNet Data Systems, Inc. Wts.,
Exp. 10/07(4) 1,919 9,835
- --------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(2) 62,000 18,600
- --------------------------------------------------------------------
Clearnet Communications, Inc. Wts.,
Exp. 9/05 660 1,567
- --------------------------------------------------------------------
Concentric Network Corp. Wts., Exp.
12/07(2) 750 111,682
- --------------------------------------------------------------------
Covad Communications Group, Inc.
Wts., Exp. 3/08(2) 900 45,000
- --------------------------------------------------------------------
Covergent Communications, Inc.
Wts., Exp. 4/08(2) 3,200 4,000
- --------------------------------------------------------------------
DTI Holdings, Inc. Wts., Exp.
3/08(2) 7,500 375
- --------------------------------------------------------------------
e.spire Communications, Inc. Wts.,
Exp. 11/05 475 11,465
- --------------------------------------------------------------------
FirstWorld Communications, Inc.
Wts., Exp. 4/08(2) 1,100 11,000
- --------------------------------------------------------------------
Foamex LP/JPS Automotive Corp.
Wts., Exp. 7/99(2) 500 10,500
- --------------------------------------------------------------------
Geotek Communications, Inc. Wts.,
Exp. 7/05(2) 52,500 525
- --------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/05(2) 1,800 18,000
- --------------------------------------------------------------------
Golden State Bancorp, Inc. Wts.,
Exp. 1/01 15,626 71,294
- --------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(4) 13,117 131
Exp. 9/04(2) 14,000 15,750
- --------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp.
9/05(2) 5,940 81,411
- --------------------------------------------------------------------
IHF Capital, Inc.:
Series I Wts., Exp. 11/99(2) 400 4
Wts., Exp. 11/99(5) 250 2
- --------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp.
8/02 950 --
- --------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts.,
Exp. 4/08(2) 2,455 6,444
- --------------------------------------------------------------------
Long Distance International, Inc.
Wts., 4/08(2) 800 2,000
- --------------------------------------------------------------------
Microcell Telecommunications, Inc.
Wts., Exp. 6/06(2) 3,200 58,000
- --------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts.,
Exp. 7/05(2) 1,500 9,375
- --------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(2) 7,500 69,844
- --------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07(2) 800 10,000
- --------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07(2) 8,600 410,650
- --------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(2) 28,000 350,000
Exp. 6/05(2) 1,600 16,000
- --------------------------------------------------------------------
Trizec Hahn Corp. Wts., Exp. 7/99 3,970 11,665
- --------------------------------------------------------------------
United International Holdings, Inc.
Wts., Exp. 11/99(2) 1,440 21,780
- --------------------------------------------------------------------
Venezuela (Republic of) Oil Linked
Payment Obligation Wts., Exp. 4/20 3,570 --
- --------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/05(2) 5,250 42,000
---------------
Total Rights, Warrants and
Certificates (Cost $368,233) 1,419,357
</TABLE>
37
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 8.4%
- --------------------------------------------------------------------
Bankers Trust/Bear Stearns High
Yield Composite Index Linked Nts.,
8.55%, 4/5/99-5/4/99 $ 6,000,000 5,765,550
- --------------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts.:
8.5%, 4/9/99-5/14/99 12,000,000 11,805,840
9%, 2/5/99 1,500,000 1,382,865
- --------------------------------------------------------------------
Goldman Sachs Group LP, High Yield
Index Nts., 8%, 3/4/99 1,500,000 1,403,400
- --------------------------------------------------------------------
J.P. Morgan & Co., Inc., The
Emerging Markets Bond Index Linked
Nts., 9.50%, 1/29/99(14) 3,000,000 2,515,290
- --------------------------------------------------------------------
Shoshone Partners Loan Trust Sr.
Nts., 6.97%, 4/28/02 (representing
a basket of reference loans and a
total return swap between Chase
Manhattan Bank and the Trust)(2)(3) 5,360,000 4,806,894
---------------
Total Structured Instruments (Cost
$29,503,421) 27,679,839
- --------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.6%
- --------------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98, to be repurchased
at $5,102,692 on 1/4/99,
collateralized by U.S. Treasury
Nts., 4%-8.875%, 2/15/99-7/15/06,
with a value of $5,204,061 (Cost
$5,100,000) 5,100,000 5,100,000
- --------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$334,412,099) 97.7% 320,913,385
- --------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.3 7,649,272
-------------- ---------------
NET ASSETS 100.0% $ 328,562,657
-------------- ---------------
-------------- ---------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in
the
following currencies:
ARP - Argentine Peso
CAD - Canadian Dollar
DEM - German Mark
GBP - British Pound Sterling
IDR - Indonesian Rupiah
XEU - European Currency Units
2. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $62,611,444 or 19.06% of the Fund's net
assets as of December 31, 1998.
5. Represents the current interest rate for an increasing rate security.
6. For zero coupon bonds, the interest rate shown is the effective yield on
the
date of purchase.
7. Non-income producing - issuer is in default.
8. Units may be comprised of several components, such as debt and equity
and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
9. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable
interest rate at a designated future date.
10. Securities with an aggregate market value of $2,919,300 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See applicable note of Notes to Financial Statements.
38
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
11. Interest or dividend is paid in kind.
12. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See applicable note of Notes to
Financial Statements.
13. Non-income producing security.
14. Security is linked to the Emerging Markets Bond Index (EMBI). The EMBI
tracks total returns for currency denominated debt instruments of the emerging
markets. Countries covered are Argentina, Brazil, Bulgaria, Ecuador, Mexico,
Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia and Venezuela.
See accompanying Notes to Financial Statements.
39
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- ------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 43.5%
- ------------------------------------------------------------------
GOVERNMENT AGENCY - 26.6%
- ------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 12.7%
Federal Home Loan Mortgage Corp.,
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates:
Series 1092, Cl. K, 8.50%, 6/15/21 $ 3,000,000 $ 3,181,890
Series 151, Cl. F, 9%, 5/15/21 866,526 912,825
Series 1541, Cl. H, 7%, 10/15/22 4,750,000 4,987,500
Series 1712, Cl. B, 6%, 3/15/09 1,000,000 995,930
Series 1714, Cl. M, 7%, 8/15/23 2,000,000 2,038,120
- ------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Gtd. Multiclass Mtg. Participation
Certificates, 7%, 4/1/26 3,854,379 3,930,812
- ------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Gtd. Real Estate Mtg. Investment
Conduit
Pass-Through Certificates, Series
1914, Cl. G, 6.50%, 2/15/24 3,000,000 3,036,540
- ------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Interest-Only Stripped Mtg.-Backed
Security, Series 197, Cl. IO,
9.643%, 4/1/28(2) 14,642,987 3,807,177
- ------------------------------------------------------------------
Federal Home Loan Mortgage
Corp.-Government National Mortgage
Assn., Gtd. Multiclass Mtg.
Participation Certificates, Series
26, Cl. B, 6%, 5/25/15 6,499,999 6,485,764
- ------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 1/25/28(4) 16,500,000 16,610,880
6.50%, 3/1/11-11/1/28 9,097,770 9,165,493
7%, 1/25/28(4) 15,000,000 15,302,400
7%, 4/1/04-11/1/25 986,546 1,004,337
7.50%, 1/1/08-1/1/26 3,076,835 3,161,912
8%, 5/1/17 425,154 443,491
- ------------------------------------------------------------------
Federal National Mortgage Assn.,
Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
8.75%, 11/25/05 1,894,061 1,970,411
- ------------------------------------------------------------------
Federal National Mortgage Assn.,
Gtd. Real Estate Mtg. Investment
Conduit
Pass-Through Certificates:
Trust 1989-17, Cl. E, 10.40%,
4/25/19 877,884 967,315
Trust 1997-25, Cl. B, 7%, 12/18/22 1,370,000 1,390,975
- ------------------------------------------------------------------
Federal National Mortgage Assn.,
Principal-Only Stripped Mtg.-Backed
Security:
Trust 277-C1, 21.711%, 4/1/27(5) 632,721 555,806
Trust 294, Cl. 1, 5.206%, 2/1/28(5) 3,557,954 3,024,262
-------------
82,973,840
- ------------------------------------------------------------------
GUARANTEED - 13.9%
Government National Mortgage Assn.:
6.50%, 9/15/24 15,628,113 15,805,493
7%, 1/1/28(4) 15,000,000 15,346,950
7%, 1/15/09-8/15/28 8,941,590 9,154,395
7.50%, 1/15/27-9/15/28 39,204,128 40,441,375
8%, 1/15/28-9/15/28 9,884,125 10,273,267
-------------
91,021,480
</TABLE>
40
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- ------------------------------------------------------------------
<S> <C> <C>
PRIVATE - 16.9%
- ------------------------------------------------------------------
COMMERCIAL - 12.5%
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-D5, Cl. A6, 7.185%,
2/14/41(6) $ 3,000,000 $ 2,746,406
Series 1997-D5, Cl. B2, 6.93%,
2/14/41 5,400,000 3,904,875
Series 1998-MD6, Cl. A3, 6.98%,
3/15/28(6) 6,000,000 6,143,437
- ------------------------------------------------------------------
Asset Securitization Corp.,
Interest-Only Stripped Mtg.-Backed
Security,
Series 1997-D5, Cl. PS1, 9.092%,
2/14/41(2) 18,497,284 1,789,034
- ------------------------------------------------------------------
BKB Commercial Mortgage Trust,
Commercial Mtg. Obligations,
Series 1997-C1, Cl. C, 7.45%,
10/25/00(3) 815,000 813,727
- ------------------------------------------------------------------
Capital Lease Funding
Securitization LP, Interest-Only
Stripped Mtg.-Backed Security,
Series 1997-CTL1, 10.611%,
6/22/24(2)(3) 31,405,361 1,293,901
- ------------------------------------------------------------------
Commercial Mortgage Acceptance
Corp., Collateralized Mtg.
Obligations,
Series 1996-C1, Cl. D, 7.746%,
12/25/20(3)(6) 2,500,000 2,464,844
- ------------------------------------------------------------------
CRIMMI MAE Trust I, Collateralized
Mtg. Obligations,
Series 1996-C1, Cl. A2, 8/30/05(7) 2,000,000 1,961,909
- ------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Interest-Only Stripped
Mtg.-Backed Security, Series
1998-C1, Cl. AX, 8.082%,
4/11/30(2)(3) 25,105,463 1,796,610
- ------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates:
Series 1994-C1, Cl. 2-D, 8.70%,
9/25/25 1,500,000 1,530,000
Series 1994-C1, Cl. 2-E, 8.70%,
9/25/25 1,500,000 1,494,375
- ------------------------------------------------------------------
First Union-Lehman Brothers
Commercial Mortgage Trust,
Commercial Mtg.
Pass-Through Certificates, Series
1998-C2, Cl. E, 6.778%, 5/18/13 2,000,000 1,731,250
- ------------------------------------------------------------------
First Union-Lehman Brothers
Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed
Security:
Series 1997-C1, Cl. IO, 10.173%,
4/18/27(2) 8,454,887 587,218
Series 1997-C1, 8.357%-8.992%,
4/18/27(2) 24,962,333 1,733,712
Series 1998-C2, 8.971%, 5/18/28(2) 29,808,827 1,227,285
- ------------------------------------------------------------------
General Motors Acceptance Corp.,
Collateralized Mtg. Obligations:
Series 1997-C2, Cl. D, 7.192%,
1/15/08 3,500,000 3,469,375
Series 1998-C1, Cl. E, 7.086%,
3/15/11(6) 3,500,000 3,520,781
- ------------------------------------------------------------------
General Motors Acceptance Corp.,
Interest-Only Stripped Mtg.-Backed
Security,
Series 1997-C1, Cl. X,
8.665%-9.155%, 7/15/27(2) 28,232,978 2,523,322
- ------------------------------------------------------------------
GS Mortgage Securities Corp. II,
Commercial Mtg. Pass-Through
Certificates,
Series 1997-CL1, Cl. F,
7.309%-7.779%, 7/13/30(6) 5,000,000 4,752,187
- ------------------------------------------------------------------
Lehman Brothers Commercial Conduit
Mortgage Trust, Interest-Only
Stripped
Mtg.-Backed Security, Series
1998-C1, Cl. IO, 8.783%, 2/18/28(2) 44,613,659 2,718,645
- ------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D, 7.42%,
4/25/28 2,000,000 2,047,500
Series 1997-C2, Cl. D, 7.072%,
12/10/29(6) 4,000,000 3,877,500
- ------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D-1, 7.436%,
2/15/28(3)(6) 1,000,000 1,028,125
Series 1997-RR, Cl. D, 7.436%,
4/30/39(3) 4,300,000 4,055,437
Series 1997-XL1, Cl. F, 7.413%,
10/3/30(6) 2,500,000 2,523,437
- ------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates,
Series-DMC, Cl. B, 8.562%-8.921%,
8/12/11(3) 6,000,000 6,319,000
</TABLE>
41
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- ------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL (CONTINUED)
Potomac Gurnee Financial Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1, Cl. C, 7.21%, 12/21/26(3) $ 250,000 $ 247,891
Series 1, Cl. D, 7.68%, 12/21/26(3) 500,000 501,563
- ------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,505,391
Series 1995-C1, Cl. D, 6.90%,
2/25/27 3,000,000 2,981,953
- ------------------------------------------------------------------
Structured Asset Securities Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl.
E, 7.30%, 4/12/12 4,000,000 3,773,750
- ------------------------------------------------------------------
Structured Asset Securities Corp.,
Multiclass Pass-Through
Certificates:
Series 1996-C3, Cl. C, 7.375%,
6/25/30(3)(6) 3,000,000 3,044,063
Series 1996-CFL, Cl. D, 7.034%,
2/25/28 1,800,000 1,815,750
-------------
81,924,253
- ------------------------------------------------------------------
MULTI-FAMILY - 0.2%
Countrywide Funding Corp., Mtg.
Pass-Through Certificates, Series
1993-12, Cl. B1, 6.625%, 2/25/24 996,193 970,043
- ------------------------------------------------------------------
Merrill Lynch Trust, Collateralized
Mtg. Obligations, Gtd. Multiclass
Mtg. Participation Certificates,
Series 43, Cl. E, 6.50%, 8/27/15 444,793 445,487
- ------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates,
Series 1991-M5, Cl. A, 9%,
3/25/17(3) 189,239 187,820
-------------
1,603,350
- ------------------------------------------------------------------
OTHER - 0.0%
Salomon Brothers Mortgage
Securities VI, Interest-Only
Stripped Mtg.-Backed Security,
Series 1987-3, Cl. B,
23.059%-24.103%, 10/23/17(2) 74,644 20,155
- ------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VI, Principal-Only
Stripped Mtg.-Backed Security,
Series 1987-3, Cl. A,
16.254%-24.103%, 10/23/17(5) 110,461 95,169
-------------
115,324
- ------------------------------------------------------------------
RESIDENTIAL - 4.2%
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates,
Series 1997-C1, Cl. E, 7.50%,
3/1/11(3) 5,006,000 4,790,116
- ------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates,
Series 1997-CHL1, 8.098%,
7/25/06(3)(6) 4,024,000 3,939,748
- ------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-HF1, Cl. E, 7.55%,
7/15/29(3) 1,500,000 1,543,125
Series 1997-WF1, Cl. E, 7.49%,
5/15/09(3) 1,000,000 1,012,813
- ------------------------------------------------------------------
NationsBank Trust, Lease
Pass-Through Certificates, Series
1997A-1, 7.442%, 1/10/11(6) 2,500,000 2,656,641
- ------------------------------------------------------------------
Residential Accredit Loans, Inc.,
Mtg. Asset-Backed Pass-Through
Certificates, Series 1997-QS11, 7%,
10/25/12 13,039,614 13,259,658
- ------------------------------------------------------------------
Ryland Mortgage Securities Corp.
III Sub. Bonds, Series 1992-A, Cl.
1A, 8.256%, 3/29/30(6) 310,293 314,075
-------------
27,516,176
-------------
Total Mortgage-Backed Obligations
(Cost $285,512,044) 285,154,423
</TABLE>
42
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
0.1%
- -----------------------------------------------------------------------
Ontario, Canada (Province of)
Bonds, 8%, 10/17/01 $ 750,000 $ 803,977
- -----------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts.,
Zero Coupon, 3/17/99 (3)(8)IDR 1,000,000,000 31,250
-------------
Total Foreign Government
Obligations (Cost $1,102,252) 835,227
- -----------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.1%
- -----------------------------------------------------------------------
Colombia (Republic of) 1989-1990
Integrated Loan Facility Bonds,
6.375%, 7/1/01(3)(6) (Cost
$795,958) 825,799 761,800
- -----------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 0.8%
- -----------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority Exchangeable
Revenue Bonds, University of Miami,
Prerefunded, MBIA Insured, 7.65%,
4/1/10 175,000 187,808
- -----------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority Revenue Bonds,
University of Miami, MBIA Insured,
7.65%, 4/1/10 205,000 219,252
- -----------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority Taxable
Exchange Revenue Bonds, University
of Miami, MBIA Insured, 7.65%,
4/1/10 120,000 128,342
- -----------------------------------------------------------------------
Pinole, CA Redevelopment Agency Tax
Allocation Taxable Bonds, Pinole
Vista Redevelopment, Series B,
8.35%, 8/1/17 670,000 708,659
- -----------------------------------------------------------------------
Port of Portland, OR Special
Obligation Taxable Revenue Bonds,
PAMCO Project, 9.20%, 5/15/22 500,000 552,200
- -----------------------------------------------------------------------
Virgin Islands Public Finance
Authority Taxable Revenue Refunding
Bonds, Sr. Lien Loan Nts., Series
B, 6.99%, 10/1/01 3,265,000 3,337,124
-------------
Total Municipal Bonds and Notes
(Cost $4,928,533) 5,133,385
- -----------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 54.1%
- -----------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.6%
Amtran, Inc., 9.625% Nts., 12/15/05 800,000 804,000
- -----------------------------------------------------------------------
Atlas Air, Inc., 8.01% Nts., 1/2/10 3,000,000 3,022,332
-------------
3,826,332
- -----------------------------------------------------------------------
CHEMICALS - 1.4%
ClimaChem, Inc., 10.75% Sr. Unsec.
Nts., Series B, 12/1/07 300,000 303,000
- -----------------------------------------------------------------------
IMC Global, Inc., 7.625% Bonds,
11/1/05 9,000,000 9,222,048
-------------
9,525,048
- -----------------------------------------------------------------------
CONSUMER DURABLES - 0.1%
Toro Co., 7.125% Nts., 6/15/07 1,000,000 969,152
- -----------------------------------------------------------------------
CONSUMER NON-DURABLES - 1.2%
AKI Holdings, Inc., 10.50% Sr.
Nts., 7/1/08(7) 300,000 286,500
- -----------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Sub.
Nts., 8/15/08(7) 110,000 112,200
- -----------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs.,
3/15/11 1,097,000 988,345
- -----------------------------------------------------------------------
Harman International Industries,
Inc., 7.32% Nts., 7/1/07 5,000,000 5,244,195
- -----------------------------------------------------------------------
Procter & Gamble Co., 9.36% Debs.,
Series A, 1/1/21 500,000 664,743
- -----------------------------------------------------------------------
Revlon Consumer Products Corp., 9%
Sr. Nts., 11/1/06(7) 500,000 500,000
</TABLE>
43
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER NON-DURABLES (CONTINUED)
Styling Technology Corp., 10.875%
Sr. Sub. Nts., 7/1/08 $ 360,000 $ 343,800
-------------
8,139,783
- -----------------------------------------------------------------------
ENERGY - 5.0%
BP America, Inc., 10.875% Unsec.
Unsub. Nts., 8/1/01CAD 1,000,000 737,839
- -----------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts.,
5/15/99 500,000 505,244
- -----------------------------------------------------------------------
Colorado Interstate Gas Corp., 10%
Sr. Debs., 6/15/05 500,000 615,642
- -----------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr.
Nts., 12/1/06(7) 2,000,000 2,104,710
- -----------------------------------------------------------------------
Enron Corp., 9.875% Debs., 6/15/03 375,000 427,440
- -----------------------------------------------------------------------
ENSCO International, Inc.:
6.75% Nts., 11/15/07 5,000,000 5,096,110
7.20% Debs., 11/15/27 3,000,000 3,047,355
- -----------------------------------------------------------------------
Enterprise Oil plc, 6.70% Sr. Nts.,
9/15/07 4,000,000 3,981,300
- -----------------------------------------------------------------------
Global Marine, Inc., 7.125% Nts.,
9/1/07 8,000,000 8,128,224
- -----------------------------------------------------------------------
Gothic Production Corp., 11.125%
Sr. Sec. Nts., Series B, 5/1/05(7) 300,000 235,500
- -----------------------------------------------------------------------
Gulf Canada Resources Ltd., 8.375%
Sr. Nts., 11/15/05 500,000 495,000
- -----------------------------------------------------------------------
HNG Internorth/Enron Corp., 9.625%
Debs., 3/15/06 500,000 612,929
- -----------------------------------------------------------------------
McDermott, Inc., 9.375% Nts.,
3/15/02 400,000 427,277
- -----------------------------------------------------------------------
Mitchell Energy & Development
Corp., 9.25% Sr. Nts., 1/15/02 55,000 58,200
- -----------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr.
Sec. Nts., 6/1/08 400,000 322,000
- -----------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 1,200,000 1,218,000
- -----------------------------------------------------------------------
Saga Petroleum ASA, 7.25% Debs.,
9/23/27 1,000,000 920,550
- -----------------------------------------------------------------------
Talisman Energy, Inc., 7.25% Debs.,
10/15/27 2,500,000 2,411,257
- -----------------------------------------------------------------------
Texaco Capital, Inc., 8.875% Gtd.
Debs., 9/1/21 500,000 648,127
- -----------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875%
Debs., 1/1/21 750,000 961,927
-------------
32,954,631
- -----------------------------------------------------------------------
FINANCIAL - 13.7%
Aeltus CBO II Ltd./Aeltus CBO II
Corp., 7.982% Sr. Sec. Sub. Bonds,
8/6/09(3) 5,000,000 4,831,250
- -----------------------------------------------------------------------
Aetna Services, Inc., 7.125% Nts.,
8/15/06 1,000,000 1,051,813
- -----------------------------------------------------------------------
Allmerica Capital I, 8.207% Debs.,
2/3/27(9) 2,000,000 2,241,142
- -----------------------------------------------------------------------
American General Finance Corp.,
5.875% Sr. Nts., 7/1/00 196,000 197,088
- -----------------------------------------------------------------------
BankAmerica Corp. (New), 7.75% Sub.
Nts., 7/15/02 750,000 805,140
- -----------------------------------------------------------------------
Banque Centrale de Tunisie, 7.50%
Nts., 9/19/07 900,000 821,056
- -----------------------------------------------------------------------
Chase Manhattan Corp. (New),
10.125% Sub. Nts., 11/1/00 750,000 809,707
- -----------------------------------------------------------------------
Citicorp Capital I, 7.933% Gtd.
Bonds, 2/15/27 2,000,000 2,193,572
- -----------------------------------------------------------------------
CNA Financial Corp., 6.25% Nts.,
11/15/06 2,195,000 2,199,572
- -----------------------------------------------------------------------
EOP Operating LP, 6.625% Sr. Unsec.
Nts., 2/15/05 1,000,000 985,431
- -----------------------------------------------------------------------
Farmers Exchange Capital, 7.05%
Trust Surplus Nts., 7/15/28(7) 3,000,000 3,027,762
</TABLE>
44
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL (CONTINUED)
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 $ 750,000 $ 834,676
9% Sub. Nts., 6/15/99 150,000 152,283
- -----------------------------------------------------------------------
Fleet Mtg. Group, Inc., 6.50% Nts.,
9/15/99 500,000 502,804
- -----------------------------------------------------------------------
Ford Motor Credit Co., 6.75% Nts.,
8/15/08 1,000,000 1,064,037
- -----------------------------------------------------------------------
Franchise Finance Corp. of America,
8.25% Sr. Unsec. Nts., 10/30/03 7,850,000 7,984,047
- -----------------------------------------------------------------------
Household Finance Corp.:
6.40% Sr. Unsec. Unsub. Nts.,
Series EMTN, 6/17/08 2,000,000 2,063,900
8.95% Debs., 9/15/99 500,000 511,410
- -----------------------------------------------------------------------
Household International BV, 6% Gtd.
Sr. Nts., 3/15/99 131,000 131,127
- -----------------------------------------------------------------------
HSBC America Capital Trust II,
8.38% Capital Securities,
5/15/27(7) 3,000,000 3,061,941
- -----------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr.
Sub. Nts., 2/15/08 3,000,000 3,000,228
- -----------------------------------------------------------------------
Liberty Mutual Insurance Co.,
7.697% Unsec. Nts., 10/15/2097(7) 7,000,000 7,069,440
- -----------------------------------------------------------------------
Long Island Savings Bank, 6.20%
Nts., 4/2/01 4,000,000 4,038,592
- -----------------------------------------------------------------------
Lumbermens Mutual Casualty Co.,
8.30% Surplus Nts., 12/1/37(7) 2,000,000 2,242,676
- -----------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6.56% Nts., 12/16/07 2,000,000 2,084,358
6.875% Nts., 3/1/03-11/15/18 7,450,000 7,774,573
- -----------------------------------------------------------------------
Metropolitan Life Insurance Co.,
6.30% Nts., 11/1/03(7) 3,000,000 3,016,956
- -----------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.,
7% Debs., 10/1/13 1,000,000 1,059,171
- -----------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75%
Sr. Nts., 5/15/99 1,000,000 1,009,119
- -----------------------------------------------------------------------
Prudential Insurance Co. of
America, 6.875% Nts., 4/15/03(7) 3,000,000 3,108,741
- -----------------------------------------------------------------------
Rank Group Finance plc, 6.75% Gtd.
Nts., 11/30/04 3,000,000 3,018,534
- -----------------------------------------------------------------------
Salomon Smith Barney Holdings,
Inc., 6.25% Bonds, 1/15/05 3,000,000 3,037,068
- -----------------------------------------------------------------------
Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,044,339
- -----------------------------------------------------------------------
SunAmerica, Inc.:
9% Sr. Nts., 1/15/99 196,000 196,152
9.95% Unsec. Debs., 8/1/08 3,000,000 3,814,737
- -----------------------------------------------------------------------
Travelers Group, Inc.:
6.875% Debs., 2/15/2098 1,000,000 1,018,395
7.25% Sr. Unsec. Nts., 5/1/01 3,300,000 3,414,117
- -----------------------------------------------------------------------
U.S. Leasing International, Inc.,
6.625% Sr. Nts., 5/15/03 750,000 774,986
- -----------------------------------------------------------------------
Washington Mutual Capital I, 8.375%
Sub. Capital Income Nts., 6/1/27 3,000,000 3,314,010
-------------
89,505,950
- -----------------------------------------------------------------------
FOOD & DRUG - 0.2%
Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03(10) 1,095,000 903,375
12.625% Sub. Nts., 6/15/02 400,000 392,000
-------------
1,295,375
- -----------------------------------------------------------------------
FOOD/TOBACCO - 0.3%
Aurora Foods, Inc., 8.75% Sr. Sub.
Nts., Series B, 7/1/08 300,000 313,500
- -----------------------------------------------------------------------
Bass America, Inc., 6.75% Gtd.
Nts., 8/1/99 750,000 755,815
</TABLE>
45
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FOOD/TOBACCO (CONTINUED)
Coca-Cola Enterprises, Inc., 6.95%
Debs., 11/15/26 $ 1,000,000 $ 1,067,105
-------------
2,136,420
- -----------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 0.6%
Boise Cascade Corp., 9.90% Nts.,
3/15/00 750,000 774,358
- -----------------------------------------------------------------------
Fletcher Challenge Capital Canada,
Inc., 7.75% Nts., 6/20/06 1,800,000 1,834,477
- -----------------------------------------------------------------------
Mail-Well I Corp., 8.75% Sr. Sub.
Nts., 12/15/08(7) 800,000 804,000
- -----------------------------------------------------------------------
Potlatch Corp., 9.46% Medium-Term
Nts., 4/2/02 500,000 548,572
-------------
3,961,407
- -----------------------------------------------------------------------
GAMING/LEISURE - 2.5%
Circus Circus Enterprises, Inc.,
6.75% Nts., 7/15/03 375,000 348,440
- -----------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr.
Nts., 4/15/07 4,000,000 4,150,864
- -----------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr.
Nts., Series C, 12/1/08 300,000 301,500
- -----------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts.,
8/15/08 950,000 978,500
- -----------------------------------------------------------------------
Marriott International, Inc.,
6.875% Nts., 11/15/05(7) 8,500,000 8,542,373
- -----------------------------------------------------------------------
Park Place Entertainment Corp.,
7.875% Sr. Sub. Nts., 12/15/05(7) 600,000 603,750
- -----------------------------------------------------------------------
Premier Parks, Inc., 0%/10% Sr.
Disc. Nts., 4/1/08(10) 300,000 204,750
- -----------------------------------------------------------------------
Station Casinos, Inc.:
8.875% Sr. Sub. Nts., 12/1/08(7) 400,000 408,000
9.75% Sr. Sub. Nts., 4/15/07 550,000 577,500
-------------
16,115,677
- -----------------------------------------------------------------------
HEALTHCARE - 0.3%
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 600,000 594,000
- -----------------------------------------------------------------------
ICN Pharmaceutical, Inc., 8.75% Sr.
Nts., 11/15/08(7) 125,000 126,875
- -----------------------------------------------------------------------
Roche Holdings, Inc., 2.75% Bonds,
4/14/00 1,250,000 1,210,938
-------------
1,931,813
- -----------------------------------------------------------------------
HOUSING - 1.2%
Building Materials Corp. of
America, 8% Sr. Nts., 12/1/08(7) 800,000 802,000
- -----------------------------------------------------------------------
Nationwide Health Properties, Inc.,
7.60% Nts., Series C, 11/20/28 6,900,000 6,934,500
-------------
7,736,500
- -----------------------------------------------------------------------
INFORMATION TECHNOLOGY - 1.6%
Motorola, Inc., 6.50% Unsec. Debs.,
11/15/28 10,000,000 10,185,970
- -----------------------------------------------------------------------
MANUFACTURING - 0.4%
MOLL Industries, Inc., 10.50% Sr.
Sub. Nts., 7/1/08(7) 250,000 246,250
- -----------------------------------------------------------------------
Norsk Hydro AS, 8.75% Bonds,
10/23/01 1,000,000 1,073,750
- -----------------------------------------------------------------------
Tenneco, Inc. (New):
10.20% Debs., 3/15/08 400,000 490,210
8.075% Nts., 10/1/02 650,000 694,406
-------------
2,504,616
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING -
1.9%
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series
B, 6/15/07 2,500,000 2,575,000
9% Sr. Sub. Nts., 10/1/08(7) 2,200,000 2,332,000
</TABLE>
46
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-BROADCASTING
(CONTINUED)
Clear Channel Communications, Inc.,
6.625% Nts., 6/15/08 $ 3,000,000 $ 3,045,828
- -----------------------------------------------------------------------
Time Warner, Inc., 6.95% Debs.,
1/15/28 4,000,000 4,250,416
-------------
12,203,244
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO - 1.4%
Comcast Cable Communications, Inc.,
8.125% Unsec. Nts., 5/1/04 5,000,000 5,524,825
- -----------------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr.
Unsec. Debs., 7/15/18 1,500,000 1,478,400
- -----------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr.
Debs., 10/30/07 2,200,000 2,395,351
-------------
9,398,576
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA - 3.3%
GSP I Corp., 10.15% First Mtg.
Bonds, 6/24/10(3) 1,086,678 1,108,694
- -----------------------------------------------------------------------
Imax Corp., 7.875% Sr. Nts.,
12/1/05 900,000 913,500
- -----------------------------------------------------------------------
Reed Elsevier, Inc., 6.625% Nts.,
10/15/23(7) 600,000 591,516
- -----------------------------------------------------------------------
Reed Publishing (USA), Inc., 7.66%
Medium-Term Nts., 2/19/99 500,000 501,083
- -----------------------------------------------------------------------
Regal Cinemas, Inc., 9.50% Sr. Sub.
Nts., 6/1/08(7) 500,000 522,500
- -----------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr.
Sub. Nts., 12/1/08(7) 600,000 603,750
- -----------------------------------------------------------------------
Time Warner Entertainment Co. LP,
8.375% Sr. Debs., 3/15/23 1,295,000 1,588,491
- -----------------------------------------------------------------------
Time Warner, Inc., 9.15% Debs.,
2/1/23 12,000,000 15,822,516
-------------
21,652,050
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
- -1.9%
Cable & Wireless Communications
plc, 6.625% Nts., 3/6/05 1,000,000 1,010,803
- -----------------------------------------------------------------------
Intermedia Communications, Inc.,
8.60% Sr. Unsec. Nts., Series B,
6/1/08 905,000 864,275
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc.,
9.625% Sr. Nts., 10/1/07 2,200,000 2,112,000
- -----------------------------------------------------------------------
NTL, Inc., 11.50% Sr. Nts.,
10/1/08(7) 1,000,000 1,097,500
- -----------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B,
2/15/05 1,000,000 995,000
11.50% Sr. Nts., 11/1/08(7) 1,000,000 1,052,500
- -----------------------------------------------------------------------
Qwest Communications International,
Inc., 0%/8.29% Sr. Unsec. Disc.
Nts., Series B, 2/1/08(10) 1,350,000 1,026,000
- -----------------------------------------------------------------------
Shaw Communications, Inc., 8.54%
Debs., 9/30/27CAD 3,000,000 2,031,401
- -----------------------------------------------------------------------
TCI Communications, Inc., 6.875%
Sr. Unsec. Nts., 2/15/06 2,000,000 2,150,738
-------------
12,340,217
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS - 0.9%
Arch Communications, Inc., 12.75%
Sr. Nts., 7/1/07(7) 200,000 201,000
- -----------------------------------------------------------------------
Price Communications Wireless,
Inc., 9.125% Sr. Sec. Nts.,
12/15/06(7) 1,000,000 1,015,000
- -----------------------------------------------------------------------
SBA Communications Corp., 0%/12%
Sr. Unsec. Disc. Nts., 3/1/08(10) 700,000 406,000
- -----------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12%
Sr. Disc. Nts., 7/15/08(7)(10) 600,000 303,000
- -----------------------------------------------------------------------
U.S. Cellular Corp., 7.25% Nts.,
8/15/07 4,000,000 4,253,488
-------------
6,178,488
- -----------------------------------------------------------------------
METALS/MINERALS - 0.1%
Great Lakes Carbon Corp., 10.25%
Sr. Sub. Nts., Series B, 5/15/08 750,000 759,375
</TABLE>
47
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL - 1.3%
Eye Care Centers of America, Inc.,
9.125% Sr. Sub. Nts., 5/1/08(7) $ 250,000 $ 238,750
- -----------------------------------------------------------------------
Neiman Marcus Group, Inc., 6.65%
Sr. Nts., 6/1/08 3,000,000 3,014,988
- -----------------------------------------------------------------------
Staples, Inc., 7.125% Sr. Nts.,
8/15/07 5,000,000 5,159,805
-------------
8,413,543
- -----------------------------------------------------------------------
SERVICE - 4.3%
Allied Waste North America, Inc.,
7.875% Sr. Nts., 1/1/09(7) 665,000 676,638
- -----------------------------------------------------------------------
Archer Daniels Midland Co., 7.125%
Debs., 3/1/13 750,000 849,599
- -----------------------------------------------------------------------
Arvin Industries, Inc., 6.75% Nts.,
3/15/08 2,500,000 2,585,635
- -----------------------------------------------------------------------
Cendant Corp., 7.75% Sr. Unsec.
Nts., 12/1/03(11) 10,000,000 10,230,150
- -----------------------------------------------------------------------
Great Lakes Dredge & Dock Corp.,
11.25% Sr. Sub. Nts., 8/15/08(7) 135,000 137,700
- -----------------------------------------------------------------------
Tyco International Group SA, 5.875%
Nts., 11/1/04(7) 13,500,000 13,436,375
-------------
27,916,097
- -----------------------------------------------------------------------
TRANSPORTATION - 4.7%
Chrysler Corp., 7.40% Debs.,
8/1/2097 2,000,000 2,262,372
- -----------------------------------------------------------------------
CSX Corp.:
6.80% Fixed Nts., 12/1/28 2,700,000 2,697,808
7.25% Sr. Unsec. Debs., 5/1/27 4,820,000 5,145,480
- -----------------------------------------------------------------------
Johnson Controls, Inc., 7.70%
Debs., 3/1/15 500,000 574,979
- -----------------------------------------------------------------------
Kansas City Southern Industries,
Inc., 6.625% Nts., 3/1/05 750,000 777,202
- -----------------------------------------------------------------------
UAL Corp., 9.125% Debs., 1/15/12 5,000,000 5,780,190
- -----------------------------------------------------------------------
Union Pacific Corp.:
6.39% Medium-Term Nts., Series E,
11/1/04 13,000,000 13,152,724
9.65% Medium-Term Nts., 4/17/00 400,000 418,300
-------------
30,809,055
- -----------------------------------------------------------------------
UTILITY - 5.2%
AES Corp., 8% Sr. Nts., 12/31/08 6,600,000 6,537,762
- -----------------------------------------------------------------------
Alltel Corp., 6.50% Debs., 11/1/13 1,000,000 1,051,429
- -----------------------------------------------------------------------
Cincinnati Bell Telephone Co.,
6.30% Sr. Unsec. Bonds, 12/1/28 1,000,000 1,005,723
- -----------------------------------------------------------------------
Cleveland Electric Illuminating
Co./Toledo Edison Co., 7.13% Sec.
Nts., Series B, 7/1/07 3,000,000 3,218,124
- -----------------------------------------------------------------------
Consolidated Natural Gas Co.,
6.625% Debs., 12/1/13 1,000,000 1,032,508
- -----------------------------------------------------------------------
GTE Corp., 9.375% Debs., 12/1/00 500,000 538,142
- -----------------------------------------------------------------------
Long Island Lighting Co., 8.20%
Debs., 3/15/23 3,300,000 3,574,250
- -----------------------------------------------------------------------
National Fuel Gas Co., 7.75% Debs.,
2/1/04 500,000 546,822
- -----------------------------------------------------------------------
Northern Telecom Ltd., 6.875% Nts.,
10/1/02 500,000 525,985
- -----------------------------------------------------------------------
Public Service Co. of Colorado,
8.75% First Mtg. Bonds, 3/1/22 750,000 826,739
- -----------------------------------------------------------------------
South Carolina Electric & Gas Co.,
9% Mtg. Bonds, 7/15/06 500,000 601,390
- -----------------------------------------------------------------------
Sprint Capital Corp., 6.875% Sr.
Unsec. Nts., 11/15/28 6,000,000 6,250,440
- -----------------------------------------------------------------------
TE Products Pipeline Co., 6.45% Sr.
Nts., 1/15/08 4,000,000 4,061,760
- -----------------------------------------------------------------------
Texas Gas Transmission Corp.,
8.625% Nts., 4/1/04 500,000 565,720
- -----------------------------------------------------------------------
Washington Gas Light Co., 8.75%
First Mtg. Bonds, 7/1/19 500,000 506,909
</TABLE>
48
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
UTILITY (CONTINUED)
Williams Cos., Inc., 6.125% Sec.
Nts., 2/15/02 $ 3,000,000 $ 3,026,301
-------------
33,870,004
-------------
Total Corporate Bonds and Notes
(Cost $347,798,759) 354,329,323
</TABLE>
<TABLE>
<CAPTION>
SHARES
- -----------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS - 1.6%
- -----------------------------------------------------------------
Centaur Funding Corp., 9.08%, Cum.
Preferred Shares, 4/21/20(3)(12) 6,600 6,917,625
- -----------------------------------------------------------------
United Dominion Realty Trust, Inc.,
8.50% Unsec. Unsub. Preferred Nts. 135,000 3,493,125
-------------
Total Preferred Stocks (Cost
$9,975,000) 10,410,750
- -----------------------------------------------------------------
OTHER SECURITIES - 0.5%
- -----------------------------------------------------------------
Allstate Financing I, 7.95% Gtd.
Quarterly Income Preferred
Securities, Series A (Cost
$3,000,000) 120,000 3,120,000
PRINCIPAL
AMOUNT (1)
- -----------------------------------------------------------------
STRUCTURED INSTRUMENTS - 3.9%
- -----------------------------------------------------------------
Bankers Trust/Bear Stearns High
Yield Composite Index Linked Nts.,
8.135%, 6/1/99 $ 5,000,000 5,088,850
- -----------------------------------------------------------------
Bankers Trust/Lehman High Yield
Composite Index Linked Nts., 7.70%,
5/4/99 1,000,000 1,033,950
- -----------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch), Lehman High
Yield Index Nts., 8.50%, 3/8/99 6,000,000 5,655,000
- -----------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts., 8.50%, 4/9/99 3,000,000 2,788,140
- -----------------------------------------------------------------
Commerzbank International SA,
Lehman High Yield Composite Index
Linked Nts., 7.80%, 2/5/99-4/5/99 10,000,000 9,973,000
- -----------------------------------------------------------------
Merrill Lynch & Co., Inc., Units,
9.75%, 6/15/99 (representing debt
of Chemical Banking Corp., sub.
capital nts., and equity of
Citicorp, 7.75% preferred,
series 22)(3) 1,000,000 1,130,000
-------------
Total Structured Instruments (Cost
$26,100,540) 25,668,940
- -----------------------------------------------------------------
REPURCHASE AGREEMENTS - 0.4%
- -----------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98, to be repurchased
at $2,601,372 on 1/4/99,
collateralized by U.S. Treasury
Nts., 4%-8.875%, 2/15/99-7/15/06,
with a value of $2,653,050 (Cost
$2,600,000) 2,600,000 2,600,000
- -----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$681,813,086) 105.0% 688,013,848
- -----------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (5.0) (32,471,149)
------------- -------------
NET ASSETS 100.0% $655,542,699
------------- -------------
------------- -------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in
the
following currencies:
CAD - Canadian Dollar
IDR - Indonesian Rupiah
49
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. Interest-Only Strips represent the right to receive the monthly interest
payments 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). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
4. When-issued security to be delivered and settled after December 31, 1998.
5. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
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. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
6. Represents the current interest rate for a variable rate security.
7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $60,469,812 or 9.22% of the Fund's net
assets as of December 31, 1998.
8. Non-income producing - issuer is in default.
9. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See applicable note of Notes to
Financial Statements.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable
interest rate at a designated future date.
11. Securities with an aggregate market value of $5,115,075 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See applicable note of Notes to Financial Statements.
12. Non-income producing security.
See accompanying Notes to Financial Statements.
50
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C>
<C>
COMMON STOCKS - 88.6%
- ------------------------------------------------------------------------------------------
CAPITAL GOODS - 9.8%
- ------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.2%
Gulfstream Aerospace Corp.(1) 242,200
$ 12,897,150
- ------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 4.9%
Allied Waste Industries, Inc. (New)(1)
875,835 20,691,602
- ------------------------------------------------------------------------------------------
Republic Services, Inc., Cl. A(1)
325,200 5,995,875
- ------------------------------------------------------------------------------------------
United Rentals, Inc.(1)
294,693 9,761,706
- ------------------------------------------------------------------------------------------
Waste Management, Inc. (New)
344,600 16,066,975
- --------------
52,516,158
- ------------------------------------------------------------------------------------------
MANUFACTURING - 3.7%
Tyco International Ltd.
525,000 39,604,687
- ------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 10.5%
- ------------------------------------------------------------------------------------------
MEDIA - 1.0%
Infinity Broadcasting Corp., Cl. A(1)
391,900 10,728,262
- ------------------------------------------------------------------------------------------
RETAIL: GENERAL - 3.9%
Fred Meyer, Inc.(1)
220,000 13,255,000
- ------------------------------------------------------------------------------------------
Kohl's Corp.(1)
200,000 12,287,500
- ------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc.
200,000 16,287,500
- --------------
41,830,000
- ------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 5.6%
Abercrombie & Fitch Co., Cl. A(1)
105,000 7,428,750
- ------------------------------------------------------------------------------------------
Guitar Center, Inc.(1)
120,000 2,955,000
- ------------------------------------------------------------------------------------------
Home Depot, Inc.
375,000 22,945,312
- ------------------------------------------------------------------------------------------
Linens 'N Things, Inc.(1)
669,000 26,509,125
- --------------
59,838,187
- ------------------------------------------------------------------------------------------
CONSUMER STAPLES - 7.5%
- ------------------------------------------------------------------------------------------
CONSUMER SERVICES - 0.6%
Young & Rubicam, Inc.(1)
186,300 6,031,462
- ------------------------------------------------------------------------------------------
ENTERTAINMENT - 3.5%
Outback Steakhouse, Inc.(1)
210,000 8,373,750
- ------------------------------------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(1)
275,000 15,090,625
- ------------------------------------------------------------------------------------------
Starbucks Corp.(1)
250,000 14,031,250
- --------------
37,495,625
- ------------------------------------------------------------------------------------------
FOOD & DRUG RETAILERS - 3.4%
CVS Corp.
665,000 36,575,000
- ------------------------------------------------------------------------------------------
FINANCIAL - 10.9%
- ------------------------------------------------------------------------------------------
BANKS - 2.0%
Fifth Third Bancorp
200,000 14,262,500
- ------------------------------------------------------------------------------------------
First Tennessee National Corp.
200,000 7,612,500
- --------------
21,875,000
</TABLE>
51
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C>
<C>
DIVERSIFIED FINANCIAL - 8.9%
Associates First Capital Corp., Cl. A 432,000
$ 18,306,000
- ------------------------------------------------------------------------------------------
Freddie Mac
380,000 24,486,250
- ------------------------------------------------------------------------------------------
Providian Financial Corp.
375,000 28,125,000
- ------------------------------------------------------------------------------------------
Schwab (Charles) Corp.
450,000 25,284,375
- --------------
96,201,625
- ------------------------------------------------------------------------------------------
HEALTHCARE - 12.1%
- ------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 4.7%
Biogen, Inc.(1)
260,000 21,580,000
- ------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co.
50,000 6,690,625
- ------------------------------------------------------------------------------------------
Pfizer, Inc.
75,000 9,407,812
- ------------------------------------------------------------------------------------------
Warner Lambert Co.
175,000 13,157,812
- --------------
50,836,249
- ------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 7.4%
Cardinal Health, Inc.
450,000 34,143,750
- ------------------------------------------------------------------------------------------
Guidant Corp.
100,000 11,025,000
- ------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1)
59,300 915,444
- ------------------------------------------------------------------------------------------
McKesson Corp.
230,000 18,184,375
- ------------------------------------------------------------------------------------------
Medtronic, Inc.
125,900 9,348,075
- ------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc.(1)
50,000 6,087,500
- --------------
79,704,144
- ------------------------------------------------------------------------------------------
TECHNOLOGY - 33.3%
- ------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 7.7%
3Com Corp.(1)
25,000 1,120,313
- ------------------------------------------------------------------------------------------
Ascend Communications, Inc.(1)
300,000 19,725,000
- ------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1)
225,000 20,882,813
- ------------------------------------------------------------------------------------------
Dell Computer Corp.(1)
175,000 12,807,813
- ------------------------------------------------------------------------------------------
EMC Corp.(1)
340,000 28,900,000
- --------------
83,435,939
- ------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 16.8%
Affiliated Computer Services, Inc., Cl. A(1)
200,000 9,000,000
- ------------------------------------------------------------------------------------------
Cap Gemini SA
116,666 18,734,205
- ------------------------------------------------------------------------------------------
Citrix Systems, Inc.(1)
360,000 34,942,500
- ------------------------------------------------------------------------------------------
Compuware Corp.(1)
400,000 31,250,000
- ------------------------------------------------------------------------------------------
Electronic Arts, Inc.(1)
200,000 11,225,000
- ------------------------------------------------------------------------------------------
HBO & Co.
760,000 21,802,500
- ------------------------------------------------------------------------------------------
Lernout & Hauspie Speech Products NV(1)
317,600 10,361,700
- ------------------------------------------------------------------------------------------
Microsoft Corp.(1)
225,000 31,204,688
- ------------------------------------------------------------------------------------------
Visio Corp.(1)
345,000 12,614,063
- --------------
181,134,656
- ------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.3%
General Instrument Corp.(1)
100,000 3,393,750
- ------------------------------------------------------------------------------------------
Lucent Technologies, Inc.
100,000 11,000,000
- --------------
14,393,750
</TABLE>
52
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C>
<C>
ELECTRONICS - 7.5%
JDS Fitel, Inc.(1) 425,000
$ 10,545,217
- ------------------------------------------------------------------------------------------
Level One Communications, Inc.(1)
200,000 7,100,000
- ------------------------------------------------------------------------------------------
Uniphase Corp.(1)(2)
228,000 15,817,500
- ------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1)
420,000 19,162,500
- ------------------------------------------------------------------------------------------
Waters Corp.(1)
325,000 28,356,250
- --------------
80,981,467
- ------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 4.5%
- ------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 4.5%
Global Crossing Ltd.(1)
362,700 16,366,838
- ------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(1)
350,000 25,112,500
- ------------------------------------------------------------------------------------------
Qwest Communications International, Inc.(1)
146,610 7,330,500
- --------------
48,809,838
- --------------
Total Common Stocks (Cost
$603,144,720) 954,889,199
- ------------------------------------------------------------------------------------------
OTHER SECURITIES - 0.8%
- ------------------------------------------------------------------------------------------
L & H Capital Trust, Inc., 4.75% Cv. Preferred Income Equity
Redeemable Securities(3)
132,500 4,223,437
- ------------------------------------------------------------------------------------------
United Rental Trust I, 6.50% Cv. Quarterly Income Preferred
Securities(3)
100,000 4,812,500
- --------------
Total Other Securities (Cost
$11,695,000) 9,035,937
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.3%
- ------------------------------------------------------------------------------------------
United Waste Systems, Inc., 4.50% Cv. Sub. Nts., 6/1/01
(Cost $2,000,000) $
2,000,000 3,137,500
- ------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 10.4%
- ------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
4.75%, dated 12/31/98, to be repurchased at $112,559,375 on
1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%,
2/15/99-7/15/06, with a value of $114,795,454 (Cost
$112,500,000)
112,500,000 112,500,000
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $729,339,720) 100.1%
1,079,562,636
- ------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS
(0.1) (1,602,476)
------------
- --------------
NET ASSETS 100.0%
$1,077,960,160
------------
- --------------
------------
- --------------
</TABLE>
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover
outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES MARKET
SUBJECT EXPIRATION
EXERCISE PREMIUM VALUE
TO CALL DATE
PRICE RECEIVED NOTE 1
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C> <C>
Uniphase Corp. 13,800 1/99
$70 $34,764 $32,775
</TABLE>
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $9,035,937, or 0.84% of the Fund's net
assets as of December 31, 1998.
See accompanying Notes to Financial Statements.
53
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 91.5%
- -----------------------------------------------------------------
BASIC MATERIALS - 1.7%
- -----------------------------------------------------------------
CHEMICALS - 1.5%
Crompton & Knowles Corp. 100,200 $ 2,072,887
- -----------------------------------------------------------------
Morton International, Inc. 139,000 3,405,500
- -----------------------------------------------------------------
PPG Industries, Inc. 100,000 5,825,000
-------------
11,303,387
- -----------------------------------------------------------------
PAPER - 0.2%
Rayonier, Inc. 32,400 1,488,375
- -----------------------------------------------------------------
CAPITAL GOODS - 4.1%
- -----------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.4%
Emerson Electric Co. 45,000 2,815,312
- -----------------------------------------------------------------
Sanmina Corp.(1) 128,500 8,031,250
-------------
10,846,562
- -----------------------------------------------------------------
INDUSTRIAL SERVICES - 0.9%
Coflexip SA, Sponsored ADR 49,200 1,580,550
- -----------------------------------------------------------------
Southdown, Inc. 95,500 5,652,406
-------------
7,232,956
- -----------------------------------------------------------------
MANUFACTURING - 1.8%
Herman Miller, Inc. 120,000 3,225,000
- -----------------------------------------------------------------
Illinois Tool Works, Inc. 57,500 3,335,000
- -----------------------------------------------------------------
Owens-Illinois, Inc.(1) 40,000 1,225,000
- -----------------------------------------------------------------
Tyco International Ltd. 75,022 5,659,472
-------------
13,444,472
- -----------------------------------------------------------------
CONSUMER CYCLICALS - 16.8%
- -----------------------------------------------------------------
AUTOS & HOUSING - 3.3%
Arvin Industries, Inc. 99,300 4,139,569
- -----------------------------------------------------------------
Centex Corp. 136,000 6,128,500
- -----------------------------------------------------------------
Ethan Allen Interiors, Inc. 80,000 3,280,000
- -----------------------------------------------------------------
Magna International, Inc., Cl. A 22,000 1,364,000
- -----------------------------------------------------------------
Pulte Corp. 44,000 1,223,750
- -----------------------------------------------------------------
Toll Brothers, Inc.(1) 156,200 3,524,262
- -----------------------------------------------------------------
USG Corp. 110,000 5,603,125
-------------
25,263,206
- -----------------------------------------------------------------
LEISURE & ENTERTAINMENT - 4.1%
Callaway Golf Co. 95,000 973,750
- -----------------------------------------------------------------
Carnival Corp. 410,000 19,680,000
- -----------------------------------------------------------------
Harley-Davidson, Inc. 70,000 3,316,250
- -----------------------------------------------------------------
Harrah's Entertainment, Inc.(1) 153,000 2,400,187
- -----------------------------------------------------------------
International Game Technology 50,000 1,215,625
</TABLE>
54
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
Premier Parks, Inc.(1) 130,000 $ 3,932,500
-------------
31,518,312
- -----------------------------------------------------------------
MEDIA - 3.2%
CBS Corp. 150,000 4,912,500
- -----------------------------------------------------------------
Chancellor Media Corp.(1) 130,000 6,223,750
- -----------------------------------------------------------------
Infinity Broadcasting Corp., Cl.
A(1) 223,900 6,129,262
- -----------------------------------------------------------------
New York Times Co., Cl. A 200,000 6,937,500
-------------
24,203,012
- -----------------------------------------------------------------
RETAIL: GENERAL - 4.2%
Dayton Hudson Corp. 65,000 3,526,250
- -----------------------------------------------------------------
Federated Department Stores,
Inc.(1) 50,000 2,178,125
- -----------------------------------------------------------------
Fred Meyer, Inc.(1) 160,000 9,640,000
- -----------------------------------------------------------------
Jones Apparel Group, Inc.(1) 200,000 4,412,500
- -----------------------------------------------------------------
Nordstrom, Inc. 125,000 4,335,937
- -----------------------------------------------------------------
Tommy Hilfiger Corp.(1) 120,000 7,200,000
- -----------------------------------------------------------------
WestPoint Stevens, Inc.(1) 35,000 1,104,687
-------------
32,397,499
- -----------------------------------------------------------------
RETAIL: SPECIALTY - 2.0%
Barnes & Noble, Inc.(1) 80,000 3,400,000
- -----------------------------------------------------------------
Intimate Brands, Inc., Cl. A 62,000 1,852,250
- -----------------------------------------------------------------
Nine West Group, Inc.(1) 130,000 2,023,125
- -----------------------------------------------------------------
Republic Industries, Inc.(1) 206,000 3,038,500
- -----------------------------------------------------------------
TJX Cos., Inc. 184,000 5,336,000
-------------
15,649,875
- -----------------------------------------------------------------
CONSUMER STAPLES - 12.6%
- -----------------------------------------------------------------
CONSUMER SERVICES - 2.5%
Budget Group, Inc., Cl. A(1) 271,800 4,314,825
- -----------------------------------------------------------------
Hertz Corp., Cl. A 73,000 3,330,625
- -----------------------------------------------------------------
Omnicom Group, Inc. 145,000 8,410,000
- -----------------------------------------------------------------
Young & Rubicam, Inc.(1) 94,500 3,059,437
-------------
19,114,887
- -----------------------------------------------------------------
ENTERTAINMENT - 2.9%
CKE Restaurants, Inc. 127,270 3,746,511
- -----------------------------------------------------------------
Royal Caribbean Cruises Ltd. 190,000 7,030,000
- -----------------------------------------------------------------
Time Warner, Inc. 180,000 11,171,250
-------------
21,947,761
- -----------------------------------------------------------------
FOOD - 1.0%
IBP, Inc. 72,800 2,120,300
- -----------------------------------------------------------------
Keebler Foods Co.(1) 145,000 5,455,625
-------------
7,575,925
</TABLE>
55
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
FOOD & DRUG RETAILERS - 4.5%
CVS Corp. 280,000 $ 15,400,000
- -----------------------------------------------------------------
Safeway, Inc.(1) 310,000 18,890,625
-------------
34,290,625
- -----------------------------------------------------------------
HOUSEHOLD GOODS - 1.7%
Avon Products, Inc. 287,000 12,699,750
- -----------------------------------------------------------------
ENERGY - 1.6%
- -----------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.8%
BJ Services Co.(1) 50,000 781,250
- -----------------------------------------------------------------
Global Industries Ltd.(1) 60,100 368,112
- -----------------------------------------------------------------
Halliburton Co. 129,800 3,845,325
- -----------------------------------------------------------------
Varco International, Inc.(1) 166,200 1,288,050
-------------
6,282,737
- -----------------------------------------------------------------
OIL - DOMESTIC - 0.4%
Mobil Corp. 18,200 1,585,675
- -----------------------------------------------------------------
Texaco, Inc. 29,000 1,533,375
-------------
3,119,050
- -----------------------------------------------------------------
OIL - INTERNATIONAL - 0.4%
Total SA, Sponsored ADR 60,000 2,985,000
- -----------------------------------------------------------------
FINANCIAL - 11.9%
- -----------------------------------------------------------------
BANKS - 2.9%
Bank One Corp. 124,488 6,356,668
- -----------------------------------------------------------------
BankBoston Corp. 30,000 1,168,125
- -----------------------------------------------------------------
Chase Manhattan Corp. (New) 31,280 2,128,995
- -----------------------------------------------------------------
Credito Italiano SpA 376,000 2,233,572
- -----------------------------------------------------------------
Fleet Financial Group, Inc. 150,000 6,703,125
- -----------------------------------------------------------------
Skandinaviska Enskilda Banken Group 177,500 1,872,330
- -----------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR 133,000 1,920,188
-------------
22,383,003
- -----------------------------------------------------------------
DIVERSIFIED FINANCIAL - 6.5%
Associates First Capital Corp., Cl.
A 180,000 7,627,500
- -----------------------------------------------------------------
Boston Properties, Inc. 110,000 3,355,000
- -----------------------------------------------------------------
Citigroup, Inc. 228,499 11,310,701
- -----------------------------------------------------------------
Fannie Mae 36,000 2,664,000
- -----------------------------------------------------------------
Finova Group, Inc. 60,800 3,279,400
- -----------------------------------------------------------------
Franklin Resources, Inc. 71,200 2,278,400
- -----------------------------------------------------------------
Freddie Mac 60,000 3,866,250
- -----------------------------------------------------------------
Merrill Lynch & Co., Inc. 70,000 4,672,500
- -----------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 80,000 5,680,000
- -----------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 65,000 2,226,250
</TABLE>
56
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Schwab (Charles) Corp. 60,000 $ 3,371,250
-------------
50,331,251
INSURANCE - 2.5%
CMAC Investment Corp. 30,000 1,378,125
- -----------------------------------------------------------------
Conseco, Inc. 190,000 5,806,875
- -----------------------------------------------------------------
Equitable Cos., Inc. 100,000 5,787,500
- -----------------------------------------------------------------
SunAmerica, Inc. 78,500 6,368,313
-------------
19,340,813
- -----------------------------------------------------------------
HEALTHCARE - 8.7%
- -----------------------------------------------------------------
HEALTHCARE/DRUGS - 5.2%
Elan Corp. plc, ADR(1) 100,000 6,956,250
- -----------------------------------------------------------------
Lilly (Eli) & Co. 45,000 3,999,375
- -----------------------------------------------------------------
Pfizer, Inc. 142,000 17,812,125
- -----------------------------------------------------------------
Schering-Plough Corp. 205,600 11,359,400
-------------
40,127,150
- -----------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
3.5%
Baxter International, Inc. 63,000 4,051,688
- -----------------------------------------------------------------
Cardinal Health, Inc. 95,400 7,238,475
- -----------------------------------------------------------------
First Health Group Corp.(1) 157,600 2,610,250
- -----------------------------------------------------------------
HEALTHSOUTH Corp.(1) 88,000 1,358,500
- -----------------------------------------------------------------
Lincare Holdings, Inc.(1) 30,000 1,216,875
- -----------------------------------------------------------------
Medtronic, Inc. 55,000 4,083,750
- -----------------------------------------------------------------
Safeskin Corp.(1) 130,000 3,136,250
- -----------------------------------------------------------------
Total Renal Care Holdings, Inc.(1) 101,750 3,007,984
-------------
26,703,772
- -----------------------------------------------------------------
TECHNOLOGY - 29.0%
- -----------------------------------------------------------------
COMPUTER HARDWARE - 7.7%
Cisco Systems, Inc.(1) 200,000 18,562,500
- -----------------------------------------------------------------
Compaq Computer Corp. 250,000 10,484,375
- -----------------------------------------------------------------
Data General Corp.(1) 159,000 2,613,563
- -----------------------------------------------------------------
Dell Computer Corp.(1) 25,000 1,829,688
- -----------------------------------------------------------------
EMC Corp.(1) 94,000 7,990,000
- -----------------------------------------------------------------
Gateway 2000, Inc.(1) 100,000 5,118,750
- -----------------------------------------------------------------
Seagate Technology, Inc.(1) 210,000 6,352,500
- -----------------------------------------------------------------
Sun Microsystems, Inc.(1) 74,000 6,336,250
-------------
59,287,626
- -----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 10.2%
BMC Software, Inc.(1) 180,000 8,021,250
- -----------------------------------------------------------------
Cambridge Technology Partners,
Inc.(1) 50,000 1,106,250
- -----------------------------------------------------------------
Gartner Group, Inc., Cl. A(1) 91,000 1,933,750
</TABLE>
57
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES
(CONTINUED)
HBO & Co. 170,000 $ 4,876,875
- -----------------------------------------------------------------
Microsoft Corp.(1) 185,000 25,657,188
- -----------------------------------------------------------------
Network Associates, Inc.(1) 120,000 7,950,000
- -----------------------------------------------------------------
Oracle Corp.(1) 180,000 7,762,500
- -----------------------------------------------------------------
Peoplesoft, Inc.(1) 188,000 3,560,250
- -----------------------------------------------------------------
PLATINUM Technology, Inc.(1) 148,300 2,836,238
- -----------------------------------------------------------------
Saville Systems Ireland plc,
Sponsored ADR(1) 85,000 1,615,000
- -----------------------------------------------------------------
Sungard Data Systems, Inc.(1) 163,300 6,480,969
- -----------------------------------------------------------------
Unisys Corp.(1) 110,000 3,788,125
- -----------------------------------------------------------------
Veritas Software Corp.(1) 50,000 2,996,875
-------------
78,585,270
- -----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 5.3%
Alcatel SA, Sponsored ADR 140,000 3,421,250
- -----------------------------------------------------------------
CIENA Corp.(1) 100,000 1,462,500
- -----------------------------------------------------------------
General Instrument Corp.(1) 250,000 8,484,375
- -----------------------------------------------------------------
Lucent Technologies, Inc. 35,000 3,850,000
- -----------------------------------------------------------------
Premisys Communications, Inc.(1) 160,000 1,470,000
- -----------------------------------------------------------------
Tellabs, Inc.(1) 323,000 22,145,688
-------------
40,833,813
- -----------------------------------------------------------------
ELECTRONICS - 5.8%
Applied Materials, Inc.(1) 70,000 2,988,125
- -----------------------------------------------------------------
LSI Logic Corp.(1) 63,000 1,015,875
- -----------------------------------------------------------------
Micron Technology, Inc.(1) 105,000 5,309,063
- -----------------------------------------------------------------
Motorola, Inc. 70,000 4,274,375
- -----------------------------------------------------------------
Novellus Systems, Inc.(1) 78,000 3,861,000
- -----------------------------------------------------------------
Uniphase Corp.(1) 80,000 5,550,000
- -----------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 286,100 13,053,313
- -----------------------------------------------------------------
Waters Corp.(1) 100,000 8,725,000
-------------
44,776,751
- -----------------------------------------------------------------
TELECOMMUNICATIONS - 3.9%
- -----------------------------------------------------------------
TELEPHONE UTILITIES - 1.2%
Embratel Participacoes SA, ADR(1) 80,000 1,115,000
- -----------------------------------------------------------------
SBC Communications, Inc. 70,000 3,753,750
- -----------------------------------------------------------------
Telesp Celular Participacoes SA,
ADR(1) 100,000 1,750,000
- -----------------------------------------------------------------
Telesp Participacoes SA, ADR(1) 115,000 2,544,375
-------------
9,163,125
- -----------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
2.7%
MCI WorldCom, Inc.(1) 211,000 15,139,250
- -----------------------------------------------------------------
Qwest Communications International,
Inc.(1) 113,942 5,697,100
-------------
20,836,350
</TABLE>
58
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 1.2%
- -----------------------------------------------------------------
RAILROADS & TRUCKERS - 1.2%
Kansas City Southern Industries,
Inc. 190,000 $ 9,345,625
-------------
Total Common Stocks (Cost
$511,894,542) 703,077,940
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 8.4%
- -----------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98, to be repurchased
at $64,433,989 on 1/4/99,
collateralized by U.S. Treasury
Nts.,
4%-8.875%, 2/15/99-7/15/06, with a
value of $65,714,020 (Cost
$64,400,000) $ 64,400,000 64,400,000
- -----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$576,294,542) 99.9% 767,477,940
- -----------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.1 1,071,756
------------ -------------
NET ASSETS 100.0% $768,549,696
------------ -------------
------------ -------------
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
59
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 48.3%
- --------------------------------------------------------------------------
BASIC MATERIALS - 1.5%
- --------------------------------------------------------------------------
CHEMICALS - 0.9%
Bayer AG, Sponsored ADR 47,000 $ 1,962,659
- --------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 27,000 1,432,687
- --------------------------------------------------------------------------
Potash Corp. of Saskatchewan, Inc.(1) 32,500 2,075,937
---------------
5,471,283
- --------------------------------------------------------------------------
METALS - 0.2%
De Beers Consolidated Mines Ltd., ADR 100,000 1,275,000
- --------------------------------------------------------------------------
PAPER - 0.4%
MacMillan Bloedel Ltd. 130,883 1,307,548
- --------------------------------------------------------------------------
Wausau-Mosinee Paper Corp. 77,000 1,361,937
---------------
2,669,485
- --------------------------------------------------------------------------
CAPITAL GOODS - 1.8%
- --------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.3%
Rockwell International Corp. 42,500 2,063,906
- --------------------------------------------------------------------------
MANUFACTURING - 1.5%
AGCO Corp. 90,000 708,750
- --------------------------------------------------------------------------
ASM Lithography Holding NV(1)(2) 50,400 1,537,200
- --------------------------------------------------------------------------
Cognex Corp.(2) 70,000 1,400,000
- --------------------------------------------------------------------------
Hexcel Corp. (New)(2) 125,000 1,046,875
- --------------------------------------------------------------------------
Hutchison Whampoa Ltd. 35,000 247,353
- --------------------------------------------------------------------------
JLK Direct Distribution, Inc.(2) 30,000 305,625
- --------------------------------------------------------------------------
Pall Corp. 105,000 2,657,812
- --------------------------------------------------------------------------
Tenneco, Inc. (New) 50,000 1,703,125
---------------
9,606,740
- --------------------------------------------------------------------------
CONSUMER CYCLICALS - 8.1%
- --------------------------------------------------------------------------
AUTOS & HOUSING - 1.3%
Dana Corp. 37,500 1,532,812
- --------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 10,000 410,000
- --------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 363,877 997,923
- --------------------------------------------------------------------------
Lear Corp.(2) 52,500 2,021,250
- --------------------------------------------------------------------------
Owens Corning 58,000 2,055,375
- --------------------------------------------------------------------------
Toll Brothers, Inc.(2) 46,000 1,037,875
---------------
8,055,235
- --------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.9%
Berjaya Sports Toto Berhad(3) 410,000 409,137
- --------------------------------------------------------------------------
Brunswick Corp. 65,000 1,608,750
- --------------------------------------------------------------------------
Callaway Golf Co. 87,000 891,750
- --------------------------------------------------------------------------
Carnival Corp. 27,500 1,320,000
</TABLE>
60
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
Crestline Capital Corp.(2) 9,000 $ 138,375
- --------------------------------------------------------------------------
Host Marriott Corp.(2) 90,000 1,243,125
- --------------------------------------------------------------------------
International Game Technology 120,000 2,917,500
- --------------------------------------------------------------------------
Marriott International, Inc., Cl. A 35,000 1,015,000
- --------------------------------------------------------------------------
Mattel, Inc. -- 6
- --------------------------------------------------------------------------
Mirage Resorts, Inc.(2) 170,000 2,539,375
- --------------------------------------------------------------------------
Nintendo Co. Ltd. 32,000 3,094,040
- --------------------------------------------------------------------------
Shimano, Inc. 100,000 2,573,951
---------------
17,751,009
- --------------------------------------------------------------------------
MEDIA - 1.6%
CBS Corp.(1) 110,000 3,602,500
- --------------------------------------------------------------------------
MediaOne Group, Inc.(2) 57,600 2,707,200
- --------------------------------------------------------------------------
RCN Corp.(2) 135,000 2,387,812
- --------------------------------------------------------------------------
South China Morning Post Holdings Ltd. 2,258,000 1,158,580
---------------
9,856,092
- --------------------------------------------------------------------------
RETAIL: GENERAL - 1.6%
Cone Mills Corp.(2) 154,000 866,250
- --------------------------------------------------------------------------
Dayton Hudson Corp. 28,000 1,519,000
- --------------------------------------------------------------------------
Federated Department Stores, Inc.(1)(2) 47,500 2,069,219
- --------------------------------------------------------------------------
Jones Apparel Group, Inc.(2) 77,000 1,698,812
- --------------------------------------------------------------------------
Neiman Marcus Group, Inc.(2) 79,000 1,970,062
- --------------------------------------------------------------------------
Saks, Inc.(2) 51,660 1,630,519
---------------
9,753,862
- --------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.7%
AutoZone, Inc.(1)(2) 57,000 1,877,437
- --------------------------------------------------------------------------
General Nutrition Cos., Inc.(2) 104,000 1,690,000
- --------------------------------------------------------------------------
Petco Animal Supplies, Inc.(2) 60,000 603,750
---------------
4,171,187
- --------------------------------------------------------------------------
CONSUMER STAPLES - 4.5%
- --------------------------------------------------------------------------
BEVERAGES - 0.6%
Coca-Cola Beverages plc(2) 55,000 95,750
- --------------------------------------------------------------------------
Diageo plc 155,800 1,744,928
- --------------------------------------------------------------------------
Whitman Corp.(1) 62,000 1,573,250
---------------
3,413,928
- --------------------------------------------------------------------------
CONSUMER SERVICES - 0.4%
Alternative Living Services, Inc.(2) 74,000 2,534,500
- --------------------------------------------------------------------------
Intermedia Communications, Inc.(2) 462 7,969
- --------------------------------------------------------------------------
Intermedia Communications, Inc.(2)(3) 58 800
---------------
2,543,269
</TABLE>
61
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT - 1.0%
Cracker Barrel Old Country Store, Inc. 76,000 $ 1,771,750
- --------------------------------------------------------------------------
Luby's Cafeterias, Inc. 90,000 1,389,375
- --------------------------------------------------------------------------
Time Warner, Inc. 48,000 2,979,000
---------------
6,140,125
- --------------------------------------------------------------------------
FOOD - 0.7%
Groupe Danone 10,000 2,864,300
- --------------------------------------------------------------------------
Nestle SA, Sponsored ADR 14,000 1,523,866
---------------
4,388,166
- --------------------------------------------------------------------------
FOOD & DRUG RETAILERS - 0.0%
Cia Brasileira de Distribuicao Grupo Pao
de Acucar, Sponsored ADR 14,000 217,000
- --------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.7%
Fort James Corp. 43,000 1,720,000
- --------------------------------------------------------------------------
Rexall Sundown, Inc.(2) 52,100 729,400
- --------------------------------------------------------------------------
Wella AG 2,150 1,471,608
- --------------------------------------------------------------------------
Wella AG, Preference 200 168,115
---------------
4,089,123
- --------------------------------------------------------------------------
TOBACCO - 1.1%
Imperial Tobacco Group plc 225,400 2,406,714
- --------------------------------------------------------------------------
Philip Morris Cos., Inc.(1) 87,000 4,654,500
---------------
7,061,214
- --------------------------------------------------------------------------
ENERGY - 2.2%
- --------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.9%
Baker Hughes, Inc. 33,750 596,953
- --------------------------------------------------------------------------
Input/Output, Inc.(2) 193,000 1,411,312
- --------------------------------------------------------------------------
Santa Fe International Corp. 99,000 1,447,875
- --------------------------------------------------------------------------
Schlumberger Ltd. 25,000 1,153,125
- --------------------------------------------------------------------------
Transocean Offshore, Inc. 44,000 1,179,750
---------------
5,789,015
- --------------------------------------------------------------------------
OIL - DOMESTIC - 0.6%
Comstock Resources, Inc.(2) 175,000 535,937
- --------------------------------------------------------------------------
Kerr-McGee Corp. 35,000 1,338,750
- --------------------------------------------------------------------------
Unocal Corp. 65,000 1,897,187
---------------
3,771,874
- --------------------------------------------------------------------------
OIL - INTERNATIONAL - 0.7%
Petroleo Brasileiro SA, Preference 3,330,000 377,595
- --------------------------------------------------------------------------
Talisman Energy, Inc.(2) 95,510 1,680,702
- --------------------------------------------------------------------------
Total SA, Sponsored ADR 17,501 870,675
- --------------------------------------------------------------------------
YPF SA, Cl. D, ADR 50,000 1,396,875
---------------
4,325,847
</TABLE>
62
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL - 11.1%
- --------------------------------------------------------------------------
BANKS - 6.3%
ABN Amro Holding NV 62,700 $ 1,319,707
- --------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 95,000 675,109
- --------------------------------------------------------------------------
Bank One Corp. 36,000 1,838,250
- --------------------------------------------------------------------------
BankAmerica Corp. (New)(1) 167,500 10,070,937
- --------------------------------------------------------------------------
Chase Manhattan Corp. (New) 165,000 11,230,312
- --------------------------------------------------------------------------
Credit Suisse Group 5,225 817,595
- --------------------------------------------------------------------------
Credito Italiano SpA 460,700 2,736,720
- --------------------------------------------------------------------------
J.P. Morgan & Co., Inc.(1) 18,500 1,943,656
- --------------------------------------------------------------------------
Societe Generale 26,200 4,244,714
- --------------------------------------------------------------------------
UBS AG 4,175 1,282,278
- --------------------------------------------------------------------------
Wells Fargo Co. 70,000 2,795,625
---------------
38,954,903
- --------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 1.5%
American Express Co.(1) 20,000 2,045,000
- --------------------------------------------------------------------------
Avalonbay Communities, Inc. 30,732 1,052,571
- --------------------------------------------------------------------------
ICICI Ltd., GDR(4) 35,500 236,963
- --------------------------------------------------------------------------
Merrill Lynch & Co., Inc.(1) 31,000 2,069,250
- --------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.(1) 40,000 2,840,000
- --------------------------------------------------------------------------
Simon Property Group, Inc. (New) 37,500 1,068,750
---------------
9,312,534
- --------------------------------------------------------------------------
INSURANCE - 1.1%
Everest Reinsurance Holdings, Inc. 56,000 2,180,500
- --------------------------------------------------------------------------
Skandia Forsakrings AB 162,000 2,478,305
- --------------------------------------------------------------------------
UNUM Corp. 40,000 2,335,000
---------------
6,993,805
- --------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 2.2%
Archstone Communities Trust 52,000 1,053,000
- --------------------------------------------------------------------------
Brandywine Realty Trust 56,000 1,001,000
- --------------------------------------------------------------------------
Camden Property Trust 40,000 1,040,000
- --------------------------------------------------------------------------
CarrAmerica Realty Corp. 48,000 1,152,000
- --------------------------------------------------------------------------
Chastain Capital Corp. 134,000 603,000
- --------------------------------------------------------------------------
Chelsea GCA Realty, Inc. 32,000 1,140,000
- --------------------------------------------------------------------------
Cornerstone Properties, Inc. 68,000 1,062,500
- --------------------------------------------------------------------------
CRIIMI MAE, Inc. 115,000 402,500
- --------------------------------------------------------------------------
Developers Diversified Realty Corp. 62,000 1,100,500
- --------------------------------------------------------------------------
JDN Realty Corp. 60,000 1,293,750
- --------------------------------------------------------------------------
Manufactured Home Communities, Inc. 44,000 1,102,750
- --------------------------------------------------------------------------
Post Properties, Inc. 28,000 1,076,250
- --------------------------------------------------------------------------
Shurgard Storage Centers, Inc. 44,000 1,135,750
</TABLE>
63
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS
(CONTINUED)
Sunstone Hotel Investors, Inc. 80,000 $ 755,000
---------------
13,918,000
- --------------------------------------------------------------------------
HEALTHCARE - 4.1%
- --------------------------------------------------------------------------
HEALTHCARE/DRUGS - 3.4%
Abbott Laboratories 42,000 2,058,000
- --------------------------------------------------------------------------
American Home Products Corp. 56,000 3,153,500
- --------------------------------------------------------------------------
Astra AB Free, Series A 120,000 2,450,176
- --------------------------------------------------------------------------
Centocor, Inc.(1)(2) 60,500 2,730,063
- --------------------------------------------------------------------------
Johnson & Johnson 21,000 1,761,375
- --------------------------------------------------------------------------
Mylan Laboratories, Inc.(1) 69,500 2,189,250
- --------------------------------------------------------------------------
Novartis AG 2,000 3,930,131
- --------------------------------------------------------------------------
SmithKline Beecham plc, Cl. A.,
Sponsored ADR 38,000 2,641,000
---------------
20,913,495
- --------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.7%
Acuson Corp.(2) 104,000 1,547,000
- --------------------------------------------------------------------------
Biomet, Inc. 20,000 805,000
- --------------------------------------------------------------------------
Innovasive Devices, Inc.(2) 110,000 371,250
- --------------------------------------------------------------------------
Pliva d.d., Sponsored GDR(4) 20,000 332,000
- --------------------------------------------------------------------------
United Healthcare Corp. 32,800 1,412,450
---------------
4,467,700
- --------------------------------------------------------------------------
TECHNOLOGY - 10.8%
- --------------------------------------------------------------------------
COMPUTER HARDWARE - 3.4%
3Com Corp.(2) 33,000 1,478,813
- --------------------------------------------------------------------------
Canon, Inc. 50,000 1,066,225
- --------------------------------------------------------------------------
Cisco Systems, Inc.(1)(2) 45,000 4,176,563
- --------------------------------------------------------------------------
Compaq Computer Corp. 17,500 733,906
- --------------------------------------------------------------------------
Hewlett-Packard Co. 39,000 2,664,188
- --------------------------------------------------------------------------
International Business Machines Corp.(1) 60,000 11,085,000
---------------
21,204,695
- --------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.4%
America Online, Inc.(1) 34,200 4,950,450
- --------------------------------------------------------------------------
Computer Associates International,
Inc.(1) 62,999 2,685,354
- --------------------------------------------------------------------------
Electronic Arts, Inc.(1)(2) 25,000 1,403,125
- --------------------------------------------------------------------------
First Data Corp. 80,000 2,535,000
- --------------------------------------------------------------------------
Novell, Inc.(1)(2) 126,000 2,283,750
- --------------------------------------------------------------------------
PLATINUM Technology, Inc.(2) 70,000 1,338,750
- --------------------------------------------------------------------------
Rational Software Corp.(1)(2) 128,000 3,392,000
- --------------------------------------------------------------------------
Sabre Group Holdings, Inc.(1)(2) 60,000 2,670,000
- --------------------------------------------------------------------------
SELECT Software Tools Ltd., ADR(2) 100,000 106,250
</TABLE>
64
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
Structural Dynamics Research Corp.(2) 167 $ 3,319
---------------
21,367,998
- --------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.2%
Tellabs, Inc.(1)(2) 17,500 1,199,844
- --------------------------------------------------------------------------
ELECTRONICS - 3.3%
Analog Devices, Inc.(1)(2) 69,000 2,164,875
- --------------------------------------------------------------------------
General Motors Corp., Cl. H(1)(2) 40,200 1,595,438
- --------------------------------------------------------------------------
Intel Corp.(1) 86,000 10,196,375
- --------------------------------------------------------------------------
Keyence Corp. 9,000 1,104,636
- --------------------------------------------------------------------------
Methode Electronics, Inc., Cl. A 105,000 1,640,625
- --------------------------------------------------------------------------
STMicroelectronics NV, NY Shares(1)(2) 17,500 1,366,094
- --------------------------------------------------------------------------
Teradyne, Inc.(1)(2) 29,000 1,228,875
- --------------------------------------------------------------------------
Xilinx, Inc.(1)(2) 21,000 1,367,625
---------------
20,664,543
- --------------------------------------------------------------------------
PHOTOGRAPHY - 0.5%
Xerox Corp.(1) 24,000 2,832,000
- --------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.8%
- --------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.4%
SBC Communications, Inc. 44,000 2,359,500
- --------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA 8,100,000 670
---------------
2,360,170
- --------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 1.4%
Airtouch Communications, Inc.(1)(2) 35,000 2,524,375
- --------------------------------------------------------------------------
Embratel Participacoes SA(2) 8,100,000 70,394
- --------------------------------------------------------------------------
MCI WorldCom, Inc.(1)(2) 62,195 4,462,491
- --------------------------------------------------------------------------
Qwest Communications International,
Inc.(2) 25,000 1,250,000
- --------------------------------------------------------------------------
Tele Celular Sul Participacoes SA(2) 8,100,000 7,509
- --------------------------------------------------------------------------
Tele Centro Oeste Celular Participacoes
SA(2) 8,100,000 6,369
- --------------------------------------------------------------------------
Tele Centro Sul Participacoes SA(2) 8,100,000 53,634
- --------------------------------------------------------------------------
Tele Leste Celular Participacoes SA(2) 8,100,000 3,218
- --------------------------------------------------------------------------
Tele Nordeste Celular Participacoes
SA(2) 8,100,000 4,090
- --------------------------------------------------------------------------
Tele Norte Celular Participacoes SA(2) 8,100,000 2,615
- --------------------------------------------------------------------------
Tele Norte Leste Participacoes SA(2) 8,100,000 66,372
- --------------------------------------------------------------------------
Tele Sudeste Celular Participacoes SA(2) 8,100,000 22,794
- --------------------------------------------------------------------------
Telemig Celular Participacoes SA(2) 8,100,000 5,699
- --------------------------------------------------------------------------
Telesp Celular Participacoes SA(2) 8,100,000 34,862
- --------------------------------------------------------------------------
Telesp Participacoes SA(2) 8,100,000 103,915
---------------
8,618,337
</TABLE>
65
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 1.2%
- --------------------------------------------------------------------------
AIR TRANSPORTATION - 0.6%
Alaska Air Group, Inc.(1)(2) 29,500 $ 1,305,375
- --------------------------------------------------------------------------
AMR Corp.(1)(2) 40,000 2,375,000
---------------
3,680,375
- --------------------------------------------------------------------------
RAILROADS & TRUCKERS - 0.4%
Burlington Northern Santa Fe Corp. 74,000 2,497,500
- --------------------------------------------------------------------------
SHIPPING - 0.2%
Stolt-Nielsen SA 73,000 739,125
- --------------------------------------------------------------------------
Stolt-Nielsen SA, Sponsored ADR 17,650 180,913
- --------------------------------------------------------------------------
Transportacion Maritima Mexicana SA de
CV, Sponsored ADR, L Shares(2) 75,700 406,888
---------------
1,326,926
- --------------------------------------------------------------------------
UTILITIES - 1.2%
- --------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.0%
Allegheny Energy, Inc. 48,000 1,656,000
- --------------------------------------------------------------------------
Houston Industries, Inc. 76,000 2,441,500
- --------------------------------------------------------------------------
Southern Co. 75,000 2,179,688
---------------
6,277,188
- --------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Enron Corp. 25,600 1,460,800
---------------
Total Common Stocks (Cost $218,199,678) 300,464,173
- --------------------------------------------------------------------------
PREFERRED STOCKS - 0.9%
- --------------------------------------------------------------------------
Budget Group, Inc., 6.25% Cv.(4) 20,000 775,000
- --------------------------------------------------------------------------
IGG Communications, Inc., 6.75% Cv.
Preferred Stock 45,000 2,356,875
- --------------------------------------------------------------------------
Intermedia Communications, Inc.:
7% Cv. Preferred Securities(4) 5,000 71,250
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr. Preferred
Stock, Series D, Non-Vtg. 30,000 750,000
- --------------------------------------------------------------------------
Monsanto Co., 6.50% Cv.(2) 35,000 1,715,000
---------------
Total Preferred Stocks (Cost $6,872,031) 5,668,125
UNITS
- --------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- --------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp.
6/99(3) 6,000 60
- --------------------------------------------------------------------------
Covergent Communications, Inc. Wts.,
Exp. 4/08(3) 2,000 2,500
- --------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/02 9,232 50,776
- --------------------------------------------------------------------------
IHF Capital, Inc. Series I Wts., Exp.
11/99(3) 1,000 10
- --------------------------------------------------------------------------
Perkin-Elmer Corp. Wts., Exp. 9/03 249 1,992
- --------------------------------------------------------------------------
Terex Corp. Rts., Exp. 5/02(3) 4,000 56,500
---------------
Total Rights, Warrants and Certificates
(Cost $20,772) 111,838
</TABLE>
66
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 1.4%
- --------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50%,
11/1/27-12/1/27 $ 4,672,379 $ 4,704,386
- --------------------------------------------------------------------------
Government National Mortgage Assn., 8%,
7/15/22-4/15/23 2,948,105 3,074,413
- --------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 651,810 649,060
---------------
Total Mortgage-Backed Obligations (Cost
$8,273,574) 8,427,859
- --------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 11.0%
- --------------------------------------------------------------------------
U.S. Treasury Bonds:
8.875%, 8/15/17 2,900,000 4,089,908
STRIPS, 7.26%, 11/15/18(6) 10,000,000 3,332,330
STRIPS, 7.10%, 11/15/18(6) 16,000,000 5,311,200
STRIPS, 7.30%, 8/15/19(6) 18,000,000 5,730,606
- --------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02 15,000,000 15,600,000
6.125%, 9/30/00 15,000,000 15,375,000
6.25%, 2/15/07 8,800,000 9,655,254
6.375%, 8/15/02 5,000,000 5,275,000
6.50%, 10/15/06 3,710,000 4,119,261
---------------
Total U.S. Government Obligations (Cost
$62,146,404) 68,488,559
- --------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 22.4%
- --------------------------------------------------------------------------
ARGENTINA - 6.2%
Argentina (Republic of) Bonds, Bonos de
Consolidacion de Deudas,
Series I, 5.010%, 4/1/01(7) 1,473,768 1,363,501
- --------------------------------------------------------------------------
Argentina (Republic of) Bonds, Series L,
6.188%, 3/31/05(7) 8,648,000 7,372,420
- --------------------------------------------------------------------------
Argentina (Republic of) Nts., 14.25%,
11/30/02(7) 13,125,000 12,895,312
- --------------------------------------------------------------------------
Argentina (Republic of) Par Bonds,
5.75%, 3/31/23(8) 23,750,000 17,129,687
---------------
38,760,920
- --------------------------------------------------------------------------
AUSTRALIA - 0.5%
New South Wales Treasury Corp. Gtd.
Bonds, 7%, 4/1/04(AUD) 3,160,000 2,098,810
- --------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable
Gtd. Nts., 10.50%, 5/15/03(AUD) 1,800,000 1,338,833
---------------
3,437,643
- --------------------------------------------------------------------------
BRAZIL - 3.7%
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 21,079,398 12,594,940
- --------------------------------------------------------------------------
Brazil (Federal Republic of) Eligible
Interest Bonds, 6.125%, 4/15/06(7) 15,792,000 10,185,840
---------------
22,780,780
- --------------------------------------------------------------------------
CANADA - 2.8%
Canada (Government of) Bonds:
8.50%, 4/1/02(CAD) 1,500,000 1,089,060
8.75%, 12/1/05(CAD) 12,200,000 9,782,863
9.75%, 12/1/01(CAD) 3,000,000 2,220,607
9.75%, 6/1/01(CAD) 2,000,000 1,452,419
Series WL43, 5.75%, 6/1/29(CAD) 3,670,000 2,618,341
---------------
17,163,290
</TABLE>
67
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
DENMARK - 1.0%
Denmark (Kingdom of) Bonds, 8%,
3/15/06(DKK) 32,100,000 $ 6,219,920
- --------------------------------------------------------------------------
GREAT BRITAIN - 1.3%
United Kingdom Treasury Bonds, 6.75%,
11/26/04(GBP) 2,680,000 4,983,321
- --------------------------------------------------------------------------
United Kingdom Treasury Nts., 13%,
7/14/00(GBP) 1,590,000 2,939,123
---------------
7,922,444
- --------------------------------------------------------------------------
IRELAND - 0.3%
Ireland (Government of) Bonds, 9.25%,
7/11/03(IEP) 1,110,000 2,057,171
- --------------------------------------------------------------------------
MEXICO - 0.6%
United Mexican States Collateralized
Fixed Rate Par Bonds, Series W-A, 6.25%,
12/31/19 4,450,000 3,476,562
- --------------------------------------------------------------------------
NEW ZEALAND - 4.9%
New Zealand (Government of) Bonds:
10%, 3/15/02(NZD) 16,800,000 10,045,321
8%, 2/15/01(NZD) 19,440,000 10,793,288
- --------------------------------------------------------------------------
New Zealand (Government of) Nts., 6.50%,
2/15/00(NZD) 18,600,000 9,937,733
---------------
30,776,342
- --------------------------------------------------------------------------
PHILIPPINES - 0.4%
Philippines (Republic of) Bonds, 8.60%,
6/15/27 1,500,000 1,265,625
- --------------------------------------------------------------------------
Philippines (Republic of) Par Bonds,
Series B, 6.50%, 12/1/17 (3)(8) 1,675,000 1,461,437
---------------
2,727,062
- --------------------------------------------------------------------------
POLAND - 0.4%
Poland (Republic of) Bonds, 15%,
10/12/99(PLZ) 9,000,000 2,589,805
- --------------------------------------------------------------------------
SOUTH AFRICA - 0.3%
Eskom Depositary Receipts, Series E168,
11%, 6/1/08(ZAR) 12,570,000 1,591,691
---------------
Total Foreign Government Obligations
(Cost $140,372,132) 139,503,630
</TABLE>
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND
NOTES - 6.2%
- --------------------------------------------------------------------------
BASIC MATERIALS - 0.9%
- --------------------------------------------------------------------------
CHEMICALS - 0.2%
Laroche Industries, Inc., 9.50% Sr. Sub.
Nts., Series B, 9/15/07 500,000 402,500
- --------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec.
Nts., 10/15/03 85,000 90,737
- --------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr.
Unsec. Sub. Nts., 8/15/06 535,000 462,775
---------------
956,012
- --------------------------------------------------------------------------
METALS - 0.4%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 1,015,000 1,060,675
- --------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75%
Sr. Sub. Nts., 2/1/03 1,000,000 985,000
- --------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 420,750
---------------
2,466,425
</TABLE>
68
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
PAPER - 0.3%
Aracruz Celulose SA, 10.375% Debs.,
1/31/02(3) $ 430,000 $ 363,350
- --------------------------------------------------------------------------
Riverwood International Corp., 10.625%
Sr. Unsec. Nts., 8/1/07 500,000 497,500
- --------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series
B, 12/15/04 750,000 820,312
---------------
1,681,162
- --------------------------------------------------------------------------
CAPITAL GOODS - 0.3%
- --------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.1%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 522,500
- --------------------------------------------------------------------------
MANUFACTURING - 0.2%
International Wire Group, Inc., 11.75%
Sr. Sub. Nts., Series B, 6/1/05 500,000 528,750
- --------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts.,
7/1/07 500,000 497,500
---------------
1,026,250
- --------------------------------------------------------------------------
CONSUMER CYCLICALS - 2.2%
- --------------------------------------------------------------------------
AUTOS & HOUSING - 0.5%
American Standard Cos., Inc., 10.875%
Sr. Nts., 5/15/99 500,000 502,500
- --------------------------------------------------------------------------
Building Materials Corp. of America,
8.625% Sr. Nts., Series B, 12/15/06 100,000 102,250
- --------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr.
Sub. Nts., Series B, 7/15/07 500,000 432,500
- --------------------------------------------------------------------------
Chrysler Financial LLC, 13.25% Debs.,
10/15/99 500,000 529,524
- --------------------------------------------------------------------------
Hayes Wheels International, Inc., 11%
Sr. Sub. Nts., 7/15/06 500,000 557,500
- --------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr.
Sub. Nts., Series B, 7/15/02 610,000 369,050
- --------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr.
Nts., 10/15/04 400,000 404,000
---------------
2,897,324
- --------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 0.3%
Casino America, Inc., 12.50% Sr. Nts.,
8/1/03 250,000 278,125
- --------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% First Mtg.
Sec. Nts., 12/1/03 460,000 503,700
- --------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub.
Nts., 4/1/05 500,000 502,500
- --------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50% Sr. Sub.
Nts., 4/15/07 750,000 832,500
---------------
2,116,825
- --------------------------------------------------------------------------
MEDIA - 1.4%
American Telecasting, Inc., 0%/14.50%
Sr. Disc. Nts., 6/15/04(9) 129,908 20,136
- --------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc.,
9.25% Sr. Sub. Nts., 7/1/07 400,000 416,000
- --------------------------------------------------------------------------
Chancellor Media Corp., 8.75% Sr. Unsec.
Sub. Nts., Series B, 6/15/07 1,000,000 1,030,000
- --------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub.
Nts., 5/15/06 250,000 273,750
- --------------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts., 6/1/04(9) 540,000 556,200
- --------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285% Sr.
Disc. Debs., Series B, 4/15/10(9) 600,000 414,000
- --------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp.,
11% Sr. Sec. Nts., Series B, 11/1/03(7) 550,000 574,750
- --------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second
Priority Sr. Sec. Debs., 12/1/07 1,000,000 1,125,000
- --------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 500,000 507,500
9% Sr. Unsec. Sub. Nts., 7/15/07 375,000 384,375
- --------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15%
Sr. Nts., 5/1/12 500,000 675,355
- --------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 500,000 634,470
</TABLE>
69
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
TKR Cable I, Inc., 10.50% Sr. Debs.,
10/30/07 $ 1,000,000 $ 1,088,796
- --------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub.
Debs., 6/15/07 900,000 918,000
---------------
8,618,332
- --------------------------------------------------------------------------
CONSUMER STAPLES - 0.5%
- --------------------------------------------------------------------------
CONSUMER SERVICES - 0.1%
Intermedia Communications, Inc., 8.50%
Sr. Nts., Series B, 1/15/08 500,000 477,500
- --------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub.
Nts., 12/1/06 150,000 161,250
---------------
638,750
- --------------------------------------------------------------------------
FOOD - 0.1%
RJR Nabisco, Inc., 8.625% Medium-Term
Nts., 12/1/02 500,000 509,414
- --------------------------------------------------------------------------
FOOD & DRUG RETAILERS - 0.2%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B, 12/1/04 300,000 285,000
10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 525,000
- --------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr.
Sub. Nts., Series B, 7/1/07 500,000 543,750
---------------
1,353,750
- --------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.1%
Revlon Consumer Products Corp., 8.625%
Sr. Unsec. Sub. Nts., 2/1/08 500,000 457,500
- --------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr.
Sec. Disc. Nts., Series B, 10.09%,
3/15/01(6) 465,000 267,375
---------------
724,875
- --------------------------------------------------------------------------
ENERGY - 0.1%
- --------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.1%
Gothic Production Corp., 11.125% Sr.
Sec. Nts., Series B, 5/1/05(4) 950,000 745,750
- --------------------------------------------------------------------------
FINANCIAL - 0.1%
- --------------------------------------------------------------------------
BANKS - 0.1%
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 250,000 278,226
9% Sub. Nts., 6/15/99 250,000 253,806
---------------
532,032
- --------------------------------------------------------------------------
HEALTHCARE - 0.1%
- --------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.0%
Integrated Health Services, Inc., 9.50%
Sr. Sub. Nts., 9/15/07 170,000 162,350
- --------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.1%
Sun Healthcare Group, Inc., 9.375% Sr.
Sub. Nts., 5/1/08(4) 1,000,000 805,000
- --------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.3%
- --------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 1.3%
Convergent Communications, Inc., 13% Sr.
Nts., 4/1/08 500,000 242,500
- --------------------------------------------------------------------------
FaciliCom International, Inc., 10.50%
Sr. Nts., Series B, 1/15/08 245,000 197,225
- --------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625%
Sr. Nts., 5/15/08 750,000 798,750
- --------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc.
Nts., 12/15/05(9) 415,000 299,838
- --------------------------------------------------------------------------
ICG Holdings, Inc., 0%/13.50% Sr. Disc.
Nts., 9/15/05(9) 765,000 634,950
- --------------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts., 6/1/06(9) 750,000 534,375
</TABLE>
70
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY
(CONTINUED)
NTL, Inc., 0%/9.75% Sr. Deferred Coupon
Nts., 4/1/08(4)(9) $ 500,000 $ 312,500
- --------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 590,000 413,000
11.625% Sr. Nts., Series A, 8/15/06 110,000 77,000
- --------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp.,
14% Sr. Nts., 8/15/04 200,000 207,000
- --------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts.,
Series B, 2/15/05 1,250,000 1,243,750
- --------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub.
Nts., Series B, 5/15/08 750,000 755,625
- --------------------------------------------------------------------------
TeleWest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(9) 1,000,000 840,000
9.625% Sr. Debs., 10/1/06 500,000 517,500
- --------------------------------------------------------------------------
USA Mobile Communications, Inc. II,
9.50% Sr. Nts., 2/1/04 1,000,000 905,000
---------------
7,979,013
- --------------------------------------------------------------------------
TRANSPORTATION - 0.2%
- --------------------------------------------------------------------------
AIR TRANSPORTATION - 0.1%
Trans World Airlines, Inc., 11.50% Sr.
Sec. Nts., 12/15/04 1,000,000 845,000
- --------------------------------------------------------------------------
SHIPPING - 0.1%
Navigator Gas Transport plc, 10.50%
First Priority Ship Mtg. Nts.,
6/30/07(4) 500,000 442,500
- --------------------------------------------------------------------------
UTILITIES - 0.5%
- --------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.3%
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 750,000 788,438
- --------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 800,000 886,000
8.75% Sr. Nts., 7/15/07 400,000 406,000
---------------
2,080,438
- --------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Beaver Valley II Funding Corp., 9%
Second Lease Obligation Bonds, 6/1/17 989,000 1,117,570
---------------
Total Non-Convertible Corporate Bonds
and Notes (Cost $39,457,840) 38,221,272
- --------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 10.1%
- --------------------------------------------------------------------------
Repurchase agreement with First Chicago
Capital Markets, 4.75%, dated 12/31/98,
to be repurchased at $63,033,250 on
1/4/99, collateralized by U.S. Treasury
Nts., 4% - 8.875%, 2/15/99 - 7/15/06,
with a value of $64,285,454 (Cost
$63,000,000) 63,000,000 63,000,000
- --------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$538,342,432) 100.3% 623,885,456
- --------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3) (1,552,155 )
--------------- ---------------
NET ASSETS 100.0% $ 622,333,301
--------------- ---------------
--------------- ---------------
</TABLE>
71
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. A sufficient amount of liquid assets has been designated to cover
outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES SUBJECT EXPIRATION
EXERCISE PREMIUM MARKET VALUE
TO CALL DATE
PRICE RECEIVED NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C> <C>
Airtouch Communications, Inc. 10,500 4/99
$ 65.00 $ 41,684 $122,063
Alaska Air Group, Inc. 14,500
4/99 45.00 32,189 68,875
America Online, Inc. 16,000
1/99 52.50 119,756 1,516,000
America Online, Inc. 18,200
1/99 72.50 63,425 1,319,500
American Express Co. 6,000
4/99 105.00 18,569 49,500
AMR Corp. 12,000
2/99 75.00 25,889 3,750
Analog Devices, Inc. 20,000
3/99 30.00 20,649 90,000
ASM Lithography Holding NV 27,000
4/99 30.00 72,517 111,375
AutoZone, Inc. 14,000
3/99 30.00 27,579 54,250
BankAmerica Corp. (New) 24,000
5/99 75.00 54,778 40,500
CBS Corp. 22,500
1/99 40.00 33,074 1,406
CBS Corp. 33,000
4/99 32.50 56,758 107,250
Centocor, Inc. 11,000
4/99 60.00 40,919 15,125
Cisco Systems, Inc. 22,000
4/99 70.00 114,836 583,000
Computer Associates International, Inc. 19,000
2/99 50.00 25,554 19,000
Electronic Arts, Inc. 5,000
3/99 55.00 14,225 27,500
Federated Department Stores, Inc. 13,500
5/99 45.00 43,469 47,250
General Motors Corp., Cl. H 10,000
3/99 40.00 39,699 35,000
Intel Corp. 17,000
4/99 105.00 69,613 333,625
International Business Machines Corp. 2,000
4/99 180.00 9,940 33,500
J.P. Morgan & Co. 5,500
3/99 110.00 25,959 41,938
MCI WorldCom, Inc. 13,000
6/99 65.00 51,608 160,875
Merrill Lynch & Co., Inc. 7,000
4/99 95.00 22,539 7,875
Morgan Stanley Dean Witter & Co. 9,000
1/99 90.00 28,979 1,125
Morgan Stanley Dean Witter & Co. 9,000
4/99 80.00 41,354 45,000
Mylan Laboratories, Inc. 19,000
4/99 40.00 40,338 15,438
Novell, Inc. 37,000
5/99 20.00 77,512 67,063
Philip Morris Cos., Inc. 16,000
3/99 60.00 20,519 19,000
Potash Corp. of Saskatchewan, Inc. 5,500
1/99 75.00 10,835 344
Rational Software Corp. 37,000
4/99 22.50 113,224 208,125
Rational Software Corp. 37,000
4/99 30.00 100,637 90,188
Sabre Group Holdings, Inc. 2,100
2/99 45.00 3,218 3,938
STMicroelectronics NV 2,500
1/99 85.00 7,112 2,813
STMicroelectronics NV 1,800
4/99 85.00 10,746 11,250
Tellabs, Inc. 17,500
3/99 75.00 45,411 74,375
Teradyne, Inc. 15,000
4/99 35.00 67,048 146,250
Whitman Corp. 17,000
3/99 25.00 19,677 32,938
Xerox Corp. 4,000
4/99 105.00 26,879 70,000
Xilinx, Inc. 10,000
1/99 55.00 19,699 102,500
Xilinx, Inc. 5,000
3/99 55.00 27,971 61,246
- --------------- ---------------
$ 1,686,387 $5,740,750
- --------------- ---------------
- --------------- ---------------
</TABLE>
2. Non-income producing security.
3. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
72
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $3,720,963 or 0.60% of the Fund's net
assets as of December 31, 1998.
5. Principal amount is reported in U.S. Dollars, except for those denoted in
the
following currencies:
AUD - Australian Dollar
CAD - Canadian Dollar
DKK - Danish Krone
GBP - British Pound Sterling
IEP - Irish Punt
NZD - New Zealand Dollar
PLZ - Polish Zloty
ZAR - South African Rand
6. For zero coupon bonds, the interest rate shown is the effective yield on
the
date of purchase.
7. Represents the current interest rate for a variable rate security.
8. Represents the current interest rate for an increasing rate security.
9. Denotes a step bond; a zero coupon bond that converts to a fixed or
variable
interest rate at a designated future date.
See accompanying Notes to Financial Statements.
73
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 98.5%
- ---------------------------------------------------------------
BASIC MATERIALS - 1.5%
- ---------------------------------------------------------------
CHEMICALS - 1.4%
Cresud SA, Sponsored ADR 475,171 $ 5,702,052
- ---------------------------------------------------------------
International Flavors & Fragrances,
Inc. 144,200 6,371,837
- ---------------------------------------------------------------
Minerals Technologies, Inc. 100,000 4,093,750
-------------
16,167,639
- ---------------------------------------------------------------
METALS - 0.1%
Cia de Minas Buenaventura SA,
Sponsored ADR, B Shares 46,000 598,000
- ---------------------------------------------------------------
CAPITAL GOODS - 7.9%
- ---------------------------------------------------------------
AEROSPACE/DEFENSE - 1.3%
Rolls-Royce plc 3,502,838 14,461,194
- ---------------------------------------------------------------
INDUSTRIAL SERVICES - 4.9%
Adecco SA 10,303 4,701,587
- ---------------------------------------------------------------
Coflexip SA, Sponsored ADR 43,800 1,407,075
- ---------------------------------------------------------------
Grupo Elektra SA de CV 3,159,000 1,590,726
- ---------------------------------------------------------------
McDermott International, Inc. 240,000 5,925,000
- ---------------------------------------------------------------
Rentokil Initial plc 2,950,000 22,107,783
- ---------------------------------------------------------------
Service Corp. International 186,400 7,094,850
- ---------------------------------------------------------------
WPP Group plc 2,000,000 12,302,366
-------------
55,129,387
- ---------------------------------------------------------------
MANUFACTURING - 1.7%
Bombardier, Inc., Cl. B 506,000 7,268,691
- ---------------------------------------------------------------
Societe BIC SA 224,032 12,432,838
-------------
19,701,529
- ---------------------------------------------------------------
CONSUMER CYCLICALS - 26.5%
- ---------------------------------------------------------------
AUTOS & HOUSING - 12.0%
Autoliv, Inc. SDR 170,000 6,103,232
- ---------------------------------------------------------------
Brazil Realty SA, GDR(1) 260,000 3,250,000
- ---------------------------------------------------------------
Brisa-Auto Estradas de Portugal SA 70,300 4,138,276
- ---------------------------------------------------------------
Granada Group plc 482,100 8,492,798
- ---------------------------------------------------------------
Hanson plc 1,608,400 12,726,962
- ---------------------------------------------------------------
Hasbro, Inc. 300,000 10,837,500
- ---------------------------------------------------------------
International Game Technology 494,000 12,010,375
- ---------------------------------------------------------------
IRSA Inversiones y Representaciones
SA 1,796,108 4,925,779
- ---------------------------------------------------------------
Nintendo Co. Ltd. 64,000 6,188,079
- ---------------------------------------------------------------
Porsche AG, Preference 14,700 33,803,756
- ---------------------------------------------------------------
Solidere, GDR(2) 110,000 1,119,250
- ---------------------------------------------------------------
Volkswagen AG 400,000 32,374,176
-------------
135,970,183
</TABLE>
74
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
MEDIA - 11.2%
Canal Plus 170,000 $ 46,410,611
- ---------------------------------------------------------------
Carlton Communications plc 2,747,300 25,212,067
- ---------------------------------------------------------------
Grupo Televisa SA, Sponsored
GDR(2)(3) 349,200 8,620,875
- ---------------------------------------------------------------
Prosieben Media AG, Preferred 54,000 2,587,292
- ---------------------------------------------------------------
Publicis SA 28,000 5,012,525
- ---------------------------------------------------------------
Reed International plc 200,000 1,636,447
- ---------------------------------------------------------------
Singapore Press Holdings Ltd. 560,000 6,075,310
- ---------------------------------------------------------------
Television Broadcasts Ltd. 1,200,000 3,097,964
- ---------------------------------------------------------------
Television Francaise 1 50,000 8,906,183
- ---------------------------------------------------------------
TeleWest Communications plc(3) 6,999,970 19,991,260
-------------
127,550,534
- ---------------------------------------------------------------
RETAIL: GENERAL - 1.1%
Sonae Investimentos 260,000 12,640,071
- ---------------------------------------------------------------
RETAIL: SPECIALTY - 2.2%
Best Buy Co., Inc.(3) 50,200 3,081,025
- ---------------------------------------------------------------
Circuit City Stores-Circuit City
Group 207,800 10,377,013
- ---------------------------------------------------------------
Dixons Group plc 800,000 11,247,878
-------------
24,705,916
- ---------------------------------------------------------------
CONSUMER STAPLES - 6.7%
- ---------------------------------------------------------------
BEVERAGES - 2.5%
Cadbury Schweppes plc 1,500,000 25,491,763
- ---------------------------------------------------------------
Cia Cervejaria Brahma, Preference 7,335,000 3,156,933
-------------
28,648,696
- ---------------------------------------------------------------
ENTERTAINMENT - 0.3%
Corporacion Interamericana de
Entretenimiento SA(3) 140,101 290,410
- ---------------------------------------------------------------
Corporacion Interamericana de
Entretenimiento SA, Cl. B(3) 1,050,764 2,868,702
- ---------------------------------------------------------------
Resorts World Berhad(1) 563,000 519,145
-------------
3,678,257
- ---------------------------------------------------------------
FOOD - 0.2%
Raisio Group plc 249,400 2,758,366
- ---------------------------------------------------------------
FOOD & DRUG RETAILERS - 1.7%
Carrefour Supermarche SA 12,000 9,063,361
- ---------------------------------------------------------------
Dairy Farm International Holdings
Ltd. 9,080,216 10,442,248
-------------
19,505,609
- ---------------------------------------------------------------
HOUSEHOLD GOODS - 1.5%
Wella AG, Preference 20,000 16,811,516
- ---------------------------------------------------------------
TOBACCO - 0.5%
Cie Financiere Richemont AG, A
Units 4,000 5,653,566
- ---------------------------------------------------------------
ENERGY - 0.7%
- ---------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.3%
Transocean Offshore, Inc. 120,818 3,239,433
</TABLE>
75
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
OIL - INTERNATIONAL - 0.4%
British Petroleum Co. plc, ADR 46,894 $ 4,202,875
- ---------------------------------------------------------------
FINANCIAL - 14.1%
- ---------------------------------------------------------------
BANKS - 6.9%
Banco Bradesco SA, Preference 983,276,747 5,452,711
- ---------------------------------------------------------------
Banco Espirito Santo e Comercial de
Lisboa SA 180,000 5,586,818
- ---------------------------------------------------------------
Banco Frances del Rio de la Plata
SA, Sponsored ADR 317,250 6,582,938
- ---------------------------------------------------------------
Banco Latinoamericano de
Exportaciones SA, Cl. E 146,200 2,430,575
- ---------------------------------------------------------------
Credito Italiano SpA 2,291,900 13,614,690
- ---------------------------------------------------------------
Istituto Mobiliare Italiano 671,000 11,882,643
- ---------------------------------------------------------------
National Westminster Bank plc 618,070 11,866,728
- ---------------------------------------------------------------
UBS AG 50,000 15,356,623
- ---------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR 390,000 5,630,625
-------------
78,404,351
- ---------------------------------------------------------------
DIVERSIFIED FINANCIAL - 5.4%
American Express Co. 99,000 10,122,750
- ---------------------------------------------------------------
Associates First Capital Corp., Cl.
A 320,000 13,560,000
- ---------------------------------------------------------------
Credit Saison Co. Ltd. 390,000 9,590,728
- ---------------------------------------------------------------
Fannie Mae 190,000 14,060,000
- ---------------------------------------------------------------
Housing Development Finance Corp.
Ltd. 22,290 1,142,693
- ---------------------------------------------------------------
ICICI Ltd., GDR(2) 405,300 2,705,378
- ---------------------------------------------------------------
ICICI Ltd., GDR 6,000 40,050
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc. 19,400 1,294,950
- ---------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 15,300 1,086,300
- ---------------------------------------------------------------
Nichiei Co. Ltd. 98,000 7,788,079
-------------
61,390,928
- ---------------------------------------------------------------
INSURANCE - 1.8%
Allianz AG 20,000 7,445,100
- ---------------------------------------------------------------
American International Group, Inc. 45,550 4,401,269
- ---------------------------------------------------------------
Chubb Corp. 140,000 9,082,500
-------------
20,928,869
- ---------------------------------------------------------------
HEALTHCARE - 11.2%
- ---------------------------------------------------------------
HEALTHCARE/DRUGS - 7.8%
Agouron Pharmaceuticals, Inc.(3) 68,600 4,030,250
- ---------------------------------------------------------------
Amgen, Inc.(3) 85,000 8,887,813
- ---------------------------------------------------------------
BioChem Pharma, Inc.(3) 161,000 4,608,625
- ---------------------------------------------------------------
Elan Corp. plc, ADR(3) 80,000 5,565,000
- ---------------------------------------------------------------
Fresenius AG, Preference 90,000 18,912,955
- ---------------------------------------------------------------
Genzyme Corp. (General Division)(3) 240,000 11,940,000
- ---------------------------------------------------------------
Gilead Sciences, Inc.(3) 172,700 7,091,494
- ---------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 140,000 9,730,000
</TABLE>
76
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS (CONTINUED)
Incyte Pharmaceuticals, Inc.(3) 83,250 $ 3,111,469
- ---------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(3) 123,000 3,182,625
- ---------------------------------------------------------------
Pfizer, Inc. 90,000 11,289,375
-------------
88,349,606
- ---------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
3.4%
Fresenius Medical Care AG 179,600 12,508,728
- ---------------------------------------------------------------
Pliva d.d., Sponsored GDR(2) 800,000 13,280,000
- ---------------------------------------------------------------
Quintiles Transnational Corp.(3) 250,000 13,343,750
-------------
39,132,478
- ---------------------------------------------------------------
TECHNOLOGY - 17.3%
- ---------------------------------------------------------------
COMPUTER HARDWARE - 4.7%
Ascend Communications, Inc.(3) 10,000 657,500
- ---------------------------------------------------------------
Cisco Systems, Inc.(3) 132,475 12,295,336
- ---------------------------------------------------------------
International Business Machines
Corp. 100,000 18,475,000
- ---------------------------------------------------------------
Sun Microsystems, Inc.(3) 250,000 21,406,250
-------------
52,834,086
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 4.3%
Cap Gemini SA 150,000 24,086,973
- ---------------------------------------------------------------
Lernout & Hauspie Speech Products
NV(3) 250,100 8,159,513
- ---------------------------------------------------------------
Microsoft Corp.(3) 66,000 9,153,375
- ---------------------------------------------------------------
SAP AG, Preference 15,000 7,200,432
-------------
48,600,293
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 5.0%
General Instrument Corp.(3) 600,000 20,362,500
- ---------------------------------------------------------------
Lucent Technologies, Inc. 20,000 2,200,000
- ---------------------------------------------------------------
QUALCOMM, Inc.(3) 240,000 12,435,000
- ---------------------------------------------------------------
Scientific-Atlanta, Inc. 934,200 21,311,438
-------------
56,308,938
- ---------------------------------------------------------------
ELECTRONICS - 3.3%
Advanced Micro Devices, Inc.(3) 500,000 14,468,750
- ---------------------------------------------------------------
National Semiconductor Corp.(3) 1,000,000 13,500,000
- ---------------------------------------------------------------
Royal Philips Electronics NV 100,000 6,714,031
- ---------------------------------------------------------------
STMicroelectronics NV, NY Shares(3) 34,000 2,654,125
-------------
37,336,906
- ---------------------------------------------------------------
TELECOMMUNICATIONS - 11.7%
- ---------------------------------------------------------------
TELEPHONE UTILITIES - 7.3%
Cable & Wireless Communications
plc(3) 380,000 3,462,072
- ---------------------------------------------------------------
Energis plc(3) 620,000 13,826,069
- ---------------------------------------------------------------
Hellenic Telecommunication
Organization SA 488,888 13,005,978
- ---------------------------------------------------------------
Olivetti SpA(3) 5,000,000 17,435,946
</TABLE>
77
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
TELEPHONE UTILITIES (CONTINUED)
SK Telecom Co. Ltd. 8,710 $ 6,384,602
- ---------------------------------------------------------------
Telecom Italia Mobile SpA 2,500,000 18,497,264
- ---------------------------------------------------------------
Telecomunicacoes de Sao Paulo SA,
Preference 41,995,329 5,724,749
- ---------------------------------------------------------------
Telesp Celular SA, Cl. B(3) 35,902,000 1,634,343
- ---------------------------------------------------------------
Videsh Sanchar Nigam Ltd., GDR(2) 250,000 3,093,750
-------------
83,064,773
- ---------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
4.4%
AT&T Corp. 200,000 15,050,000
- ---------------------------------------------------------------
Ericsson LM, B Shares 295,200 7,028,969
- ---------------------------------------------------------------
Kinnevik Investments AB Free,
Series B 150,000 3,516,113
- ---------------------------------------------------------------
MCI WorldCom, Inc.(3) 326,200 23,404,850
- ---------------------------------------------------------------
Societe Europeene de Communication
SA, A Shares, Sponsored ADR(3) 6,000 111,750
- ---------------------------------------------------------------
Societe Europeene de Communication
SA, B Shares, Sponsored ADR(3) 54,000 985,500
-------------
50,097,182
- ---------------------------------------------------------------
UTILITIES - 0.9%
- ---------------------------------------------------------------
ELECTRIC UTILITIES - 0.9%
Vivendi (Ex-Generale des Eaux) 40,000 10,383,088
-------------
Total Common Stocks (Cost
$915,181,348) 1,118,254,269
UNITS
- ---------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.0%
- ---------------------------------------------------------------
American Satellite Network, Inc.
Wts., Exp. 6/99 6,250 --
- ---------------------------------------------------------------
Banco Bradesco SA Rts., Exp. 2/99 40,755,977 --
- ---------------------------------------------------------------
Industrial Finance Corp. of
Thailand (The) Rts., Exp. 6/99 528,500 --
- ---------------------------------------------------------------
PT Pan Indonesia Bank Wts., Exp.
6/00 423,810 3,708
-------------
Total Rights, Warrants and
Certificates (Cost $0) 3,708
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.5%
- ----------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98,
to be repurchased at $27,914,725 on
1/4/99, collateralized by U.S.
Treasury Nts.,
4%-8.875%, 2/15/99-7/15/06, with a
value of $28,469,272 (Cost
$27,900,000) $27,900,000 27,900,000
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$943,081,348) 101.0% 1,146,157,977
- ----------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (1.0) (11,128,843)
----------- --------------
NET ASSETS 100.0% $1,135,029,134
----------- --------------
----------- --------------
</TABLE>
1. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $28,819,253 or 2.54% of the Fund's net
assets as of December 31, 1998.
3. Non-income producing security.
78
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Distribution of investments by a country of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
COUNTRY MARKET VALUE PERCENT
- ----------------------------------------------------------
<S> <C> <C>
United States $ 392,135,325 34.1%
- ----------------------------------------------------------
Great Britain 196,758,262 17.1
- ----------------------------------------------------------
Germany 131,643,956 11.5
- ----------------------------------------------------------
France 120,356,779 10.5
- ----------------------------------------------------------
Italy 61,430,543 5.4
- ----------------------------------------------------------
Switzerland 25,711,777 2.2
- ----------------------------------------------------------
Brazil 24,849,361 2.2
- ----------------------------------------------------------
Japan 23,566,887 2.1
- ----------------------------------------------------------
Portugal 22,365,165 2.0
- ----------------------------------------------------------
Argentina 17,210,768 1.5
- ----------------------------------------------------------
Sweden 16,648,315 1.5
- ----------------------------------------------------------
Singapore 16,517,558 1.4
- ----------------------------------------------------------
Mexico 13,370,713 1.2
- ----------------------------------------------------------
Croatia 13,280,000 1.2
- ----------------------------------------------------------
Greece 13,005,978 1.1
- ----------------------------------------------------------
Canada 11,877,316 1.0
- ----------------------------------------------------------
Belgium 8,159,513 0.7
- ----------------------------------------------------------
India 6,981,871 0.6
- ----------------------------------------------------------
The Netherlands 6,714,031 0.6
- ----------------------------------------------------------
Korea, Republic of (South) 6,384,602 0.6
- ----------------------------------------------------------
Ireland 5,565,000 0.5
- ----------------------------------------------------------
Other 11,624,257 1.0
-------------- -----
Total $1,146,157,977 100.0%
-------------- -----
-------------- -----
See accompanying Notes to Financial
Statements.
</TABLE>
79
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 13.9%
- -----------------------------------------------------------------------
GOVERNMENT AGENCY - 10.2%
- -----------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 1.6%
Federal Home Loan Mortgage Corp.,
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 151, Cl. F,
9%, 5/15/21 $ 1,299,790 $ 1,369,238
- -----------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Interest-Only Stripped
Mtg.-Backed Security, Series 177,
Cl. B, 0.62%, 7/1/26(2) 4,943,848 947,056
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
7.50%, 8/1/25 625,857 643,062
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
Interest-Only Stripped
Mtg.-Backed Security, Trust 276,
Cl. 2, 4.43%, 10/1/24(2) 3,292,524 722,298
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
Principal-Only Stripped
Mtg.-Backed Security, Trust 277-C1,
10.59%, 4/1/27(3) 803,069 705,446
---------------
4,387,100
- -----------------------------------------------------------------------
GUARANTEED - 8.6%
Government National Mortgage Assn.:
7%, 11/20/25 - 7/15/28 17,119,028 17,521,752
7.50%, 2/15/27 3,316,976 3,420,035
8%, 11/15/25 - 5/15/26 3,076,718 3,197,849
---------------
24,139,636
- -----------------------------------------------------------------------
PRIVATE - 3.7%
- -----------------------------------------------------------------------
COMMERCIAL - 2.5%
AMRESCO Commercial Mortgage Funding
I Corp., Multiclass Mtg.
Pass-Through Certificates, Series
1997-C1, Cl. G, 7%, 6/17/29(4) 100,000 79,844
- -----------------------------------------------------------------------
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-D4, Cl. B1, 7.525%,
4/14/29(5) 375,000 300,703
Series 1997-D5, Cl. B1, 6.93%,
2/14/41 300,000 225,891
Series 1997-D5, Cl. B2, 6.93%,
2/14/41 1,250,000 903,906
- -----------------------------------------------------------------------
CRIMMI MAE Trust I, Collateralized
Mtg. Obligations, Series 1996-C1,
Cl. A2, 8/30/05(6) 100,000 98,095
- -----------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C2, Cl.
F, 7.46%, 5/17/14 150,000 127,078
- -----------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates, Series 1994-C1, Cl.
2-G, 8.70%, 9/25/25(4) 153,594 158,490
- -----------------------------------------------------------------------
General Motors Acceptance Corp.,
Collateralized Mtg. Obligations:
Series 1997-C1, Cl. G, 7.414%,
11/15/11 440,000 334,262
Series 1997-C2, Cl. F, 6.75%,
4/16/29 250,000 170,234
- -----------------------------------------------------------------------
General Motors Acceptance Corp.,
Interest-Only Stripped
Mtg.-Backed Security, Series
1997-C1, Cl. X, 8.80%, 7/15/27(2) 4,157,596 371,585
- -----------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl.
D, 7.863%, 6/15/21(5) 289,584 295,240
</TABLE>
80
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL (CONTINUED)
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. F, 7.436%,
2/15/28(4)(5) $ 162,744 $ 139,350
Series 1997-HF1, Cl. F, 6.86%,
2/15/10(4) 150,000 134,625
Series 1997-RR, Cl. D, 7.67%,
4/30/39(4) 450,000 424,406
Series 1997-RR, Cl. E, 7.762%,
4/30/39(4)(5) 300,000 271,875
Series 1997-RR, Cl. F, 7.79%,
4/30/39(4) 600,000 435,750
Series 1997-XL1, Cl. G, 7.695%,
10/3/30(4)(5) 390,000 373,425
- -----------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates, Series-DMC, Cl. C,
8.921%, 8/12/11(4) 200,000 210,000
- -----------------------------------------------------------------------
Nykredit AS, 8% Cv. Bonds,
10/1/26(DKK) 3,474,000 562,229
- -----------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. D, 8.25%,
12/25/20 64,223 63,953
Series 1993-C1, Cl. D, 9.45%,
5/25/24 91,000 90,147
Series 1994-C2, Cl. E, 8%, 4/25/25 998,084 993,874
- -----------------------------------------------------------------------
Structured Asset Securities Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl.
F, 7.30%, 4/12/12(4) 200,000 160,188
- -----------------------------------------------------------------------
Structured Asset Securities Corp.,
Multiclass Pass-Through
Certificates, Series 1995-C4, Cl.
E, 8.559%, 6/25/26(4)(5) 46,290 43,744
---------------
6,968,894
- -----------------------------------------------------------------------
MULTI-FAMILY - 0.6%
Mortgage Capital Funding, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl.
F, 7.452%, 5/20/07(4) 63,720 52,940
- -----------------------------------------------------------------------
Mortgage Capital Funding, Inc.,
Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl.
G, 7.15%, 6/15/06(6) 800,000 659,375
- -----------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-CL, Cl.
F, 9.175%, 1/20/06(5) 1,000,000 840,000
---------------
1,552,315
- -----------------------------------------------------------------------
RESIDENTIAL - 0.6%
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates:
Series 1997-C1, Cl. F, 7.50%,
6/20/13(4) 100,000 77,969
Series 1997-C1, Cl. G, 7.50%,
6/20/14(4) 100,000 71,594
Series 1997-C1, Cl. H, 7.50%,
8/20/14(4) 60,000 41,175
Series 1997-C2, Cl. H, 7.46%,
1/17/35 100,000 68,000
- -----------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1,
8.098%, 5/25/08 - 2/25/11(4)(5) 950,000 766,985
- -----------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B, Cl.
1, 7.132%, 4/25/26(4) 387,444 285,982
- -----------------------------------------------------------------------
Salomon, Inc., Commercial Mtg.
Pass-Through Certificates, Series
1998-A1, 5%, 12/25/00(4) 340,798 327,166
---------------
1,638,871
---------------
Total Mortgage-Backed Obligations
(Cost $39,666,758) 38,686,816
</TABLE>
81
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 25.5%
- -----------------------------------------------------------------------
U.S. Treasury Bonds:
6%, 2/15/26(7) $ 1,730,000 $ 1,888,404
6.125%, 11/15/27(8)(9) 2,500,000 2,800,782
6.50%, 11/15/26 7,000,000 8,148,441
8%, 11/15/21 300,000 402,000
8.125%, 8/15/19 500,000 668,750
9.375%, 2/15/06 4,700,000 6,005,721
10.75%, 8/15/05 3,260,000 4,347,008
11.875%, 11/15/03 4,950,000 6,459,750
STRIPS, 5.75%, 2/15/19(10) 6,500,000 2,131,805
STRIPS, 5.30%, 5/15/17(10) 6,000,000 2,180,208
- -----------------------------------------------------------------------
U.S. Treasury Nts.:
5.375%, 6/30/00 3,600,000 3,638,250
6.50%, 5/15/05 - 10/15/06 25,420,000 28,145,263
6.875%, 5/15/06 3,900,000 4,409,438
---------------
Total U.S. Government Obligations
(Cost $68,599,709) 71,225,820
- -----------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
20.2%
- -----------------------------------------------------------------------
ARGENTINA - 3.7%
Argentina (Republic of) Bonds, 5%,
12/20/02(JPY) 60,000,000 467,259
- -----------------------------------------------------------------------
Argentina (Republic of) Bonds,
Bonos de Consolidacion de Deudas,
Series I:
3.011%, 4/1/07(5)(ARP) 3,474,104 2,239,458
5.010%, 4/1/01(5) 100,836 93,292
- -----------------------------------------------------------------------
Argentina (Republic of) Bonds,
Series L, 6.188%, 3/31/05(5) 1,297,200 1,105,863
- -----------------------------------------------------------------------
Argentina (Republic of) Global
Unsec. Unsub. Bonds., Series BGL5,
11.375%, 1/30/17 2,380,000 2,380,000
- -----------------------------------------------------------------------
Argentina (Republic of) Nts:
11%, 12/4/05 1,065,000 1,065,000
Series REGS, 11.75%, 2/12/07(ARP) 450,000 379,467
- -----------------------------------------------------------------------
Argentina (Republic of) Sr. Unsec.
Unsub. Bonds, 11%, 10/9/06 50,000 49,125
- -----------------------------------------------------------------------
Argentina (Republic of) Unsec.
Unsub. Medium-Term Nts.:
5.50%, 3/27/01(4)(JPY) 170,000,000 1,445,354
8.75%, 7/10/02(ARP) 660,000 541,689
- -----------------------------------------------------------------------
Banco Hipotecario Nacional
(Argentina) Medium-Term Unsec.
Nts., Series 3, 10.625%, 8/7/06 400,000 388,000
- -----------------------------------------------------------------------
City of Buenos Aires Bonds, Series
3, 10.50%, 5/28/04(ARP) 160,000 124,913
---------------
10,279,420
- -----------------------------------------------------------------------
AUSTRALIA - 0.3%
Australia (Government of) Bonds,
Series 904, 9%, 9/15/04(AUD) 1,335,000 986,654
- -----------------------------------------------------------------------
BRAZIL - 1.5%
Brazil (Federal Republic of) Bonds,
Series RG, 6.188%, 4/15/12(5) 1,000,000 502,500
- -----------------------------------------------------------------------
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 1,731,101 1,034,333
- -----------------------------------------------------------------------
Brazil (Federal Republic of) Debt
Conversion Bonds, 6.188%,
4/15/12(5) 2,660,000 1,336,650
- -----------------------------------------------------------------------
Brazil (Federal Republic of)
Eligible Interest Bonds, 6.125%,
4/15/12(5) 672,000 433,440
</TABLE>
82
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
BRAZIL (CONTINUED)
Brazil (Federal Republic of) Gtd.
Disc. Bonds, 6.125%, 4/15/24(5) $ 1,400,000 $ 822,500
---------------
4,129,423
- -----------------------------------------------------------------------
BULGARIA - 0.4%
Bulgaria (Republic of) Disc. Bonds,
Tranche A, 6.688%, 7/28/24(5) 690,000 484,725
- -----------------------------------------------------------------------
Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds,
Tranche A, 2.50%, 7/28/12(11) 1,080,000 618,300
- -----------------------------------------------------------------------
Bulgaria (Republic of) Interest
Arrears Bonds, 6.688%, 7/28/11(5) 160,000 107,600
---------------
1,210,625
- -----------------------------------------------------------------------
DENMARK - 0.5%
Denmark (Kingdom of) Bonds:
7%, 11/10/24(DKK) 1,190,000 239,333
8%, 5/15/03(DKK) 5,740,000 1,046,294
- -----------------------------------------------------------------------
Denmark (Kingdom of) Bullet Bonds,
7%, 11/15/07(DKK) 1,190,000 224,506
---------------
1,510,133
- -----------------------------------------------------------------------
ECUADOR - 0.1%
Ecuador (Republic of) Debs.,
6.625%, 2/27/15(5) 441,347 178,746
- -----------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds,
6.625%, 2/28/25(5) 50,000 25,125
- -----------------------------------------------------------------------
Ecuador (Republic of) Past Due
Interest Bonds, 6.625%, 2/27/15(5) 56,578 22,914
---------------
226,785
- -----------------------------------------------------------------------
FINLAND - 0.3%
Finland (Republic of) Bonds, 9.50%,
3/15/04(FIM) 3,000,000 756,285
- -----------------------------------------------------------------------
FRANCE - 2.2%
France (Government of) Bonds:
Obligations Assimilables du Tresor,
5.25%, 4/25/08(FRF) 23,780,000 4,704,484
Obligations Assimilables du Tresor,
5.50%, 10/25/07(FRF) 7,720,000 1,543,583
---------------
6,248,067
- -----------------------------------------------------------------------
GERMANY - 1.2%
Germany (Republic of) Bonds, 4.50%,
2/18/03(DEM) 1,070,000 670,258
- -----------------------------------------------------------------------
Germany (Republic of) Nts., Series
98, 4%, 3/17/00(DEM) 4,390,000 2,662,954
---------------
3,333,212
- -----------------------------------------------------------------------
GREAT BRITAIN - 0.7%
United Kingdom Treasury Bonds:
8.50%, 12/7/05(GBP) 880,000 1,810,378
9%, 8/6/12(GBP) 40,000 96,462
---------------
1,906,840
- -----------------------------------------------------------------------
GREECE - 0.2%
Hellenic Republic Government Bonds,
8.90%, 4/1/03(GRD) 158,200,000 587,513
- -----------------------------------------------------------------------
HUNGARY - 0.3%
Hungary (Government of) Bonds:
Series 00/G, 16%, 11/24/00(HUF) 60,900,000 290,858
Series 03/I, 13%, 7/24/03(HUF) 61,190,000 289,011
</TABLE>
83
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
HUNGARY (CONTINUED)
Hungary (Government of) Bonds:
(Continued)
Series 99-G, 16.50%, 7/24/99(HUF) 44,000,000 $ 204,949
---------------
784,818
- -----------------------------------------------------------------------
INDONESIA - 0.1%
PT Bank Negara Indonesia Sr. Nts.,
7.625%, 2/15/07 317,000 175,142
- -----------------------------------------------------------------------
ITALY - 1.8%
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali:
8.50%, 1/1/04(ITL) 2,855,000,000 2,112,388
8.75%, 7/1/06(ITL) 3,575,000,000 2,823,979
10.50%, 4/1/05(ITL) 175,000,000 144,392
---------------
5,080,759
- -----------------------------------------------------------------------
IVORY COAST - 0.1%
Ivory Coast (Government of) Past
Due Interest Bonds, 2%,
3/29/18(6)(11) 579,662 169,551
- -----------------------------------------------------------------------
JORDAN - 0.0%
Hashemite (Kingdom of Jordan)
Bonds, Series DEF, 5%, 12/23/23(11) 210,000 120,225
- -----------------------------------------------------------------------
KOREA, REPUBLIC OF (SOUTH) - 0.4%
Export-Import Bank of Korea Unsec.
Nts., 7.10%, 3/15/07 300,000 267,750
- -----------------------------------------------------------------------
Korea (Republic of) Nts., 7.813%,
4/8/00(4)(5) 580,000 537,225
- -----------------------------------------------------------------------
Korea Electric Power Unsec. Unsub.
Nts., 6.375%, 12/1/03 300,000 255,509
---------------
1,060,484
- -----------------------------------------------------------------------
MEXICO - 2.9%
United Mexican States Bills, Zero
Coupon, 32.91%, 5/6/99(10)(MXP) 13,850,000 1,262,555
- -----------------------------------------------------------------------
United Mexican States Bonds:
6.63%, 12/31/19(FRF) 7,500,000 1,087,539
8.125%, 9/10/04(11)(DEM) 750,000 461,791
10.375%, 1/29/03(DEM) 725,000 466,857
11.50%, 5/15/26 1,920,000 2,040,000
16.50%, 9/1/08(4)(GBP) 20,000 39,792
- -----------------------------------------------------------------------
United Mexican States
Collateralized Fixed Rate Par
Bonds:
Series B, 6.25%, 12/31/19 600,000 468,750
Series W-A, 6.25%, 12/31/19 550,000 429,687
Series W-B, 6.25%, 12/31/19 2,100,000 1,640,625
- -----------------------------------------------------------------------
United Mexican States Petroleos
Mexicanos Unsec. Unsub. Nts.,
7.875%, 3/2/99(CAD) 200,000 130,101
---------------
8,027,697
- -----------------------------------------------------------------------
NIGERIA - 0.0%
Nigeria (Federal Republic of)
Promissory Nts., Series RC, 5.092%,
1/5/10 68,192 43,288
- -----------------------------------------------------------------------
PANAMA - 0.1%
Panama (Government of) Past Due
Interest Debs., 6.688%, 7/17/16(5) 232,025 172,279
</TABLE>
84
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
PERU - 0.6%
Peru (Republic of) Past Due
Interest Bonds, Series 20 yr., 4%,
3/7/17(11) $ 600,000 $ 378,000
- -----------------------------------------------------------------------
Peru (Republic of) Sr. Nts., Zero
Coupon, 4.50%, 2/28/16(10) 3,305,417 1,422,982
---------------
1,800,982
- -----------------------------------------------------------------------
POLAND - 0.7%
Poland (Republic of) Bonds, 12%,
10/12/03(PLZ) 1,010,000 300,921
- -----------------------------------------------------------------------
Poland (Republic of) Bonds, Series
2 yr., 14%, 2/12/00(PLZ) 1,000,000 289,181
- -----------------------------------------------------------------------
Poland (Republic of) Past Due
Interest Bonds, 5%, 10/27/14(11) 1,155,000 1,081,369
- -----------------------------------------------------------------------
Poland (Republic of) Treasury
Bills, Series 52, Zero Coupon,
14.86%, 10/13/99(10)(PLZ) 770,000 199,244
- -----------------------------------------------------------------------
Poland (Republic of) Treasury
Bills, Series 52, Zero Coupon,
15.13%, 8/11/99(10)(PLZ) 450,000 119,013
---------------
1,989,728
- -----------------------------------------------------------------------
RUSSIA - 0.1%
City of St. Petersburg Sr. Unsub.
Nts., 9.50%, 6/18/02(4) 180,000 43,650
- -----------------------------------------------------------------------
Russia (Government of) Bonds:
18.29%, 4/28/99(4)(12)(RUR) 860,000 9,091
29.80%, 7/14/99(4)(12)(RUR) 1,500,000 19,031
Series 2, 29.80%,
7/14/99(4)(12)(RUR) 745,000 9,452
Series 3, 18.29%,
4/28/99(4)(12)(RUR) 790,000 8,351
- -----------------------------------------------------------------------
Russia (Government of) Debs.,
5.969%, 12/15/15(5) 24,195 2,677
- -----------------------------------------------------------------------
Russia (Government of) Federal Loan
Bonds, Series 5022, 15%,
2/23/00(4)(12)(RUR) 5,417,000 98,866
- -----------------------------------------------------------------------
Russia (Government of) Principal
Loan Debs., Series 24 yr., 5.969%,
12/15/20(5) 1,730,000 107,066
---------------
298,184
- -----------------------------------------------------------------------
SPAIN - 1.5%
Spain (Kingdom of) Gtd. Bonds,
Bonos y Obligacion del Estado:
4.50%, 7/30/04(ESP) 271,340,000 1,969,251
5.25%, 1/31/03(ESP) 273,920,000 2,073,278
6%, 1/31/08(ESP) 12,200,000 98,609
---------------
4,141,138
- -----------------------------------------------------------------------
THAILAND - 0.1%
Industrial Finance Corp. of
Thailand (The) Sr. Nts., 6.875%,
4/1/03(6) 200,000 174,373
- -----------------------------------------------------------------------
TURKEY - 0.2%
Turkey (Republic of) Treasury
Bills, Zero Coupon, 85.01%,
1/27/99(10)(TRL) 20,300,000,000 641,495
- -----------------------------------------------------------------------
VENEZUELA - 0.2%
Venezuela (Republic of) Bonds,
9.25%, 9/15/27 380,000 224,200
- -----------------------------------------------------------------------
Venezuela (Republic of) Disc.
Bonds, Series DL, 5.938%,
12/18/07(5) 214,285 136,339
</TABLE>
85
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
VENEZUELA (CONTINUED)
Venezuela (Republic of)
Front-Loaded Interest Reduction
Bonds, Series B, 6.75%, 3/31/07(5) $ 202,380 $ 126,361
- -----------------------------------------------------------------------
Venezuela (Republic of) New Money
Bonds, Series A, 6.063%,
12/18/05(5) 205,883 128,548
---------------
615,448
- -----------------------------------------------------------------------
VIETNAM - 0.0%
Vietnam (Government of) Bonds, 3%,
3/12/28(5) 54,000 13,770
---------------
Total Foreign Government
Obligations (Cost $58,599,197) 56,484,318
- -----------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.2%
- -----------------------------------------------------------------------
Jamaica (Government of) 1990
Refinancing Agreement Nts., Tranche
A, 6.188%, 10/16/00(4)(5) 25,000 21,625
- -----------------------------------------------------------------------
Morocco (Kingdom of) Loan
Participation Agreement, Tranche A,
6.312%, 1/1/09(4)(5) 740,000 586,450
---------------
Total Loan Participations (Cost
$680,509) 608,075
- -----------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 27.2%
- -----------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.9%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 450,000 470,250
- -----------------------------------------------------------------------
Amtran, Inc.:
9.625% Nts., 12/15/05 100,000 100,500
10.50% Sr. Nts., 8/1/04 150,000 156,750
- -----------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08(4) 300,000 300,750
9.375% Sr. Nts., 11/15/06(6) 300,000 307,500
10.75% Sr. Nts., 8/1/05 125,000 131,875
12.25% Pass-Through Certificates,
12/1/02 350,000 378,000
- -----------------------------------------------------------------------
Constellation Finance LLC, 9.80%
Airline Receivable Asset-Backed
Nts., Series 1997-1, 1/1/01(4) 175,000 171,500
- -----------------------------------------------------------------------
Greater Toronto Airport, 5.40%
Debs., 12/3/02(CAD) 240,000 158,014
- -----------------------------------------------------------------------
Pegasus Aircraft Lease
Securitization Trust, 11.76% Sr.
Nts., Series 1997-A, Cl. B,
6/15/04(4) 90,586 96,601
- -----------------------------------------------------------------------
SC International Services, Inc.,
9.25% Sr. Sub. Nts., Series B,
9/1/07 200,000 201,000
---------------
2,472,740
- -----------------------------------------------------------------------
CHEMICALS - 0.5%
ClimaChem, Inc., 10.75% Sr. Unsec.
Nts., Series B, 12/1/07 150,000 151,500
- -----------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 50,000 46,750
- -----------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., Series B, 9/15/07 150,000 120,750
- -----------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr.
Sec. Nts., 10/15/03 140,000 149,450
- -----------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25%
Sec. Nts., 10/15/07 175,000 135,625
- -----------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 150,000 120,750
- -----------------------------------------------------------------------
Polytama International Finance BV,
11.25% Sec. Nts., 6/15/07 125,047 27,823
- -----------------------------------------------------------------------
Sovereign Specialty Chemicals,
Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 425,000 433,500
</TABLE>
86
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
CHEMICALS (CONTINUED)
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 $ 50,000 $ 42,250
11.75% Sr. Unsec. Sub. Nts.,
8/15/06 190,000 164,350
---------------
1,392,748
- -----------------------------------------------------------------------
CONSUMER DURABLES - 0.1%
Holmes Products Corp., 9.875% Sr.
Unsec. Sub. Nts., Series B,
11/15/07 200,000 190,000
- -----------------------------------------------------------------------
Icon Health & Fitness, Inc., 13%
Sr. Sub. Nts., Series B, 7/15/02 125,000 75,625
- -----------------------------------------------------------------------
TAG Heuer International SA, 12% Sr.
Sub. Nts., 12/15/05(4) 100,000 116,101
---------------
381,726
- -----------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.7%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs.,
7/1/09(6)(13) 150,000 59,250
10.50% Sr. Nts., 7/1/08(6) 100,000 95,500
- -----------------------------------------------------------------------
American Pad & Paper Co., 13% Sr.
Sub. Nts., Series B, 11/15/05 295,000 169,625
- -----------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Sub.
Nts., 8/15/08(6) 305,000 311,100
- -----------------------------------------------------------------------
Chattem, Inc., 8.875% Sr. Unsec.
Sub. Nts., Series B, 4/1/08 100,000 103,000
- -----------------------------------------------------------------------
Globe Manufacturing, Inc., 10% Sr.
Sub. Nts., 8/1/08(6) 315,000 286,650
- -----------------------------------------------------------------------
Indorayon International Finance Co.
BV, 10% Gtd. Unsec. Unsub. Nts.,
3/29/01(4) 100,000 29,000
- -----------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50%
Sr. Unsec. Sub. Nts., 5/1/08 200,000 201,000
- -----------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 100,000 91,500
9% Sr. Nts., 11/1/06(6) 100,000 100,000
- -----------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts., Series B,
9.89%, 3/15/01(10) 220,000 126,500
- -----------------------------------------------------------------------
Styling Technology Corp., 10.875%
Sr. Sub. Nts., 7/1/08 70,000 66,850
- -----------------------------------------------------------------------
William Carter Co., 10.375% Sr.
Sub. Nts., Series A, 12/1/06 135,000 143,100
- -----------------------------------------------------------------------
Williams (J. B.) Holdings, Inc.,
12% Sr. Nts., 3/1/04 100,000 105,500
---------------
1,888,575
- -----------------------------------------------------------------------
ENERGY - 1.9%
AEI Resources, Inc., 11.50% Sr.
Sub. Nts., 12/15/06(6) 250,000 248,125
- -----------------------------------------------------------------------
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 100,000 75,500
9.625% Sr. Unsec. Nts., Series B,
5/1/05 155,000 117,025
- -----------------------------------------------------------------------
Clark Refinancing & Marketing,
Inc., 8.875% Sr. Sub. Nts.,
11/15/07 245,000 219,275
- -----------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts.,
Series B, 12/1/05 125,000 115,625
- -----------------------------------------------------------------------
Dailey International, Inc., 9.50%
Sr. Unsec. Nts., Series B, 2/15/08 400,000 178,000
- -----------------------------------------------------------------------
Denbury Management, Inc., 9% Sr.
Sub. Nts., 3/1/08 400,000 338,000
- -----------------------------------------------------------------------
Empresa Electric Del Norte, 10.50%
Sr. Debs., 6/15/05(6) 100,000 68,500
- -----------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B,
2/15/07 90,000 67,050
</TABLE>
87
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
Forcenergy, Inc.: (Continued)
9.50% Sr. Sub. Nts., 11/1/06 $ 400,000 $ 310,000
- -----------------------------------------------------------------------
Gothic Energy Corp., 0%/14.125% Sr.
Disc. Nts., 5/1/06(13) 275,000 90,750
- -----------------------------------------------------------------------
Gothic Production Corp., 11.125%
Sr. Sec. Nts., Series B, 5/1/05(6) 200,000 157,000
- -----------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/15/08 560,000 383,600
- -----------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr.
Sec. Nts., 6/1/08 250,000 201,250
- -----------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 600,000 609,000
- -----------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sr. Sub. Debs., 2/1/06 425,000 399,500
- -----------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub.
Nts., 5/15/07 370,000 344,100
- -----------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec.
Nts., 2/15/08 630,000 444,150
- -----------------------------------------------------------------------
Statia Terminals
International/Statia Terminals
(Canada), Inc., 11.75% First Mtg.
Nts., Series B, 11/15/03 175,000 175,875
- -----------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 270,000 261,900
- -----------------------------------------------------------------------
Universal Compression Holdings,
Inc.:
0%/9.875% Sr. Disc. Nts.,
2/15/08(13) 500,000 302,500
0%/11.375% Sr. Disc. Nts.,
2/15/09(13) 400,000 240,000
---------------
5,346,725
- -----------------------------------------------------------------------
FINANCIAL - 3.6%
AMRESCO, Inc.:
9.875% Sr. Sub. Nts., Series 98-A,
3/15/05 300,000 205,500
10% Sr. Sub. Nts., Series 97-A,
3/15/04 100,000 71,250
- -----------------------------------------------------------------------
Bakrie Investindo, Zero Coupon
Promissory Nts.,
7/10/98(4)(12)(IDR) 1,000,000,000 31,250
- -----------------------------------------------------------------------
Banco Nacional de Mexico SA, 11%
Sub. Exchangeable Capital Debs.,
7/15/03(4) 130,000 113,750
- -----------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts.,
7/18/07 7,000 5,635
- -----------------------------------------------------------------------
Bayerische Vereinsbank AG, 5% Sec.
Nts., Series 661, 7/28/04(DEM) 4,055,000 2,584,400
- -----------------------------------------------------------------------
CB Richard Ellis Services, Inc.,
8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 246,250
- -----------------------------------------------------------------------
Deutsche Pfandbrief & Hypobank,
4.75% Sec. Nts., Series 452,
3/20/03(DEM) 2,800,000 1,755,458
- -----------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr.
Nts., Series B, 9/15/04 80,000 40,400
- -----------------------------------------------------------------------
Federal Home Loan Bank, 5.625%,
6/10/03(GBP) 115,000 193,244
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
6.875% Sr. Unsec. Nts., 6/7/02(GBP) 325,000 566,803
- -----------------------------------------------------------------------
Ford Motor Credit Co., 5.25% Bonds,
6/16/08(DEM) 1,350,000 840,444
- -----------------------------------------------------------------------
Hypothekenbank in Essen AG:
4.50% Sec. Nts., Series 478,
5/2/03(DEM) 575,000 357,044
- -----------------------------------------------------------------------
5.25% Sec. Nts., Series 502,
1/22/08(DEM) 890,000 571,772
- -----------------------------------------------------------------------
5.50% Sec. Nts., Series 459,
2/20/07(DEM) 830,000 544,936
- -----------------------------------------------------------------------
Industrial Bank of Japan Preferred
Capital Co. (The) LLC, 8.79% Bonds,
12/29/49(5)(6) 400,000 344,624
- -----------------------------------------------------------------------
Kreditanstalt fuer Wiederaufbau, 5%
Bonds, 1/4/09(DEM) 650,000 416,610
- -----------------------------------------------------------------------
Local Financial Corp., 11% Sr.
Nts., 9/8/04(6) 150,000 152,250
- -----------------------------------------------------------------------
Ocwen Capital Trust I, 10.875%
Capital Nts., 8/1/27 150,000 120,750
</TABLE>
88
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL (CONTINUED)
Ocwen Financial Corp., 11.875%
Nts., 10/1/03 $ 150,000 $ 134,250
- -----------------------------------------------------------------------
Ongko International Finance Co. BV,
10.50% Gtd. Nts., 3/29/04(4)(12) 90,000 5,625
- -----------------------------------------------------------------------
PT Polysindo Eka Perkasa:
11% Nts., 6/27/01-6/18/03(4) 100,000 12,000
24% Nts., 6/27/01-6/19/03(IDR) 164,300,000 2,464
- -----------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 9.75% Sr. Sec. Nts., Series
B, 4/1/08 350,000 327,250
- -----------------------------------------------------------------------
SBS Agro Finance BV Bonds, 10.25%,
7/21/00 339,000 26,272
- -----------------------------------------------------------------------
Southern Pacific Funding Corp.,
11.50% Sr. Nts., 11/1/04(12) 100,000 27,000
- -----------------------------------------------------------------------
Veritas Capital Trust, 10% Nts.,
1/1/28 100,000 90,250
- -----------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr.
Nts., 12/15/03 129,000 129,000
- -----------------------------------------------------------------------
Wilshire Financial Services Group,
Inc., 13% Nts., 1/1/04 60,000 18,000
---------------
9,934,481
- -----------------------------------------------------------------------
FOOD & DRUG - 0.5%
Ameriking, Inc., 10.75% Sr. Nts.,
12/1/06(12) 125,000 130,937
- -----------------------------------------------------------------------
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B,
12/1/04 50,000 47,500
10.625% Sr. Sub. Nts., Series B,
7/31/07 560,000 525,000
- -----------------------------------------------------------------------
Pathmark Stores, Inc., 0%/10.75%
Jr. Sub. Deferred Coupon Nts.,
11/1/03(13) 260,000 214,500
- -----------------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., Series B,
7/1/07 350,000 380,625
- -----------------------------------------------------------------------
Shoppers Food Warehouse Corp.,
9.75% Sr. Nts., 6/15/04 155,000 169,725
---------------
1,468,287
- -----------------------------------------------------------------------
FOOD/TOBACCO - 0.4%
Aurora Foods, Inc., 8.75% Sr. Sub.
Nts., Series B, 7/1/08 150,000 156,750
- -----------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr.
Disc. Nts., Series B, 12/15/07(13) 100,000 69,000
- -----------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/1/05 200,000 201,000
- -----------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec.
Sub. Nts., 3/15/10 200,000 205,000
- -----------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr.
Unsec. Sub. Nts., 2/15/08 400,000 404,000
- -----------------------------------------------------------------------
Sparkling Spring Water Group Ltd.,
11.50% Sr. Sec. Sub. Nts., 11/15/07 200,000 194,000
---------------
1,229,750
- -----------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 0.7%
Ball Corp.:
7.75% Sr. Nts., 8/1/06(6) 125,000 131,250
8.25% Sr. Sub. Nts., 8/1/08(6) 125,000 130,625
- -----------------------------------------------------------------------
Consumers International, Inc.,
10.25% Sr. Sec. Nts., 4/1/05 250,000 268,750
- -----------------------------------------------------------------------
Fletcher Challenge Finance U.S.A.,
Inc., 8.05% Debs., 6/15/03(NZD) 80,000 43,838
- -----------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts.,
4/30/05(NZD) 60,000 34,074
14.50% Cv. Sub. Nts., 9/30/00(NZD) 60,000 34,967
</TABLE>
89
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FOREST PRODUCTS/CONTAINERS
(CONTINUED)
Florida Coast Paper Co. LLC, 12.75%
First Mtg. Nts., Series B,
6/1/03(12) $ 230,000 $ 124,200
- -----------------------------------------------------------------------
Four M Corp., 12% Sr. Sec. Nts.,
Series B, 6/1/06 105,000 78,225
- -----------------------------------------------------------------------
Indah Kiat International Finance
Co. BV, 11.375% Sec. Nts., Series
A, 6/15/99(4) 205,000 182,450
- -----------------------------------------------------------------------
Riverwood International Corp.,
10.625% Sr. Unsec. Nts., 8/1/07 400,000 398,000
- -----------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts.,
Series B, 12/15/04 200,000 218,750
- -----------------------------------------------------------------------
SF Holdings Group, Inc., 0%/12.75%
Sr. Disc. Nts., 3/15/08(13) 100,000 35,500
- -----------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr.
Nts., 11/15/07 150,000 151,500
---------------
1,832,129
- -----------------------------------------------------------------------
GAMING/LEISURE - 1.6%
AP Holdings, Inc., 0%/11.25% Sr.
Disc. Nts., 3/15/08(13) 50,000 27,250
- -----------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub.
Nts., 3/15/08 100,000 92,500
- -----------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 275,000 269,500
- -----------------------------------------------------------------------
Casino America, Inc., 12.50% Sr.
Nts., 8/1/03 50,000 55,625
- -----------------------------------------------------------------------
Casino Magic of Louisiana Corp.,
13% First Mtg. Nts., Series B,
8/15/03 120,000 136,200
- -----------------------------------------------------------------------
Empress Entertainment, Inc., 8.125%
Sr. Sub. Nts., 7/1/06 400,000 400,000
- -----------------------------------------------------------------------
Grand Casinos, Inc., 10.125% First
Mtg. Sec. Nts., 12/1/03 325,000 355,875
- -----------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375%
Bonds, 2/13/02 50,000 43,312
- -----------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr.
Sub. Nts., 4/1/05 300,000 301,500
- -----------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 425,000 440,938
- -----------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts.,
8/15/08 350,000 360,500
- -----------------------------------------------------------------------
Majestic Star Casino LLC (The),
12.75% Sr. Sec. Nts., 5/15/03 400,000 417,000
- -----------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec.
Nts., Series B, 11/15/02 200,000 241,000
- -----------------------------------------------------------------------
Outboard Marine Corp., 10.75% Sr.
Nts., 6/1/08(6) 110,000 107,800
- -----------------------------------------------------------------------
Premier Cruise Ltd., 11% Sr. Nts.,
3/15/08(6) 250,000 126,250
- -----------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(13) 200,000 136,500
9.25% Sr. Nts., 4/1/06 100,000 103,875
- -----------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50% Sr.
Sub. Nts., 4/15/07 200,000 222,000
- -----------------------------------------------------------------------
Showboat Marina Casino
Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts.,
Series B, 3/15/03 350,000 397,250
- -----------------------------------------------------------------------
Six Flags Entertainment Corp.,
8.875% Sr. Nts., 4/1/06 200,000 206,250
- -----------------------------------------------------------------------
Venetian Casino Resort LLC/Las
Vegas Sands, Inc., 10% Sr. Unsec.
Sub. Nts., 11/15/05 (11) 150,000 132,750
---------------
4,573,875
- -----------------------------------------------------------------------
HEALTHCARE - 0.8%
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 500,000 495,000
- -----------------------------------------------------------------------
Fresenius Medical Care Capital
Trust III, 7.375% Nts., 2/1/08(DEM) 400,000 253,374
</TABLE>
90
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
HEALTHCARE (CONTINUED)
ICN Pharmaceutical, Inc., 8.75% Sr.
Nts., 11/15/08(6) $ 350,000 $ 355,250
- -----------------------------------------------------------------------
Integrated Health Services, Inc.:
10.25% Sr. Sub. Nts., 4/30/06 15,000 14,775
9.50% Sr. Sub. Nts., 9/15/07 115,000 109,825
- -----------------------------------------------------------------------
Kinetic Concepts, Inc., 9.625% Sr.
Unsec. Sub. Nts., Series B, 11/1/07 500,000 481,250
- -----------------------------------------------------------------------
Magellan Health Services, Inc., 9%
Sr. Sub. Nts., 2/15/08 250,000 221,250
- -----------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr.
Nts., 5/15/05(6) 150,000 141,750
- -----------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 7/1/07 250,000 203,750
---------------
2,276,224
- -----------------------------------------------------------------------
HOUSING - 0.5%
Building Materials Corp. of
America, 8.625% Sr. Nts., Series B,
12/15/06 50,000 51,125
- -----------------------------------------------------------------------
Falcon Building Products, Inc.,
9.50% Sr. Sub. Nts., 6/15/07 100,000 90,500
- -----------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr.
Nts., 3/1/04 50,000 53,000
- -----------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75%
Sr. Nts., 10/15/04 300,000 303,000
- -----------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 650,000 672,750
9.25% Sr. Nts., Series B, 3/15/07 150,000 154,500
---------------
1,324,875
- -----------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.6%
Covad Communications Group, Inc.,
0%/13.50% Sr. Disc. Nts.,
3/15/08(13) 600,000 333,000
- -----------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts.,
Series B, 11/15/05 250,000 238,750
- -----------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub.
Nts., 9/15/07 20,000 19,900
- -----------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 350,000 351,750
- -----------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub.
Nts., 9/30/09 150,000 155,250
- -----------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts.,
10/15/04 150,000 174,750
- -----------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec.
Disc. Nts., Series B, 3/1/05(13) 500,000 275,000
- -----------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub.
Nts., 6/15/07 175,000 167,125
---------------
1,715,525
- -----------------------------------------------------------------------
MANUFACTURING - 0.8%
Axia, Inc. (New), 10.75% Sr. Sub.
Nts., 7/15/08 125,000 127,500
- -----------------------------------------------------------------------
Burke Industries, Inc., 10% Sr.
Sub. Nts., 8/15/07 150,000 146,250
- -----------------------------------------------------------------------
Cia Latino Americana de
Infraestructura & Servicios SA -
CLISA, 11.625% Sr. Unsec. Nts.,
6/1/04(4) 30,000 19,650
- -----------------------------------------------------------------------
Communications & Power Industries,
Inc., 12% Sr. Sub. Nts., Series B,
8/1/05 250,000 261,875
- -----------------------------------------------------------------------
Eagle-Picher Industries, Inc.,
9.375% Sr. Unsec. Sub. Nts., 3/1/08 300,000 283,500
- -----------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub.
Nts., 5/1/08 100,000 90,500
- -----------------------------------------------------------------------
Hydrochem Industrial Services,
Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 143,250
</TABLE>
91
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Insilco Corp., Units (each unit
consists of $1,000 principal amount
of 12% Sr. Sub. Nts., 8/15/07 and
one warrant to purchase 0.52 shares
of common stock)(6)(14) $ 270,000 $ 280,800
- -----------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 125,000 132,188
- -----------------------------------------------------------------------
Mechala Group Jamaica Ltd., 12.75%
Gtd. Sr. Sec. Sub. Nts., Series B,
12/30/99 85,000 58,013
- -----------------------------------------------------------------------
MOLL Industries, Inc., 10.50% Sr.
Sub. Nts., 7/1/08(6) 200,000 197,000
- -----------------------------------------------------------------------
Paragon Corp. Holdings, Inc.,
9.625% Sr. Unsec. Nts., Series B,
4/1/08 125,000 106,563
- -----------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub.
Nts., 7/1/07 100,000 99,500
- -----------------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Sr. Sub. Nts., Series
B, 6/15/07 140,000 136,500
- -----------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub.
Nts., 4/1/08 150,000 147,750
- -----------------------------------------------------------------------
Unifrax Investment Corp., 10.50%
Sr. Nts., 11/1/03 50,000 52,250
---------------
2,283,089
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING -
1.2%
Azteca Holdings SA, 11% Sr. Sec.
Nts., 6/15/02 155,000 131,750
- -----------------------------------------------------------------------
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 275,000 286,000
- -----------------------------------------------------------------------
CBS Radio, Inc., 11.375% Unsec.
Sub. Debs., 1/15/09(15) 75,100 89,745
- -----------------------------------------------------------------------
Chancellor Media Corp.:
8.125% Sr. Sub. Nts., Series B,
12/15/07 200,000 200,500
8.75% Sr. Unsec. Sub. Nts., Series
B, 6/15/07 400,000 412,000
10.50% Sr. Sub. Nts., Series B,
1/15/07 90,000 99,000
- -----------------------------------------------------------------------
Jacor Communications, Inc.:
8% Sr. Sub. Nts., 2/15/10 500,000 530,000
8.75% Gtd. Sr. Sub. Nts., Series B,
6/15/07 100,000 108,250
- -----------------------------------------------------------------------
Paxson Communications Corp.,
11.625% Sr. Sub. Nts., 10/1/02 95,000 97,850
- -----------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts.,
Series B, 5/15/04(11) 100,000 100,500
- -----------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 150,000 152,250
9% Sr. Unsec. Sub. Nts., 7/15/07 210,000 215,250
10% Sr. Sub. Nts., 9/30/05 100,000 106,500
- -----------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
11% Sr. Nts., 3/15/04 100,000 106,500
- -----------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Sr. Nts., Series A, 2/15/04 100,000 85,250
10.50% Sr. Nts., Series B, 2/15/07 150,000 123,750
- -----------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 275,000 280,500
9% Sr. Sub. Nts., Series B, 1/15/06 100,000 101,500
---------------
3,227,095
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO - 1.2%
Adelphia Communications Corp.:
8.375% Sr. Nts., Series B, 2/1/08 100,000 103,750
</TABLE>
92
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO (CONTINUED)
Adelphia Communications Corp.:
(Continued)
9.25% Sr. Nts., 10/1/02 $ 100,000 $ 106,000
10.50% Sr. Unsec. Nts., Series B,
7/15/04 70,000 78,750
- -----------------------------------------------------------------------
American Telecasting, Inc.,
0%/14.50% Sr. Disc. Nts.,
6/15/04(13) 40,545 6,284
- -----------------------------------------------------------------------
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 4/1/23 150,000 167,625
9.875% Sr. Sub. Nts., 5/15/06 250,000 273,750
- -----------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(13) 40,000 41,200
- -----------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Sr. Sec.
Nts., 7/1/02 250,000 288,750
- -----------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(4) 111,983 111,983
- -----------------------------------------------------------------------
EchoStar II, 8.25% Sinking Fund
Bonds, 11/9/01(4) 114,318 114,318
- -----------------------------------------------------------------------
EchoStar Satellite Broadcasting
Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(13) 400,000 401,000
- -----------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285%
Sr. Disc. Debs., Series B,
4/15/10(13) 350,000 241,500
- -----------------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03(5) 175,000 182,875
- -----------------------------------------------------------------------
Marcus Cable Operating Co.
LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts.,
Series II, 8/1/04(13) 200,000 202,500
- -----------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series
B, 2/15/05 310,000 308,450
- -----------------------------------------------------------------------
Rogers Cablesystems Ltd., 10%
Second Priority Sr. Sec. Debs.,
12/1/07 200,000 225,000
- -----------------------------------------------------------------------
Rogers Communications, Inc., 8.75%
Sr. Nts., 7/15/07(CAD) 400,000 252,239
- -----------------------------------------------------------------------
United International Holdings,
Inc.:
0%/10.75% Sr. Disc. Nts., Series B,
2/15/08(13) 70,000 38,150
0%/14% Sr. Disc. Nts., Series B,
5/15/06(13) 400,000 210,000
---------------
3,354,124
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA - 0.6%
Hollywood Theaters, Inc., 10.625%
Sr. Sub. Nts., 8/1/07 100,000 74,250
- -----------------------------------------------------------------------
IPC Magazines Group plc, 9.625%
Bonds, 3/15/08(GBP) 300,000 435,225
- -----------------------------------------------------------------------
Regal Cinemas, Inc., 8.875% Sr.
Sub. Nts., 12/15/10(6) 250,000 249,375
- -----------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr.
Unsec. Sub. Nts., Series B, 2/1/08 500,000 497,500
- -----------------------------------------------------------------------
Time Warner Entertainment Co. LP,
8.375% Sr. Debs., 3/15/23 300,000 367,990
---------------
1,624,340
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
- -4.0%
Amazon.Com, Inc., 0%/10% Sr. Unsec.
Disc. Nts., 5/1/08(13) 260,000 172,900
- -----------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts.,
12/15/06(13) 200,000 169,000
7.625% Bonds, 7/31/08(DEM) 500,000 297,016
8.875% Sr. Nts., 11/30/07(DEM) 100,000 61,692
10.125% Sr. Nts., 11/30/07(GBP) 170,000 297,362
</TABLE>
93
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
(CONTINUED)
COLT Telecom Group plc: (Continued)
Units (each unit consists of $1,000
principal amount of 0%/12% sr.
disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary
shares)(13)(14) $ 200,000 $ 169,000
- -----------------------------------------------------------------------
Comcast UK Cable Partner Ltd.,
0%/11.20% Sr. Disc. Debs.,
11/15/07(13) 250,000 212,500
- -----------------------------------------------------------------------
Concentric Network Corp., 12.75%
Sr. Unsec. Nts., 12/15/07 80,000 82,000
- -----------------------------------------------------------------------
Convergent Communications, Inc.,
13% Sr. Nts., 4/1/08 250,000 121,250
- -----------------------------------------------------------------------
Diamond Cable Communications plc,
0%/11.75% Sr. Disc. Nts.,
12/15/05(13) 825,000 686,813
- -----------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr.
Nts., 2/1/08 50,000 48,000
- -----------------------------------------------------------------------
e.spire Communications, Inc.,
13.75% Sr. Nts., 7/15/07 110,000 103,125
- -----------------------------------------------------------------------
Exodus Communications, Inc., 11.25%
Sr. Nts., 7/1/08 165,000 165,825
- -----------------------------------------------------------------------
FaciliCom International, Inc.,
10.50% Sr. Nts., Series B, 1/15/08 340,000 273,700
- -----------------------------------------------------------------------
FirstWorld Communications, Inc.,
0%/13% Sr. Disc. Nts., 4/15/08(13) 190,000 57,950
- -----------------------------------------------------------------------
Focal Communications Corp.,
0%/12.125% Sr. Unsec. Disc. Nts.,
2/15/08(13) 515,000 275,525
- -----------------------------------------------------------------------
Global Crossing Holdings Ltd.,
9.625% Sr. Nts., 5/15/08 210,000 223,650
- -----------------------------------------------------------------------
Globix Corp., 13% Sr. Unsec. Nts.,
5/1/05 325,000 268,125
- -----------------------------------------------------------------------
GST Telecommunications, Inc.,
0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(6)(13) 25,000 19,844
- -----------------------------------------------------------------------
GST Telecommunications, Inc./GST
Network Funding Corp., Inc.,
0%/10.50% Sr. Disc. Nts.,
5/1/08(6)(13) 75,000 32,625
- -----------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr.
Disc. Nts., 12/15/05(13) 355,000 256,488
- -----------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Sr. Sec. Disc. Nts.,
5/1/06(13) 195,000 146,250
0%/13.50% Sr. Disc. Nts.,
9/15/05(13) 120,000 99,600
- -----------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr.
Unsec. Disc. Nts., 2/15/08(13) 115,000 61,525
- -----------------------------------------------------------------------
Intermedia Communications, Inc.:
8.60% Sr. Unsec. Nts., Series B,
6/1/08 225,000 214,875
8.875% Sr. Nts., 11/1/07 200,000 194,000
- -----------------------------------------------------------------------
KMC Telecom Holdings, Inc.,
0%/12.50% Sr. Unsec. Disc. Nts.,
2/15/08(13) 725,000 351,625
- -----------------------------------------------------------------------
Level 3 Communications, Inc.,
9.125% Sr. Unsec. Nts., 5/1/08 450,000 446,625
- -----------------------------------------------------------------------
Long Distance International, Inc.,
12.25% Sr. Nts., 4/15/08(6) 200,000 167,000
- -----------------------------------------------------------------------
McLeodUSA, Inc., 9.25% Sr. Nts.,
7/15/07 75,000 78,750
- -----------------------------------------------------------------------
Netia Holdings BV:
10.25% Sr. Nts., Series B, 11/1/07 50,000 42,625
0%/11% Sr. Disc. Nts.,
11/1/07(13)(DEM) 400,000 137,494
0%/11% Sr. Disc. Nts., Series B,
11/1/07(13)(DEM) 200,000 68,747
0%/11.25% Sr. Disc. Nts., Series B,
11/1/07(13) 100,000 57,250
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Unsec. Nts.,
4/15/08(13) 260,000 149,500
9% Sr. Nts., 3/15/08 200,000 189,000
</TABLE>
94
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
(CONTINUED)
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc.:
(Continued)
9.625% Sr. Nts., 10/1/07 $ 350,000 $ 336,000
10.75% Sr. Nts., 11/15/08(6) 100,000 102,250
- -----------------------------------------------------------------------
NorthEast Optic Network, Inc.,
12.75% Sr. Nts., 8/15/08 200,000 197,000
- -----------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts.,
4/1/08(6)(13) 300,000 187,500
0%/10.75% Sr. Unsec. Unsub. Nts.,
Series REGS, 4/1/08(13)(GBP) 200,000 208,079
7% Cv. Sub. Nts., 12/15/08(6) 400,000 433,000
10% Sr. Nts., Series B, 2/15/07 100,000 103,000
- -----------------------------------------------------------------------
PLD Telekom, Inc., 0%/14% Sr. Disc.
Nts., 6/1/04(13) 300,000 160,500
- -----------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts.,
Series B, 2/15/05 750,000 746,250
- -----------------------------------------------------------------------
PTC International Finance BV,
0%/10.75% Gtd. Sr. Unsec. Sub.
Bonds, 7/1/07(4)(13) 134,000 92,795
- -----------------------------------------------------------------------
Qwest Communications International,
Inc.:
0%/8.29% Sr. Unsec. Disc. Nts.,
Series B, 2/1/08(13) 365,000 277,400
0%/9.47% Sr. Disc. Nts.,
10/15/07(13) 495,000 384,863
- -----------------------------------------------------------------------
RSL Communications plc:
0%/10% Bonds, 3/15/08(13)(DEM) 350,000 116,236
0%/10.125% Sr. Disc. Nts.,
3/1/08(13) 300,000 173,250
10.50% Sr. Nts., 11/15/08(6) 250,000 244,375
- -----------------------------------------------------------------------
Shaw Communications, Inc., 8.54%
Debs., 9/30/27(CAD) 340,000 230,225
- -----------------------------------------------------------------------
TeleWest Communications plc, 0%/11%
Sr. Disc. Debs., 10/1/07(13) 200,000 168,000
- -----------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr.
Nts., 7/15/08 100,000 105,500
- -----------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 225,000 221,625
13.50% Sr. Unsec. Nts., 6/15/04 65,000 70,525
- -----------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts.,
4/15/08 300,000 308,250
---------------
11,265,879
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS - 2.3%
Arch Communications, Inc., 12.75%
Sr. Nts., 7/1/07(6) 100,000 100,500
- -----------------------------------------------------------------------
Celcaribe SA, 13.50% Sr. Sec. Nts.,
3/15/04 150,000 143,250
- -----------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14%
Sr. Disc. Nts., 10/1/07(13) 500,000 127,500
- -----------------------------------------------------------------------
Cellular Communications
International, Inc., 0%/9.50%
Bonds, 4/1/05(13)(XEU) 650,000 644,959
- -----------------------------------------------------------------------
Clearnet Communications, Inc.,
0%/14.75% Sr. Disc. Nts.,
12/15/05(13) 50,000 43,000
- -----------------------------------------------------------------------
Comunicacion Celular SA, 0%/14.125%
Sr. Unsec. Deferred Bonds,
3/1/05(4)(13) 350,000 245,000
- -----------------------------------------------------------------------
Crown Castle International Corp.,
0%/10.625% Sr. Unsec. Disc. Nts.,
11/15/07(13) 500,000 352,500
- -----------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr.
Deferred Coupon Nts., 4/15/08(13) 175,000 79,625
- -----------------------------------------------------------------------
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts., Series
B, 7/15/05(12)(13) 90,000 18,450
12% Cv. Sr. Sub. Nts., 2/15/01(12) 210,000 --
</TABLE>
95
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS (CONTINUED)
ICO Global Communications
(Holdings) Ltd., Units (each unit
consists of $1,000 principal amount
of 15% sr. nts., 8/1/05 and one
warrant to buy 19.85 shares of
common stock)(14) $ 100,000 $ 75,000
- -----------------------------------------------------------------------
Microcell Telecommunications, Inc.,
0%/11.125% Sr. Disc. Nts., Series
B, 10/15/07(13)(CAD) 300,000 108,227
- -----------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts.,
6/1/06(13) 210,000 149,625
- -----------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts.,
10/31/07(13) 345,000 210,450
0%/9.95% Sr. Disc. Nts.,
2/15/08(13) 245,000 146,388
0%/10.65% Sr. Disc. Nts.,
9/15/07(13) 480,000 308,400
- -----------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 365,000 255,500
11.625% Sr. Nts., Series A, 8/15/06 265,000 185,500
- -----------------------------------------------------------------------
Orange plc, 8% Sr. Nts., 8/1/08 250,000 253,750
- -----------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 300,000 310,500
- -----------------------------------------------------------------------
Orion Network Systems, Inc.,
0%/12.50% Sr. Disc. Nts.,
1/15/07(13) 550,000 346,500
- -----------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr.
Unsec. Disc. Nts., 3/15/08(13) 325,000 190,938
- -----------------------------------------------------------------------
Price Communications Cellular
Holdings, Inc., 11.25% Sr. Nts.,
8/15/08(15) 150,000 142,500
- -----------------------------------------------------------------------
Price Communications Wireless,
Inc.:
11.75% Sr. Sub. Nts., 7/15/07 275,000 291,500
9.125% Sr. Sec. Nts., 12/15/06(6) 250,000 253,750
- -----------------------------------------------------------------------
Real Time Data, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/13.50% sub. disc.
nts., 8/15/06 and one warrant to
purchase six ordinary
shares)(6)(13)(14) 300,000 139,500
- -----------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 300,000 302,250
- -----------------------------------------------------------------------
Satelites Mexicanos SA, 10.125% Sr.
Nts., 11/1/04 100,000 80,250
- -----------------------------------------------------------------------
SBA Communications Corp., 0%/12%
Sr. Unsec. Disc. Nts., 3/1/08(13) 700,000 406,000
- -----------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12%
Sr. Disc. Nts., 7/15/08(6)(13) 500,000 252,500
- -----------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum
Finance Corp., 0%/12.50% Sr. Disc.
Nts., 8/15/06(13) 65,000 58,825
- -----------------------------------------------------------------------
USA Mobile Communications, Inc. II:
9.50% Sr. Nts., 2/1/04 100,000 90,500
14% Sr. Nts., 11/1/04 200,000 207,000
---------------
6,520,137
- -----------------------------------------------------------------------
METALS/MINERALS - 0.7%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 220,000 229,900
- -----------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First
Mtg. Nts., 7/15/05 45,000 34,425
- -----------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr.
Sec. Nts., 4/1/01 45,000 48,263
- -----------------------------------------------------------------------
Centaur Mining & Exploration Ltd.,
11% Sr. Nts., 12/1/07 100,000 91,500
- -----------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25%
Sr. Sub. Nts., Series B, 5/15/08 500,000 506,250
</TABLE>
96
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
METALS/MINERALS (CONTINUED)
International Utility Structures,
Inc., 10.75% Sr. Sub. Nts., 2/1/08 $ 50,000 $ 47,250
- -----------------------------------------------------------------------
Keystone Consolidated Industries,
Inc., 9.625% Sr. Sec. Nts., 8/1/07 200,000 192,000
- -----------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75%
Sr. Disc. Nts., 7/15/08(13) 250,000 86,250
- -----------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts.,
12/1/07 745,000 696,575
---------------
1,932,413
- -----------------------------------------------------------------------
RETAIL - 0.5%
Boyds Collection Ltd., 9% Sr. Sub.
Nts., 5/15/08(6) 400,000 410,000
- -----------------------------------------------------------------------
Central Termica Guemes, 12% Bonds,
11/26/01(4) 100,000 56,875
- -----------------------------------------------------------------------
Eye Care Centers of America, Inc.,
9.125% Sr. Sub. Nts., 5/1/08(6) 300,000 286,500
- -----------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs.,
5/1/08 100,000 88,500
- -----------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Nts., 5/1/08 100,000 92,500
- -----------------------------------------------------------------------
Home Interiors & Gifts, Inc.,
10.125% Sr. Sub. Nts., 6/1/08(6) 225,000 223,875
- -----------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub.
Nts., 10/15/07 200,000 210,500
---------------
1,368,750
- -----------------------------------------------------------------------
SERVICE - 0.9%
Allied Waste North America, Inc.,
7.875% Sr. Nts., 1/1/09(6) 335,000 340,863
- -----------------------------------------------------------------------
Borg-Warner Security Corp., 9.625%
Sr. Sub. Nts., 3/15/07 100,000 108,500
- -----------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc.
Nts., 10/1/06(13) 100,000 82,500
- -----------------------------------------------------------------------
Fisher Scientific International,
Inc.:
9% Sr. Sub. Nts., 2/1/08(6) 105,000 105,525
9% Sr. Unsec. Sub. Nts., 2/1/08 600,000 603,000
- -----------------------------------------------------------------------
Great Lakes Dredge & Dock Corp.,
11.25% Sr. Sub. Nts., 8/15/08(6) 375,000 382,500
- -----------------------------------------------------------------------
Intermedia Communications, Inc.,
8.50% Sr. Nts., Series B, 1/15/08 250,000 238,750
- -----------------------------------------------------------------------
Kindercare Learning Centers, Inc.,
9.50% Sr. Sub. Nts., 2/15/09 50,000 50,000
- -----------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 150,000 158,250
9.625% Sr. Sub. Nts., 12/1/06 50,000 53,750
- -----------------------------------------------------------------------
Protection One Alarm Monitoring,
Inc., 6.75% Cv. Sr. Sub. Nts.,
9/15/03 125,000 128,281
- -----------------------------------------------------------------------
United Rentals, Inc., 9.25% Sr.
Sub. Nts., 1/15/09(6) 250,000 251,875
---------------
2,503,794
- -----------------------------------------------------------------------
TRANSPORTATION - 1.8%
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., Series B, 7/15/07 75,000 64,875
- -----------------------------------------------------------------------
Coach USA, Inc., 9.375% Sr. Sub.
Nts., Series B, 7/1/07 80,000 82,000
- -----------------------------------------------------------------------
Collins & Aikman Products Co.,
11.50% Sr. Unsec. Sub. Nts.,
4/15/06 300,000 313,500
- -----------------------------------------------------------------------
Federal-Mogul Corp., 7.875% Nts.,
7/1/10 300,000 307,741
- -----------------------------------------------------------------------
Hayes Wheels International, Inc.:
9.125% Sr. Sub. Nts., 7/15/07 100,000 104,250
11% Sr. Sub. Nts., 7/15/06 225,000 250,875
- -----------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr.
Sub. Nts., 8/1/05(6) 250,000 226,250
</TABLE>
97
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION (CONTINUED)
Key Plastics, Inc., 10.25% Sr. Sub.
Nts., Series B, 3/15/07 $ 300,000 $ 282,000
- -----------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts.,
7/15/06 200,000 221,000
- -----------------------------------------------------------------------
Millenium Seacarriers, Inc., Units
(each unit consists of $1,000
principal amount of 12% first
priority ship mtg. nts., 7/15/05
and one warrant to purchase five
shares of common stock)(6)(14) 250,000 201,250
- -----------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg.
Nts., 6/30/07(6) 275,000 243,375
Units (each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants)(6)(14) 150,000 135,750
- -----------------------------------------------------------------------
Oxford Automotive, Inc.:
10.125% Sr. Sub. Nts., 6/15/07(4) 400,000 418,000
10.125% Sr. Unsec. Sub. Nts.,
6/15/07 900,000 936,000
- -----------------------------------------------------------------------
Pycsa Panama SA, 10.28% Sr. Sec.
Bonds, 12/15/12(4) 200,000 156,500
- -----------------------------------------------------------------------
TFM SA de CV, 10.25% Sr. Nts.,
6/15/07 200,000 165,000
- -----------------------------------------------------------------------
Trans World Airlines, Inc., 11.50%
Sr. Sec. Nts., 12/15/04 580,000 490,100
- -----------------------------------------------------------------------
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(13) 300,000 289,500
- -----------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50%
Nts., Series 1993-A, 12/1/11(6) 192,214 116,770
---------------
5,004,736
- -----------------------------------------------------------------------
UTILITY - 0.4%
Beaver Valley II Funding Corp., 9%
Second Lease Obligation Bonds,
6/1/17 199,000 224,870
- -----------------------------------------------------------------------
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 150,000 157,688
- -----------------------------------------------------------------------
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 230,000 233,450
10.50% Sr. Nts., 5/15/06 100,000 110,750
- -----------------------------------------------------------------------
El Paso Electric Co., 9.40% First
Mtg. Sec. Nts., Series E, 5/1/11 250,000 290,625
---------------
1,017,383
---------------
Total Corporate Bonds and Notes
(Cost $80,568,681) 75,939,400
SHARES
- -----------------------------------------------------------------------
PREFERRED STOCKS - 2.2%
- -----------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable, Non-Vtg.(15) 2,638 66,609
- -----------------------------------------------------------------------
BankUnited Capital Trust, 10.25%
Gtd. Bonds, 12/31/26 100,000 100,250
- -----------------------------------------------------------------------
CGA Group Ltd., Preferred Stock,
Series A(4)(15) 19,110 477,750
- -----------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cum.
Cv.(6) 4,000 41,000
- -----------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum.
Exchangeable(15) 55 46,337
- -----------------------------------------------------------------------
Concentric Network Corp., 13.50%
Preferred, Series B(15) 212 181,790
- -----------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv.,
Series B, Non-Vtg. 46,000 644,000
- -----------------------------------------------------------------------
Crown American Realty Trust, 11%
Cum., Series A, Non-Vtg. 2,000 97,750
- -----------------------------------------------------------------------
Doane Products Co., 14.25%
Exchangeable, Non-Vtg.(4)(16) 5,000 191,875
- -----------------------------------------------------------------------
Dobson Communications Corp., 12.25%
Sr. Exchangeable(15) 218 194,565
</TABLE>
98
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
- -----------------------------------------------------------------------
e.spire Communications, Inc.,
12.75% Jr. Redeemable Preferred
Stock 163 $ 80,277
- -----------------------------------------------------------------------
Eagle-Picher Holdings, Inc., Cum.
Exchangeable, Series B, 3/1/08,
Non-Vtg. (16) 50 253,750
- -----------------------------------------------------------------------
Earthwatch, Inc., 12% Cum. Cv.,
Series C, Non-Vtg.(6)(15) 10,000 15,000
- -----------------------------------------------------------------------
EchoStar Communications Corp.,
12.125% Sr. Redeemable
Exchangeable, Series B,
Non-Vtg.(15) 144 167,400
- -----------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale
California, l2% Non-Cum.
Exchangeable Perpetual Preferred
Stock, Series A 20 465
- -----------------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable(15) 115 126,787
- -----------------------------------------------------------------------
Intermedia Communications, Inc.,
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series E,
Non-Vtg.(6) 2,100 38,325
- -----------------------------------------------------------------------
International Utility Structures,
Inc.:
13% Preferred(6)(15) 3 2,588
Units (each unit consists of $1,000
principal amount of 13% sr.
exchangeable preferred stock and
one warrant to purchase 30 shares
of common stock)(4)(15) 50 43,250
- -----------------------------------------------------------------------
Kelley Oil & Gas Corp., $2.625 Cv. 1,800 16,200
- -----------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25%
Cum. Exchangeable(15) 5,425 272,606
- -----------------------------------------------------------------------
Nextel Communications, Inc.,
11.125% Exchangeable, Series E(15) 109 98,373
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc., 14%
Cum. Exchangeable, Vtg.(15) 16,584 883,098
- -----------------------------------------------------------------------
Paxson Communications Corp., 13.25%
Cum. Jr. Exchangeable, Non-Vtg.(15) 21 179,025
- -----------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
Jr. Cv. Preferred Stock(16) 1,434 2,510
- -----------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable 8,000 772,000
9.20% Exchangeable, Series F 1,000 98,500
- -----------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum.
Sr., Series B, Non-Vtg.(15) 210 195,825
- -----------------------------------------------------------------------
SD Warren Co., 14% Cum.
Exchangeable, Series B,
Non-Vtg.(16) 9,000 461,250
- -----------------------------------------------------------------------
SF Holdings Group, Inc., 13.75%
Cum. Nts., Series B, 3/15/09,
Non-Vtg.(15) 10 43,250
- -----------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
14.25% Cum. Exchangeable,
Non-Vtg.(6)(15) 121 123,723
- -----------------------------------------------------------------------
Viatel, Inc., 10% Cv., Series A(15) 148 16,317
- -----------------------------------------------------------------------
Walden Residential Properties,
Inc.:
9.16% Cv., Series B 10,000 230,000
9.20% Preferred 1,000 21,750
---------------
Total Preferred Stocks (Cost
$8,171,525) 6,184,195
- -----------------------------------------------------------------------
COMMON STOCKS - 0.4%
- -----------------------------------------------------------------------
Celcaribe SA(6)(16) 24,390 51,829
- -----------------------------------------------------------------------
Coinstar, Inc.(16) 700 7,525
- -----------------------------------------------------------------------
Golden State Bancorp, Inc.(16) 2,404 39,966
</TABLE>
99
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------
Horizon Group Properties, Inc.(16) 358 $ 1,387
- -----------------------------------------------------------------------
Intermedia Communications, Inc.(16) 112 1,932
- -----------------------------------------------------------------------
MCI WorldCom, Inc.(16) 6,885 493,999
- -----------------------------------------------------------------------
Optel, Inc.(16) 210 2
- -----------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(16) 570 1,140
- -----------------------------------------------------------------------
Vail Resorts, Inc.(16) 15,500 341,000
---------------
Total Common Stocks (Cost $378,715) 938,780
UNITS
- -----------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.1%
- -----------------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(4) 1,500 15
- -----------------------------------------------------------------------
Argentina (Republic of) Wts., Exp.
12/99 1,065 4,659
- -----------------------------------------------------------------------
Central Bank of Nigeria Wts., Exp.
11/20 250 --
- -----------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(4) 16,000 4,800
- -----------------------------------------------------------------------
Clearnet Communications, Inc. Wts.,
Exp. 9/05 165 392
- -----------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp.
11/03 200 12,025
- -----------------------------------------------------------------------
Concentric Network Corp. Wts., Exp.
12/07(4) 100 14,891
- -----------------------------------------------------------------------
Covad Communications Group, Inc.
Wts., Exp. 3/08(4) 600 30,000
- -----------------------------------------------------------------------
Covergent Communications, Inc.
Wts., Exp. 4/08(4) 1,000 1,250
- -----------------------------------------------------------------------
FirstWorld Communications, Inc.
Wts., Exp. 4/08(4) 190 1,900
- -----------------------------------------------------------------------
Geotek Communications, Inc. Wts.,
Exp. 7/05(4) 7,500 75
- -----------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/05(4) 325 3,250
- -----------------------------------------------------------------------
Golden State Bancorp, Inc. Wts.,
Exp. 1/01 2,404 10,968
- -----------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(6) 2,621 26
Exp. 9/04(4) 2,800 3,150
Exp. 5/05(4) 2,181 218
- -----------------------------------------------------------------------
Hyperion Telecommunications, Inc.
Wts., Exp. 4/01 60 3,687
- -----------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp.
9/05(4) 825 11,307
- -----------------------------------------------------------------------
IHF Capital, Inc. Series I Wts.,
Exp. 11/99(4) 200 2
- -----------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp.
8/02 200 --
- -----------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts.,
Exp. 4/08(4) 725 1,903
- -----------------------------------------------------------------------
Long Distance International, Inc.
Wts., 4/08(4) 200 500
- -----------------------------------------------------------------------
Mexican Value Rts., Exp. 6/03 1,100,000 --
- -----------------------------------------------------------------------
Microcell Telecommunications, Inc.
Wts., Exp. 6/06(4) 600 10,875
- -----------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts.,
Exp. 7/05(4) 250 1,563
- -----------------------------------------------------------------------
Occidente y Caribe Celular SA Wts.,
Exp. 3/04(4) 800 6,100
- -----------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07(4) 150 1,875
- -----------------------------------------------------------------------
PLD Telekom, Inc. Wts., Exp.
6/06(4) 300 30
- -----------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07(4) 3,096 147,834
</TABLE>
100
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
UNITS NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES
(CONTINUED)
- -----------------------------------------------------------------------
United International Holdings, Inc.
Wts., Exp. 11/99(4) 200 $ 3,025
- -----------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/05(4) 1,500 12,000
---------------
Total Rights, Warrants and
Certificates (Cost $47,541) 288,320
PRINCIPAL
AMOUNT(1)
- -----------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 6.1%
- -----------------------------------------------------------------------
Bankers Trust/Bear Stearns High
Yield Composite Index Linked Nts.,
8.55%, 5/4/99 $ 1,000,000 959,570
- -----------------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch), Lehman High
Yield Index Nts., 8.50%, 3/8/99 1,000,000 942,500
- -----------------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts.:
8.50%, 4/9/99 1,000,000 929,380
9%, 2/16/99 1,600,000 1,474,306
- -----------------------------------------------------------------------
Beta Finance Corp., Japanese Yen
Linked Nts., 2.11%, 9/10/99 1,520,000 1,639,624
- -----------------------------------------------------------------------
Credit Suisse First Boston Corp.
(New York Branch), Russian OFZ
Linked Nts., 15%,
2/23/00(4)(12)(RUR) 8,008,000 146,154
- -----------------------------------------------------------------------
Credit Suisse First Boston Corp.
(New York Branch), Turkish Lira
Currency Linked Nts., 92.556%,
2/2/99(5)(TRL) 18,302,400,000 692,571
- -----------------------------------------------------------------------
Deutsche Bank AG, Turkish Lira O/N
Rate Linked Nts., 91.727%,
2/4/99(5)(TRL) 19,564,000,000 696,165
- -----------------------------------------------------------------------
Deutsche Morgan Grenfell, Russian
Federal Loan Floating Rate Linked
Nts.:
5.20%, 10/25/00(4)(12) 240,000 2,400
5.12%, 2/23/00(4)(12) 240,000 2,400
- -----------------------------------------------------------------------
Deutsche Morgan Grenfell, Russian
OFZ Linked Nts., 14%,
9/27/00(4)(12)(RUR) 3,610,000 33,504
- -----------------------------------------------------------------------
Goldman, Sachs & Co. Argentina
Local Market Securities Trust,
11.30%, 4/1/00 representing debt of
Argentina (Republic of) Bonos del
Tesoro Bonds, Series 10, 11.30%,
4/1/00 and an interest rate swap
between Goldman Sachs and the
Trust(4) 78,260 76,649
- -----------------------------------------------------------------------
J.P. Morgan & Co., Inc., The
Emerging Markets Bond Plus Index
Linked Nts., 9.50%, 7/16/99(17) 2,700,000 2,229,034
- -----------------------------------------------------------------------
Korea Development Bank, Industrial
Bank Finance Linked Nts., Zero
Coupon, 3/5/99 470,000 514,462
- -----------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
Chilean Peso/Japanese Yen Linked
Nts., 18.50%, 1/28/99 600,000 596,520
- -----------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
Greek Drachma/European Currency
Unit Linked Nts., Zero Coupon,
3/26/99 280,000 320,684
- -----------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
Greek Drachma/Swiss Franc Linked
Nts., Zero Coupon, 3/31/99 175,000 202,143
- -----------------------------------------------------------------------
Morgan Guaranty Trust Co. of New
York, The Emerging Markets Bond
Index Linked Nts.:
9.50%, 5/7/99(17) 1,300,000 1,303,719
9.50%, 8/10/99(17) 1,400,000 1,215,850
</TABLE>
101
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
STRUCTURED INSTRUMENTS (CONTINUED)
- -----------------------------------------------------------------------
Salomon Smith Barney, Inc., Brazil
Credit Linked Nts., 6%, 4/2/03 $ 620,000 $ 317,440
- -----------------------------------------------------------------------
Salomon Smith Barney, Inc., United
Mexican States 2016 Linked Nts.,
14.076%, 3/18/99 749,000 747,247
- -----------------------------------------------------------------------
Shoshone Partners Loan Trust Sr.
Nts., 6.97%, 4/28/02 (representing
a basket of reference loans and a
total return swap between Chase
Manhattan Bank and the Trust)(4)(5) 750,000 672,606
- -----------------------------------------------------------------------
Standard Chartered Bank,
Philippines Peso/Japanese Yen
Currency Linked Nts., 16.45%,
1/21/99 116,000 126,858
- -----------------------------------------------------------------------
Standard Chartered Bank,
Philippines Peso/Japanese Yen
Linked Nts.:
20.45%, 2/9/99 240,000 237,360
21.83%, 1/19/99 270,000 219,888
- -----------------------------------------------------------------------
Standard Chartered Bank,
Philippines Peso/Singapore Dollar
Linked Nts.:
18.70%, 3/8/99 150,000 149,340
18.90%, 3/4/99 460,000 458,666
---------------
Total Structured Instruments (Cost
$19,421,140) 16,907,040
</TABLE>
<TABLE>
<CAPTION>
DATE STRIKE CONTRACTS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED - 0.0%
- --------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%,
11/15/27 Call Opt.(4) (Cost
$65,234) 2/99 111.375%
2,500 52,344
- --------------------------------------------------------------------------------------
PUT OPTIONS PURCHASED - 0.0%
- --------------------------------------------------------------------------------------
Japanese Yen Put Opt. 1/99 121.00(JPY)
146,410,000 1,025
- --------------------------------------------------------------------------------------
Japanese Yen Put Opt.(4) 2/99 125(JPY)
78,000,000 1,404
- --------------------------------------------------------------------------------------
Mexican Peso Put Opt.(4) 2/99 10.75(MXP)
13,100,000 5,240
- ---------------
Total Put Options Purchased (Cost
$55,514)
7,669
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(1)
- -----------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 2.2%
- -----------------------------------------------------------------------
Repurchase agreement with
PaineWebber, Inc., 4.85%, dated
12/31/98, to be repurchased at
$6,203,341 on 1/4/99,
collateralized by U.S. Treasury
Nts., 4.625%--5.875%,
12/31/00--11/30/01, with a value of
$6,335,417 (Cost $6,200,000) $ 6,200,000 6,200,000
- -----------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$282,454,523) 98.0% 273,522,777
- -----------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.0 5,677,619
------------ ---------------
NET ASSETS 100.0% $ 279,200,396
------------ ---------------
------------ ---------------
</TABLE>
102
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
1. Principal amount is reported in U.S. Dollars, except for those denoted in
the
following currencies:
ARP - Argentine Peso
AUD - Australian Dollar
CAD - Canadian Dollar
DEM - German Mark
DKK - Danish Krone
ESP - Spanish Peseta
FIM - Finnish Markka
FRF - French Franc
GBP - British Pound Sterling
GRD - Greek Drachma
HUF - Hungarian Forint
IDR - Indonesian Rupiah
ITL - Italian Lira
JPY - Japanese Yen
MXP - Mexican Peso
NZD - New Zealand Dollar
PLZ - Polish Zloty
RUR - Russian Ruble
TRL - Turkish Lira
XEU - European Currency Units
2. Interest-Only Strips represent the right to receive the monthly interest
payments 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). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
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. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
4. Identifies issues considered to be illiquid or restricted -- See applicable
note of Notes to Financial Statements.
5. Represents the current interest rate for a variable rate security.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $10,081,861 or 3.61% of the Fund's net
assets as of December 31, 1998.
7. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See applicable note of Notes to
Financial Statements.
8. Securities with an aggregate market value of $672,188 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See applicable note of Notes to Financial Statements.
9. A sufficient amount of liquid assets has been designated to cover
outstanding
written options, as follows:
<TABLE>
<CAPTION>
CONTRACTS/PRINCIPAL EXPIRATION EXERCISE
PREMIUM MARKET VALUE
SUBJECT TO CALL DATE PRICE
RECEIVED NOTE 1
<S> <C> <C> <C>
<C> <C>
- --------------------------------------------------------------------------------------------
Japanese Yen Call Option 134,503,600 1/99 111(JPY)
$10,236 $10,357
- --------------------------------------------------------------------------------------------
Mexican Peso Call Option 13,100,000 2/99 10(MXP)
9,140 3,930
- --------------------------------------------------------------------------------------------
U.S. Treasury Bonds,
6.125%, 11/15/27 Call
Opt. 2,500,000 2/99 122%
5,859 1,758
- ------- ------
$25,235 $16,045
- ------- ------
- ------- ------
</TABLE>
10. For zero coupon bonds, the interest rate shown is the effective yield on
the
date of purchase.
11. Represents the current interest rate for an increasing rate security.
12. Non-income producing -- issuer is in default.
13. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable
interest rate at a designated future date.
103
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
14. Units may be comprised of several components, such as debt and equity
and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
15. Interest or dividend is paid in kind.
16. Non-income producing security.
17. Security is linked to the Emerging Markets Bond Index (EMBI). The EMBI
tracks total returns for currency denominated debt instruments of the emerging
markets. Countries covered are Argentina, Brazil, Bulgaria, Ecuador, Mexico,
Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia and Venezuela.
See accompanying Notes to Financial Statements.
104
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 91.6%
- ----------------------------------------------------------------
BASIC MATERIALS - 0.6%
- ----------------------------------------------------------------
CHEMICALS - 0.6%
Delta & Pine Land Co. 22,500 $ 832,500
- ----------------------------------------------------------------
IMC Global, Inc. 50,000 1,068,750
---------------
1,901,250
- ----------------------------------------------------------------
CAPITAL GOODS - 11.9%
- ----------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.8%
CommScope, Inc.(1) 67,500 1,134,844
- ----------------------------------------------------------------
Etec Systems, Inc.(1) 2,500 100,000
- ----------------------------------------------------------------
Raychem Corp. 40,000 1,292,500
---------------
2,527,344
- ----------------------------------------------------------------
INDUSTRIAL SERVICES - 7.2%
Allied Waste Industries, Inc.
(New)(1) 235,000 5,551,875
- ----------------------------------------------------------------
Coflexip SA, Sponsored ADR 60,000 1,927,500
- ----------------------------------------------------------------
Republic Services, Inc., Cl. A(1) 185,000 3,410,937
- ----------------------------------------------------------------
United Rentals, Inc.(1) 25,000 828,125
- ----------------------------------------------------------------
Waste Management, Inc. (New) 227,500 10,607,187
---------------
22,325,624
- ----------------------------------------------------------------
MANUFACTURING - 3.9%
American Standard Cos., Inc.(1) 75,000 2,700,000
- ----------------------------------------------------------------
Halter Marine Group, Inc.(1) 360,000 1,755,000
- ----------------------------------------------------------------
MascoTech, Inc. 30,000 513,750
- ----------------------------------------------------------------
Mettler-Toledo International,
Inc.(1) 220,000 6,173,750
- ----------------------------------------------------------------
Owens-Illinois, Inc.(1) 22,500 689,062
- ----------------------------------------------------------------
Tyco International Ltd. 2,500 188,594
---------------
12,020,156
- ----------------------------------------------------------------
CONSUMER CYCLICALS - 22.8%
- ----------------------------------------------------------------
AUTOS & HOUSING - 2.5%
Champion Enterprises, Inc.(1) 32,500 889,687
- ----------------------------------------------------------------
General Motors Corp. 17,500 1,252,344
- ----------------------------------------------------------------
Lear Corp.(1) 42,500 1,636,250
- ----------------------------------------------------------------
Lennar Corp. 115,000 2,903,750
- ----------------------------------------------------------------
Owens Corning 27,500 974,531
---------------
7,656,562
- ----------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.7%
Crestline Capital Corp.(1) 8,000 123,000
- ----------------------------------------------------------------
Host Marriott Corp.(1) 80,000 1,105,000
- ----------------------------------------------------------------
Mirage Resorts, Inc.(1) 95,000 1,419,062
- ----------------------------------------------------------------
Rio Hotel & Casino, Inc.(1) 155,000 2,460,625
---------------
5,107,687
</TABLE>
105
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
MEDIA - 9.0%
Capstar Broadcasting Corp., Cl.
A(1) 210,000 $ 4,803,750
- ----------------------------------------------------------------
CBS Corp. 205,000 6,713,750
- ----------------------------------------------------------------
Emmis Communications Corp., Cl.
A(1) 77,500 3,361,562
- ----------------------------------------------------------------
Fox Entertainment Group, Inc., A
Shares(1) 171,500 4,319,656
- ----------------------------------------------------------------
Infinity Broadcasting Corp., Cl.
A(1) 70,300 1,924,462
- ----------------------------------------------------------------
Jacor Communications, Inc.(1) 37,500 2,414,062
- ----------------------------------------------------------------
RCN Corp.(1) 232,500 4,112,344
---------------
27,649,586
- ----------------------------------------------------------------
RETAIL: GENERAL - 2.0%
Federated Department Stores,
Inc.(1) 87,500 3,811,719
- ----------------------------------------------------------------
Fred Meyer, Inc.(1) 41,000 2,470,250
---------------
6,281,969
- ----------------------------------------------------------------
RETAIL: SPECIALTY - 7.6%
AutoZone, Inc.(1) 95,000 3,129,062
- ----------------------------------------------------------------
CSK Auto Corp.(1) 475,000 12,676,562
- ----------------------------------------------------------------
Republic Industries, Inc.(1) 525,000 7,743,750
---------------
23,549,374
- ----------------------------------------------------------------
CONSUMER STAPLES - 16.5%
- ----------------------------------------------------------------
BEVERAGES - 0.9%
Anheuser-Busch Cos., Inc.(2) 41,000 2,690,625
- ----------------------------------------------------------------
CONSUMER SERVICES - 2.9%
Budget Group, Inc., Cl. A(1) 225,000 3,571,875
- ----------------------------------------------------------------
Intermedia Communications, Inc.(1) 11,338 195,580
- ----------------------------------------------------------------
Intermedia Communications,
Inc.(1)(3) 292 4,030
- ----------------------------------------------------------------
United Road Services, Inc.(1) 277,500 5,099,062
---------------
8,870,547
- ----------------------------------------------------------------
ENTERTAINMENT - 8.0%
Brinker International, Inc.(1) 85,000 2,454,375
- ----------------------------------------------------------------
News Corp. Ltd., Sponsored ADR,
Preference 107,500 2,653,906
- ----------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(1) 225,000 12,346,875
- ----------------------------------------------------------------
Time Warner, Inc.(2) 70,000 4,344,375
- ----------------------------------------------------------------
Viacom, Inc.(1)(2) 40,000 2,960,000
---------------
24,759,531
- ----------------------------------------------------------------
FOOD - 1.7%
RJR Nabisco Holdings Corp. 130,000 3,859,375
- ----------------------------------------------------------------
Unilever NV(2) 15,000 1,244,062
---------------
5,103,437
- ----------------------------------------------------------------
HOUSEHOLD GOODS - 0.7%
Fort James Corp. 50,000 2,000,000
- ----------------------------------------------------------------
TOBACCO - 2.3%
Philip Morris Cos., Inc. 130,000 6,955,000
</TABLE>
106
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
ENERGY - 2.1%
- ----------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 2.1%
BJ Services Co.(1) 45,000 $ 703,125
- ----------------------------------------------------------------
Cooper Cameron Corp.(1) 45,000 1,102,500
- ----------------------------------------------------------------
Marine Drilling Cos., Inc.(1) 40,000 307,500
- ----------------------------------------------------------------
Santa Fe International Corp. 80,000 1,170,000
- ----------------------------------------------------------------
Stolt Comex Seaway SA, ADR(1) 300,000 1,687,500
- ----------------------------------------------------------------
Transocean Offshore, Inc. 27,500 737,344
- ----------------------------------------------------------------
Weatherford International, Inc.
(New)(1) 35,000 678,125
---------------
6,386,094
- ----------------------------------------------------------------
FINANCIAL - 19.2%
- ----------------------------------------------------------------
BANKS - 9.2%
Bank One Corp. 42,500 2,170,156
- ----------------------------------------------------------------
BankAmerica Corp. (New) 42,500 2,555,313
- ----------------------------------------------------------------
Chase Manhattan Corp. (New) 90,000 6,125,625
- ----------------------------------------------------------------
Commercial Federal Corp. 165,000 3,825,938
- ----------------------------------------------------------------
Compass Bancshares, Inc. 37,500 1,427,344
- ----------------------------------------------------------------
First Union Corp. 72,500 4,408,906
- ----------------------------------------------------------------
Fleet Financial Group, Inc. 50,000 2,234,375
- ----------------------------------------------------------------
Hubco, Inc. 57,500 1,732,188
- ----------------------------------------------------------------
KeyCorp 20,000 640,000
- ----------------------------------------------------------------
Prosperity Bancshares, Inc.(1) 103,100 1,275,863
- ----------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR 60,000 866,250
- ----------------------------------------------------------------
Union Planters Corp. 25,000 1,132,813
---------------
28,394,771
- ----------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.2%
American Express Co.(2) 15,000 1,533,750
- ----------------------------------------------------------------
C.I.T. Group, Inc., Cl. A 78,000 2,481,375
- ----------------------------------------------------------------
Citigroup, Inc. 57,750 2,858,625
- ----------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 20,000 1,420,000
- ----------------------------------------------------------------
UniCapital Corp.(1) 210,000 1,548,750
---------------
9,842,500
- ----------------------------------------------------------------
INSURANCE - 5.7%
Allstate Corp.(2) 80,000 3,090,000
- ----------------------------------------------------------------
Arm Financial Group, Inc., Cl. A 50,000 1,109,375
- ----------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 285,000 11,097,188
- ----------------------------------------------------------------
Scottish Annuity & Life Holdings
Ltd.(1) 155,000 2,131,250
---------------
17,427,813
- ----------------------------------------------------------------
SAVINGS & LOANS - 1.1%
Sovereign Bancorp, Inc. 150,000 2,137,500
</TABLE>
107
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
SAVINGS & LOANS (CONTINUED)
Washington Mutual, Inc. 30,000 $ 1,145,625
---------------
3,283,125
- ----------------------------------------------------------------
HEALTHCARE - 1.0%
- ----------------------------------------------------------------
HEALTHCARE/DRUGS - 1.0%
BioChem Pharma, Inc.(1) 50,000 1,431,250
- ----------------------------------------------------------------
Centocor, Inc.(1)(2) 37,500 1,692,188
---------------
3,123,438
- ----------------------------------------------------------------
TECHNOLOGY - 12.0%
- ----------------------------------------------------------------
COMPUTER HARDWARE - 1.5%
Compaq Computer Corp. 7,500 314,531
- ----------------------------------------------------------------
International Business Machines
Corp.(2) 20,000 3,695,000
- ----------------------------------------------------------------
Seagate Technology, Inc.(1)(2) 20,000 605,000
---------------
4,614,531
- ----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 6.8%
First Data Corp. 110,000 3,485,625
- ----------------------------------------------------------------
Microsoft Corp.(1) 2,500 346,719
- ----------------------------------------------------------------
Network Associates, Inc.(1) 10,000 662,500
- ----------------------------------------------------------------
PLATINUM Technology, Inc.(1) 315,000 6,024,375
- ----------------------------------------------------------------
Structural Dynamics Research
Corp.(1) 397,500 7,900,313
- ----------------------------------------------------------------
Unigraphics Solutions, Inc.(1) 185,000 2,682,500
---------------
21,102,032
- ----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.3%
Tellabs, Inc.(1)(2) 15,000 1,028,438
- ----------------------------------------------------------------
ELECTRONICS - 3.4%
Waters Corp.(1) 120,000 10,470,000
- ----------------------------------------------------------------
TELECOMMUNICATIONS - 4.2%
- ----------------------------------------------------------------
TELEPHONE UTILITIES - 0.0%
Embratel Participacoes SA, ADR(1) 750 10,453
- ----------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
4.2%
MCI WorldCom, Inc.(1) 95,000 6,816,250
- ----------------------------------------------------------------
Newbridge Networks Corp.(1) 10,000 303,750
- ----------------------------------------------------------------
Qwest Communications International,
Inc.(1) 90,000 4,500,000
- ----------------------------------------------------------------
Telecomunicacoes Brasileiras SA,
Sponsored ADR(1) 19,500 1,417,406
---------------
13,037,406
- ----------------------------------------------------------------
TRANSPORTATION - 1.4%
- ----------------------------------------------------------------
AIR TRANSPORTATION - 1.4%
AMR Corp.(1) 27,500 1,632,813
- ----------------------------------------------------------------
Continental Airlines, Inc., Cl.
B(1) 25,339 848,857
- ----------------------------------------------------------------
Delta Air Lines, Inc. 35,000 1,820,000
---------------
4,301,670
---------------
Total Common Stocks (Cost
$257,894,535) 282,420,963
</TABLE>
108
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- ----------------------------------------------------------------
PREFERRED STOCKS - 3.5%
- ----------------------------------------------------------------
Evergreen Media Corp., 6% Cv.
Preferred(4) 20,000 $ 1,867,500
- ----------------------------------------------------------------
Host Marriott Corp., 6.75%
Preferred Stock 17,500 708,750
- ----------------------------------------------------------------
ICG Communications, Inc.:
6.75% Cv. Preferred Stock(4) 37,500 1,964,063
6.75% Cv. Preferred Stock 35,000 1,833,125
- ----------------------------------------------------------------
Intermedia Communications, Inc.:
7% Cv. Preferred Stock(4) 32,500 463,125
7% Cv. Preferred Stock(4) 40,000 1,000,000
- ----------------------------------------------------------------
Intermedia Communications, Inc.:
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series D, Non-Vtg. 30,000 750,000
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series E,
Non-Vtg.(4) 2,500 45,625
- ----------------------------------------------------------------
Monsanto Co., 6.50% Cv.(1) 25,000 1,225,000
- ----------------------------------------------------------------
Nextel Communications, Inc.,
Cv.(1)(4) 3,900 989,625
---------------
Total Preferred Stocks (Cost
$11,167,364) 10,846,813
- ----------------------------------------------------------------
OTHER SECURITIES - 3.5%
- ----------------------------------------------------------------
Automatic Commission Exchange
Security Trust II, 6.50% Cv.
Preferred (exchangeable to common
stock of Republic Industries, Inc.,
Trust Automatic Common Exchange
Securities effective 5/15/00) 125,700 1,916,925
- ----------------------------------------------------------------
Continental Airlines Finance Trust,
8.50% Cv. Trust Originated
Preferred Securities 5,000 348,125
- ----------------------------------------------------------------
Host Marriott Financial Trust,
6.75% Cv. Preferred Stock(4) 10,000 405,000
- ----------------------------------------------------------------
Houston Industries, Inc., 7%
Automatic Common Exchange
Securities, Exchangeable for Time
Warner, Inc. Common Stock, 7/1/00 25,000 2,659,375
- ----------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25%
Structured Yield Product
Exchangeable for Stock of IMC
Global, Inc. 17,500 415,625
- ----------------------------------------------------------------
Qwest Trends Trust, $43 Cv.(1)(4) 16,700 780,725
- ----------------------------------------------------------------
United Rental Trust I, 6.50% Cv.
Quarterly Income Preferred
Securities(4) 85,000 4,090,625
---------------
Total Other Securities (Cost
$10,045,078) 10,616,400
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND
NOTES - 1.4%
- ----------------------------------------------------------------
Continental Airlines, Inc.:
6.75% Cv. Sub. Nts., 4/15/06(4) $ 350,000 426,125
6.75% Cv. Sub. Nts., 4/15/06 150,000 182,625
- ----------------------------------------------------------------
PLATINUM Technology, Inc.:
6.25% Cv. Sub. Nts., 12/15/02(4) 2,000,000 1,795,000
6.25%. Cv. Unsec. Sub. Nts.,
12/15/02 1,500,000 1,346,250
6.75% Cv. Sub. Nts., 11/15/01 500,000 683,750
---------------
Total Convertible Corporate Bonds
and Notes (Cost $4,266,795) 4,433,750
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$283,373,772) 100.0% 308,317,926
- ----------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.0 35,388
---------- ---------------
NET ASSETS 100.0% $ 308,353,314
---------- ---------------
---------- ---------------
</TABLE>
109
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover
outstanding
written call and put options, as follows:
<TABLE>
<CAPTION>
SHARES
SUBJECT TO EXPIRATION EXERCISE
PREMIUM MARKET VALUE
CALL DATE PRICE
RECEIVED NOTE 1
<S> <C> <C> <C>
<C> <C>
- -----------------------------------------------------------------------------------------------
Allstate Corp. 30,000 1/99 $ 55.00 $
49,849 $ 1,875
- -----------------------------------------------------------------------------------------------
American Express Co. 7,500 1/99 110.00
11,337 6,563
- -----------------------------------------------------------------------------------------------
American Express Co. 7,500 1/99 115.00
10,712 2,344
- -----------------------------------------------------------------------------------------------
Anheuser-Busch Cos. 7,500 1/99 65.00
11,025 12,188
- -----------------------------------------------------------------------------------------------
Centocor, Inc. 10,000 1/99 45.00
41,574 18,750
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 5,000 4/99 160.00
88,600 155,000
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 4,500 4/99 155.00
89,862 159,188
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 5,500 1/99 160.00
59,646 137,500
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 5,000 1/99 150.00
46,723 171,250
- -----------------------------------------------------------------------------------------------
Seagate Technology, Inc. 10,000 1/99 32.50
22,199 5,623
- -----------------------------------------------------------------------------------------------
Tellabs, Inc. 15,000 3/99 65.00
110,171 135,000
- -----------------------------------------------------------------------------------------------
Time Warner, Inc. 10,000 1/99 55.00
16,724 80,000
- -----------------------------------------------------------------------------------------------
Unilever NV 15,000 1/99 85.00
24,862 33,750
- -----------------------------------------------------------------------------------------------
Viacom, Inc. 10,000 1/99 70.00
28,449 48,750
$
611,733 $967,781
</TABLE>
3. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $13,827,413 or 4.48% of the Fund's net
assets as of December 31, 1998.
See accompanying Notes to Financial Statements.
110
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 85.0%
- --------------------------------------------------------------------------------
BASIC MATERIALS - 1.5%
- --------------------------------------------------------------------------------
PAPER - 1.5%
Daisytek International Corp.(1) 800 $
15,200
- --------------------------------------------------------------------------------
CAPITAL GOODS - 13.1%
- --------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 11.9%
Casella Waste Systems, Inc., Cl. A(1) 400
14,850
- --------------------------------------------------------------------------------
Eastern Environmental Services, Inc.(1) 400
11,850
- --------------------------------------------------------------------------------
Group Maintenance America Corp.(1) 500
6,062
- --------------------------------------------------------------------------------
Kendle International, Inc.(1) 400
9,350
- --------------------------------------------------------------------------------
Maximus, Inc.(1) 600
22,200
- --------------------------------------------------------------------------------
Metzler Group, Inc.(1) 400
19,475
- --------------------------------------------------------------------------------
Service Experts, Inc.(1) 200
5,850
- --------------------------------------------------------------------------------
Stericycle, Inc.(1) 400
6,450
- --------------------------------------------------------------------------------
Tetra Tech, Inc.(1) 600
16,237
- --------------------------------------------------------------------------------
United Rentals, Inc.(1) 192
6,360
- --------
118,684
- --------------------------------------------------------------------------------
MANUFACTURING - 1.2%
Zebra Technologies Corp., Cl. A(1) 400
11,500
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS - 13.7%
- --------------------------------------------------------------------------------
AUTOS & HOUSING - 2.3%
Fairfield Communities, Inc.(1) 1,000
11,062
- --------------------------------------------------------------------------------
Kroll-O'Gara Co. (The)(1) 300
11,831
- --------
22,893
- --------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.8%
Handleman Co.(1) 2,000
28,125
- --------------------------------------------------------------------------------
MEDIA - 1.0%
Penton Media, Inc.(1) 500
10,125
- --------------------------------------------------------------------------------
RETAIL: GENERAL - 1.5%
Cutter & Buck, Inc.(1) 400
14,900
- --------------------------------------------------------------------------------
RETAIL: SPECIALTY - 6.1%
Chico's Fas, Inc.(1) 800
18,700
- --------------------------------------------------------------------------------
O'Reilly Automotive, Inc.(1) 400
18,900
- --------------------------------------------------------------------------------
School Specialty, Inc.(1) 1,100
23,512
- --------
61,112
- --------------------------------------------------------------------------------
CONSUMER STAPLES - 18.9%
- --------------------------------------------------------------------------------
CONSUMER SERVICES - 10.0%
Applied Analytical Industries, Inc.(1) 1,200
20,850
- --------------------------------------------------------------------------------
Boron, LePore & Associates, Inc.(1) 300
10,350
- --------------------------------------------------------------------------------
Core Laboratories NV(1) 300
5,737
</TABLE>
111
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER SERVICES (CONTINUED)
Cornell Corrections, Inc.(1) 1,000 $
19,000
- --------------------------------------------------------------------------------
CORT Business Services Corp.(1) 500
12,125
- --------------------------------------------------------------------------------
Getty Images, Inc.(1) 600
10,312
- --------------------------------------------------------------------------------
Rent-Way, Inc.(1) 200
4,862
- --------------------------------------------------------------------------------
Renters Choice, Inc.(1) 500
15,875
- --------
99,111
- --------------------------------------------------------------------------------
EDUCATION - 6.3%
Career Education Corp.(1) 500
15,000
- --------------------------------------------------------------------------------
Education Management Corp.(1) 1,000
23,625
- --------------------------------------------------------------------------------
ITT Educational Services, Inc.(1) 400
13,600
- --------------------------------------------------------------------------------
Strayer Education, Inc. 300
10,575
- --------
62,800
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.6%
Cinar Films, Inc., Cl. B(1) 1,000
25,375
- --------------------------------------------------------------------------------
ENERGY - 0.4%
- --------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.4%
Cross Timbers Oil Co. 500
3,750
- --------------------------------------------------------------------------------
FINANCIAL - 5.8%
- --------------------------------------------------------------------------------
BANKS - 1.2%
Investors Financial Services Corp. 200
11,925
- --------------------------------------------------------------------------------
INSURANCE - 4.6%
Advance Paradigm, Inc.(1) 300
10,500
- --------------------------------------------------------------------------------
Annuity & Life RE Holdings Ltd. 500
13,500
- --------------------------------------------------------------------------------
Medical Assurance, Inc. 660
21,821
- --------
45,821
- --------------------------------------------------------------------------------
HEALTHCARE - 11.8%
- --------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 3.1%
Serologicals Corp.(1) 800
24,000
- --------------------------------------------------------------------------------
Ventana Medical Systems, Inc.(1) 300
6,488
- --------
30,488
- --------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 8.7%
Covance, Inc.(1) 500
14,563
- --------------------------------------------------------------------------------
Hanger Orthopedic Group, Inc.(1) 700
15,750
- --------------------------------------------------------------------------------
Parexel International Corp.(1) 300
7,500
- --------------------------------------------------------------------------------
Pharmaceutical Product Development, Inc.(1) 800
24,050
- --------------------------------------------------------------------------------
Renal Care Group, Inc.(1) 600
17,288
- --------------------------------------------------------------------------------
VWR Scientific Products Corp.(1) 400
6,950
- --------
86,101
- --------------------------------------------------------------------------------
TECHNOLOGY - 19.8%
- --------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.1%
SCM Microsystems, Inc.(1) 300
21,319
</TABLE>
112
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES - 17.0%
Aspen Technologies, Inc.(1) 300 $
4,350
- --------------------------------------------------------------------------------
Aware, Inc.(1) 1,000
27,188
- --------------------------------------------------------------------------------
Brio Technology, Inc.(1) 1,000
17,688
- --------------------------------------------------------------------------------
Concord Communications, Inc.(1) 200
11,350
- --------------------------------------------------------------------------------
Documentum, Inc.(1) 400
21,375
- --------------------------------------------------------------------------------
Engineering Animation, Inc.(1) 100
5,400
- --------------------------------------------------------------------------------
Medical Manager Corp.(1) 400
12,550
- --------------------------------------------------------------------------------
New Era of Networks, Inc.(1) 200
8,800
- --------------------------------------------------------------------------------
Phoenix International Ltd.(1) 1,000
14,750
- --------------------------------------------------------------------------------
Segue Software, Inc.(1) 500
10,125
- --------------------------------------------------------------------------------
Software AG Systems, Inc.(1) 600
10,875
- --------------------------------------------------------------------------------
SPR, Inc.(1) 1,000
17,250
- --------------------------------------------------------------------------------
Visio Corp.(1) 200
7,313
- --------
169,014
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.7%
Pittway Corp., Cl. A 200
6,613
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $739,885) 85.0%
844,856
- --------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 15.0
149,448
-------
- --------
NET ASSETS 100.0%
$994,304
-------
- --------
-------
- --------
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
113
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER
OPPENHEIMER AGGRESSIVE OPPENHEIMER
MONEY HIGH INCOME
BOND GROWTH GROWTH
FUND FUND
FUND FUND FUND
<S> <C> <C>
<C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost *)
(including repurchase agreements **) -
see accompanying statements $ 151,269,014 $ 320,913,385 $
688,013,848 $ 1,079,562,636 $ 767,477,940
- -------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts -
see applicable note --
50,410 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash 152,071
1,918,277 178,353 96,737 119,623
- -------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 445,414 6,408,876
8,526,057 226,583 298,939
Daily variation on futures contracts -
see applicable note --
7,650 2,108 -- --
Shares of beneficial interest sold 638,924 226,088
1,613,778 748,053 3,312,716
Investments sold -- 1,426,850
5,246,858 1,182,183 469,735
- -------------------------------------------------------------------------------------------------------------------------
Other 5,225
6,817 9,388 11,926 9,025
------------- -------------
- ------------- --------------- -------------
Total assets 152,510,648 330,958,353
703,590,390 1,081,828,118 771,687,978
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Options written, at value (premiums
received ***) - see accompanying
statements and notes --
- -- -- 32,775 --
- -------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note --
2,014 14,916 -- --
- -------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends 285,552
- -- -- -- --
Custodian fees 1,969
9,396 11,345 12,130 8,092
Registration and filing fees 9,020
14,555 32,077 30,980 52,813
Shareholder reports 21,635
41,202 58,125 74,868 49,376
Legal and auditing fees 8,787
14,151 14,192 18,160 13,773
Investments purchased (including those
purchased on a when-issued basis****) -
see applicable note -- --
47,434,432 -- --
Shares of beneficial interest redeemed 380,917
2,311,170 392,473 3,694,484 3,010,700
Transfer and shareholder servicing agent
fees 2,905
2,317 2,303 2,905 2,483
Other 1,063
891 87,828 1,656 1,045
------------- -------------
- ------------- --------------- -------------
Total liabilities 711,848 2,395,696
48,047,691 3,867,958 3,138,282
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 151,798,800 $ 328,562,657 $
655,542,699 $ 1,077,960,160 $ 768,549,696
------------- -------------
- ------------- --------------- -------------
------------- -------------
- ------------- --------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
COMPOSITIONS OF NET ASSETS
Paid-in capital $ 151,805,834 $ 323,273,405 $
616,406,705 $ 797,996,718 $ 542,115,494
- -------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net
investment income 11,314 23,046,774
30,079,292 -- 2,959,139
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss)
from investments and foreign currency
transactions (18,348) (4,290,927)
2,718,207 (70,261,463) 32,291,665
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies -- (13,466,595)
6,338,495 350,224,905 191,183,398
------------- -------------
- ------------- --------------- -------------
Net Assets $ 151,798,800 $ 328,562,657 $
655,542,699 $ 1,077,960,160 $ 768,549,696
------------- -------------
- ------------- --------------- -------------
------------- -------------
- ------------- --------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 151,805,855 29,806,919
53,210,003 24,043,802 20,956,201
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $ 1.00 $ 11.02
$ 12.32 $ 44.83 $ 36.67
* Cost $ 151,269,014 $ 334,412,099 $
681,813,086 $ 729,339,720 $ 576,294,542
** Repurchase agreements $ 1,800,000 $ 5,100,000 $
2,600,000 $ 112,500,000 $ 64,400,000
*** Premiums received $ -- $ --
$ -- $ 34,764 $ --
**** When-issued $ -- $ -- $
47,434,432 $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
114
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL
STRATEGIC GROWTH & SMALL CAP
STRATEGIES SECURITIES
BOND INCOME GROWTH
FUND FUND
FUND FUND FUND
<S> <C> <C>
<C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost *)
(including repurchase agreements **) -
see accompanying statements $ 623,885,456 $ 1,146,157,977 $
273,522,777 $ 308,317,926 $ 844,856
- ------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts -
see applicable note --
26,055 26,339 -- --
- ------------------------------------------------------------------------------------------------------------------------
Cash 147,269
153,505 495,588 218,017 129,322
- ------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 5,139,170
1,288,216 5,003,192 357,509 41
Daily variation on futures contracts -
see applicable note --
- -- -- -- --
Shares of beneficial interest sold 17,862
245,965 213,947 640,011 18,955
Investments sold 33,387
129,251 84,219 -- --
- ------------------------------------------------------------------------------------------------------------------------
Other 8,967
12,495 6,534 5,528 1,514
------------- ---------------
- ------------- ------------- ------------
Total assets 629,232,111 1,148,013,464
279,352,596 309,538,991 994,688
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Options written, at value (premiums
received ***) - see accompanying
statements and notes 5,740,750
- -- 16,045 967,781 --
- ------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note --
1,403 47,561 -- --
- ------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends --
- -- -- -- --
Custodian fees 20,840
145,007 11,736 757 --
Registration and filing fees --
39,978 19,675 43,438 255
Shareholder reports 60,011
75,114 29,632 22,221 --
Legal and auditing fees 17,461
18,232 11,708 9,836 --
Investments purchased (including those
purchased on a when-issued basis****) -
see applicable note 362,598
10,966,196 -- 4,100 --
Shares of beneficial interest redeemed 695,060
1,735,012 11,646 133,103 7
Transfer and shareholder servicing agent
fees 2,062
1,832 2,496 3,122 --
Other 28
1,556 1,701 1,319 122
------------- ---------------
- ------------- ------------- ------------
Total liabilities 6,898,810
12,984,330 152,200 1,185,677 384
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 622,333,301 $ 1,135,029,134 $
279,200,396 $ 308,353,314 $ 994,304
------------- ---------------
- ------------- ------------- ------------
------------- ---------------
- ------------- ------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
COMPOSITIONS OF NET ASSETS
Paid-in capital $ 490,829,556 $ 885,257,467 $
274,895,218 $ 284,367,574 $ 934,634
- ------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net
investment income 20,748,181
11,592,206 15,570,425 1,425,924 --
- ------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss)
from investments and foreign currency
transactions 29,244,260
35,108,448 (2,352,642) (2,028,281) (45,301)
- ------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies 81,511,304
203,071,013 (8,912,605) 24,588,097 104,971
------------- ---------------
- ------------- ------------- ------------
Net Assets $ 622,333,301 $ 1,135,029,134 $
279,200,396 $ 308,353,314 $ 994,304
------------- ---------------
- ------------- ------------- ------------
------------- ---------------
- ------------- ------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 36,497,549
51,429,193 54,569,819 15,054,704 103,531
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $ 17.05 $ 22.07
$ 5.12 $ 20.48 $ 9.60
* Cost $ 538,342,432 $ 943,081,348 $
282,454,523 $ 283,373,782 $ 739,885
** Repurchase agreements $ 63,000,000 $ 27,900,000
$ 6,200,000 $ -- $ --
*** Premiums received $ 1,686,387 $ --
$ 25,235 $ 611,733 $ --
**** When-issued $ -- $ --
$ -- $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
115
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER
OPPENHEIMER AGGRESSIVE OPPENHEIMER
MONEY HIGH INCOME
BOND GROWTH GROWTH
FUND FUND
FUND FUND FUND
<S> <C> <C>
<C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (net of withholding taxes of *) $ 7,738,972 $ 28,358,859 $
41,073,653 $ 3,823,383 $ 4,035,121
- ----------------------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of
**) --
2,076,307 284,719 1,800,986 3,555,637
------------ -------------
- ------------- ------------- -------------
Total income 7,738,972 30,435,166
41,358,372 5,624,369 7,590,758
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
Custodian fees and expenses 11,399
212 5,407 37,397 21,434
- ----------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 11,188
17,697 18,655 24,922 18,225
- ----------------------------------------------------------------------------------------------------------------------
Insurance expenses 3,435
5,148 4,274 7,901 5,339
- ----------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,679
4,059 4,107 5,071 2,422
- ----------------------------------------------------------------------------------------------------------------------
Registration and filing fees 6,981
14,562 31,923 31,640 52,918
- ----------------------------------------------------------------------------------------------------------------------
Shareholder reports 29,826
64,833 67,408 108,886 77,895
- ----------------------------------------------------------------------------------------------------------------------
Management fees - see applicable note 619,030 2,383,008
4,218,231 6,564,650 4,369,487
- ----------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent
fees - see applicable note 1,941
4,140 4,074 3,734 4,161
- ----------------------------------------------------------------------------------------------------------------------
Other 2,461
12,124 3,259 2,753 2,628
------------ -------------
- ------------- ------------- -------------
Total expenses 688,940 2,505,783
4,357,338 6,786,954 4,554,509
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 7,050,032 27,929,383
37,001,034 (1,162,585) 3,036,249
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 9,101 (1,534,125)
6,485,338 (67,129,354) 32,505,999
Closing of futures contracts -- (1,309,724)
(1,285,982) -- --
Closing and expiration of options
written --
(34,656) -- 18,579 --
Foreign currency transactions --
(10,862) 340,635 (14,239) 1,951
- ----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments -- (24,533,407)
(4,833,663) 182,808,457 99,910,949
Translation of assets and liabilities
denominated in foreign currencies -- 407,939
(369,485) 676,163 22,616
------------ -------------
- ------------- ------------- -------------
Net realized and unrealized gain (loss) 9,101
(27,014,835) 336,843 116,359,606 132,441,515
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 7,059,133 $ 914,548 $
37,337,877 $ 115,197,021 $ 135,477,764
------------ -------------
- ------------- ------------- -------------
------------ -------------
- ------------- ------------- -------------
* Withholding taxes - interest $ -- $ --
$ 11,251 $ -- $ --
** Withholding taxes - dividends $ -- $ --
$ -- $ 926 $ 23,758
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December
31,
1998.
See accompanying Notes to Financial Statements.
116
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL
STRATEGIC GROWTH & SMALL CAP
STRATEGIES SECURITIES
BOND INCOME GROWTH
FUND FUND
FUND FUND FUND(1)
<S> <C> <C>
<C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (net of withholding taxes of *) $ 25,898,105 $ 8,710,561 $
21,709,341 $ 913,537 $ 60
- --------------------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of
**) 4,857,228
11,995,300 751,928 2,688,093 173
------------ -------------
- ------------- ------------ ------------
Total income 30,755,333 20,705,861
22,461,269 3,601,630 233
- --------------------------------------------------------------------------------------------------------------------
EXPENSES
Custodian fees and expenses 110,088
434,535 40,476 14,729 --
- --------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 25,143
29,358 14,398 15,399 --
- --------------------------------------------------------------------------------------------------------------------
Insurance expenses 6,777
7,867 4,008 4,440 --
- --------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 9,595
4,854 1,185 2,501 --
- --------------------------------------------------------------------------------------------------------------------
Registration and filing fees --
39,654 19,916 43,581 255
- --------------------------------------------------------------------------------------------------------------------
Shareholder reports 97,293
124,964 40,101 26,194 --
- --------------------------------------------------------------------------------------------------------------------
Management fees - see applicable note 4,584,184 7,167,836
1,860,227 1,742,253 2,219
- --------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent
fees - see applicable note 3,476
3,656 4,078 4,790 --
- --------------------------------------------------------------------------------------------------------------------
Other 7,682
6,003 25,063 3,135 98
------------ -------------
- ------------- ------------ ------------
Total expenses 4,844,238 7,818,727
2,009,452 1,857,022 2,572
- --------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 25,911,095 12,887,134
20,451,817 1,744,608 (2,339)
- --------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 28,607,655 111,119,684
(2,977,920) (2,457,929) (45,301)
Closing of futures contracts -- (61,569,353)
2,898,440 -- --
Closing and expiration of options
written 2,262,307
- -- (97,776) 434,542 --
Foreign currency transactions (1,329,735) (12,587,339)
(2,519,662) 66,152 --
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments (15,359,667) 53,953,288
(12,558,792) 6,284,351 104,971
Translation of assets and liabilities
denominated in foreign currencies (536,206) 32,506,738
1,082,185 51,446 --
------------ -------------
- ------------- ------------ ------------
Net realized and unrealized gain (loss) 13,644,354 123,423,018
(14,173,525) 4,378,562 59,670
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 39,555,449 $ 136,310,152 $
6,278,292 $ 6,123,170 $ 57,331
------------ -------------
- ------------- ------------ ------------
------------ -------------
- ------------- ------------ ------------
* Withholding taxes - interest $ -- $ --
$ 68,298 $ -- $ --
** Withholding taxes - dividends $ 90,320 $ 297,465
$ -- $ 5,250 $ --
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December
31,
1998.
See accompanying Notes to Financial Statements.
117
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER
MONEY HIGH
INCOME
FUND
FUND
1998 1997
1998 1997
<S> <C> <C>
<C> <C>
- ---------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 7,050,032 $ 6,934,054 $
27,929,383 $ 19,861,042
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) 9,101 2,232
(2,889,367) 6,265,470
- ---------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation -- --
(24,125,468) 93,210
------------- -------------
- ------------- -------------
Net increase in net assets
resulting from operations 7,059,133 6,936,286
914,548 26,219,722
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (7,050,032) (6,937,040)
(6,694,100) (18,546,183)
- ---------------------------------------------------------------------------------------------
Distributions from net
realized gain -- --
(8,113,249) (138,778)
- ---------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 25,007,317 (2,935,384)
51,132,667 92,494,657
- ---------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 25,016,418 (2,936,138)
37,239,866 100,029,418
- ---------------------------------------------------------------------------------------------
Beginning of period 126,782,382 129,718,520
291,322,791 191,293,373
------------- -------------
- ------------- -------------
End of period $ 151,798,800 $ 126,782,382 $
328,562,657 $ 291,322,791
------------- -------------
- ------------- -------------
------------- -------------
- ------------- -------------
Undistributed
(overdistributed) net
investment income $ -- $ -- $
23,046,774 $ 1,776,867
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER
AGGRESSIVE
BOND
GROWTH
FUND
FUND
1998 1997
1998 1997
<S> <C> <C>
<C> <C>
- -----------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 37,001,034 $ 30,219,733 $
(1,162,585) $ 2,349,366
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) 5,539,991 4,038,585
(67,125,014) 21,293,313
- -----------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation (5,203,148) 6,440,140
183,484,620 61,517,825
------------- -------------
- --------------- -------------
Net increase in net assets
resulting from operations 37,337,877 40,698,458
115,197,021 85,160,504
- -----------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (9,009,958) (27,908,616)
(2,267,793) (1,547,409)
- -----------------------------------------------------------------------------------------------
Distributions from net
realized gain (8,154,014) (1,447,022)
(23,288,487) (30,466,762)
- -----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 115,290,766 82,296,263
110,511,946 207,268,868
- -----------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 135,464,671 93,639,083
200,152,687 260,415,201
- -----------------------------------------------------------------------------------------------
Beginning of period 520,078,028 426,438,945
877,807,473 617,392,272
------------- -------------
- --------------- -------------
End of period $ 655,542,699 $ 520,078,028 $
1,077,960,160 $ 877,807,473
------------- -------------
- --------------- -------------
------------- -------------
- --------------- -------------
Undistributed
(overdistributed) net
investment income $ 30,079,292 $ 1,857,027 $
- -- $ 2,236,363
</TABLE>
See accompanying Notes to Financial Statements.
118
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
OPPENHEIMER
MULTIPLE GLOBAL
GROWTH
STRATEGIES SECURITIES
FUND
FUND FUND
1998 1997
1998 1997 1998 1997
<S> <C> <C>
<C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,036,249 $ 3,966,775 $
25,911,095 $ 21,778,851 $ 12,887,134 $ 12,143,675
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 32,507,950 47,435,793
29,540,227 34,197,105 36,962,992 103,718,556
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 99,933,565 34,194,334
(15,895,873) 32,455,612 86,460,026 33,657,002
------------- -------------
- ------------- ------------- --------------- -------------
Net increase in net assets
resulting from operations 135,477,764 85,596,902
39,555,449 88,431,568 136,310,152 149,519,233
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (3,939,379) (1,639,463)
(5,964,037) (21,242,764) (21,307,082) (8,181,958)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain (47,530,889) (17,220,011)
(34,591,414) (18,354,349) (80,203,951) --
- -------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 190,636,226 141,248,396
(14,211,527) 104,424,895 141,119,795 235,692,756
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 274,643,722 207,985,824
(15,211,529) 153,259,350 175,918,914 377,030,031
- -------------------------------------------------------------------------------------------------------------------------------
Beginning of period 493,905,974 285,920,150
637,544,830 484,285,480 959,110,220 582,080,189
------------- -------------
- ------------- ------------- --------------- -------------
End of period $ 768,549,696 $ 493,905,974 $
622,333,301 $ 637,544,830 $ 1,135,029,134 $ 959,110,220
------------- -------------
- ------------- ------------- --------------- -------------
------------- -------------
- ------------- ------------- --------------- -------------
Undistributed
(overdistributed) net
investment income $ 2,959,139 $ 3,896,959 $
20,748,181 $ 1,264,870 $ 11,592,206 $ 18,148,506
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER
STRATEGIC
GROWTH & SMALL CAP
BOND
INCOME GROWTH
FUND
FUND FUND(1)
1998 1997
1998 1997 1998
<S> <C> <C>
<C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 20,451,817 $ 13,156,048 $
1,744,608 $ 1,094,913 $ (2,339)
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (2,696,918) 894,858
(1,957,235) 9,837,467 (45,301)
- ------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation (11,476,607) (441,401)
6,335,797 15,049,196 104,971
------------- -------------
- ------------- ------------- ------------
Net increase in net assets
resulting from operations 6,278,292 13,609,505
6,123,170 25,981,576 57,331
- ------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (3,974,494) (12,654,390)
(449,201) (976,438) --
- ------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain (2,561,341) (207,080)
(9,891,403) (2,670,354) --
- ------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 71,618,535 88,374,959
157,202,998 86,023,722 936,973
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 71,360,992 89,122,994
152,985,564 108,358,506 994,304
- ------------------------------------------------------------------------------------------------------------
Beginning of period 207,839,404 118,716,410
155,367,750 47,009,244 --
------------- -------------
- ------------- ------------- ------------
End of period $ 279,200,396 $ 207,839,404 $
308,353,314 $ 155,367,750 $ 994,304
------------- -------------
- ------------- ------------- ------------
------------- -------------
- ------------- ------------- ------------
Undistributed
(overdistributed) net
investment income $ 15,570,425 $ 885,276 $
1,425,924 $ 130,085 $ --
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December
31,
1998.
See accompanying Notes to Financial Statements.
119
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------------------
1998 1997 1996
1995 1994
<S> <C> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $1.00 $1.00 $1.00
$1.00 $1.00
- ------------------------------------------------------------------------------------------
Income from investment operations -
net investment income and net
realized gain .05 .05 .05
.06 .04
Dividends and distributions to
shareholders (.05) (.05) (.05)
(.06) (.04)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00
$1.00 $1.00
-------- -------- --------
- -------- --------
-------- -------- --------
- -------- --------
- ------------------------------------------------------------------------------------------
TOTAL RETURN(1) 5.25% 5.31% 5.13%
5.62% 4.25%
- ------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $151,799 $126,782 $129,719
$65,386 $89,671
- ------------------------------------------------------------------------------------------
Average net assets (in thousands) $137,633 $133,707 $99,263
$75,136 $90,264
- ------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.12% 5.19% 5.01%
5.52% 4.18%
Expenses 0.50% 0.48% 0.49%
0.51% 0.43%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns are
not
annualized for periods of less than one full year. Total returns reflect
changes
in net investment income only. 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.
See accompanying Notes to Financial Statements.
120
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ------------------------------------------------------------
1998 1997 1996
1995 1994
<S> <C> <C> <C>
<C> <C>
- --------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $11.52 $11.13 $10.63 $
9.79 $11.02
- --------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .95 .94 .97
.98 .94
Net realized and unrealized
gain (loss) (.90) .37 .58
.94 (1.27)
- --------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .05 1.31 1.55
1.92 (.33)
- --------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.25) (.91) (1.05)
(1.08) (.66)
Distributions from net
realized gain (.30) (.01) --
- -- (.24)
- --------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (.55) (.92) (1.05)
(1.08) (.90)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $11.02 $11.52 $11.13
$10.63 $ 9.79
-------- -------- --------
- -------- --------
-------- -------- --------
- -------- --------
- --------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 0.31% 12.21% 15.26%
20.37% (3.18)%
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $328,563 $291,323 $191,293
$133,451 $ 95,698
- --------------------------------------------------------------------------------------------
Average net assets (in
thousands) $322,748 $223,617 $157,203
$115,600 $101,096
- --------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.65% 8.88% 9.18%
9.81% 9.15%
Expenses 0.78% 0.82% 0.81%
0.81% 0.67%
- --------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 161.4% 167.6% 125.0%
107.1% 110.1%
</TABLE>
1. 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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $537,018,561 and $428,828,226, respectively.
See accompanying Notes to Financial Statements.
121
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $11.91 $11.63 $11.84 $10.78
$11.65
- --------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .72 .76 .69 .72
.76
Net realized and unrealized gain
(loss) .07 .28 (.15) 1.07
(.98)
- --------------------------------------------------------------------------------
Total income (loss) from investment
operations .79 1.04 .54 1.79
(.22)
- --------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.20) (.72) (.74) (.73)
(.62)
Distributions from net realized
gain (.18) (.04) (.01) --
(.03)
- --------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.38) (.76) (.75) (.73)
(.65)
- --------------------------------------------------------------------------------
Net asset value, end of period $12.32 $11.91 $11.63 $11.84
$10.78
------ ------ ------ ------
- ------
------ ------ ------ ------
- ------
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 6.80% 9.25% 4.80% 17.00%
(1.94)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $655,543 $520,078 $426,439 $211,232
$135,067
- --------------------------------------------------------------------------------
Average net assets (in thousands) $586,242 $449,760 $296,253 $170,929
$121,884
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.31% 6.72% 6.72% 6.91%
7.30%
Expenses 0.74% 0.78% 0.78% 0.80%
0.57%
- --------------------------------------------------------------------------------
Portfolio turnover rate(2) 75.8% 116.9% 82.3% 79.4%
35.1%
</TABLE>
1. 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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $523,613,491 and $403,166,088, respectively.
See accompanying Notes to Financial Statements.
122
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------
1998
1997 1996 1995 1994
<S> <C>
<C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period
$40.96 $38.71 $34.21 $25.95 $31.64
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income
(.05) .10 .09 .11 .10
Net realized and unrealized gain (loss)
5.09 4.01 6.59 8.29 (2.22)
- ----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations
5.04 4.11 6.68 8.40 (2.12)
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income
(.10) (.09) (.11) (.09) (.04)
Distributions from net realized gain
(1.07) (1.77) (2.07) (.05) (3.53)
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders
(1.17) (1.86) (2.18) (.14) (3.57)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
$44.83 $40.96 $38.71 $34.21 $25.95
----------
- ---------- ---------- ---------- ----------
----------
- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1)
12.36% 11.67% 20.22% 32.52% (7.59)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $1,077,960 $
877,807 $ 617,392 $ 325,404 $ 185,774
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 954,848 $
753,852 $ 467,080 $ 240,730 $ 153,832
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss)
(0.12)% 0.31% 0.32% 0.47% 0.50%
Expenses
0.71% 0.73% 0.75% 0.78% 0.57%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2)
79.8% 87.6% 100.1% 125.5% 96.5%
</TABLE>
1. 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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $781,979,929 and $705,990,510, respectively.
See accompanying Notes to Financial Statements.
123
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------------------
1998
1997 1996 1995 1994
<S> <C>
<C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $32.44
$27.24 $23.55 $17.68 $17.70
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13
.25 .15 .25 .22
Net realized and unrealized gain (loss) 7.28
6.62 5.46 6.10 (.05)
- ---------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 7.41
6.87 5.61 6.35 .17
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.24)
(.15) (.25) (.22) (.15)
Distributions from net realized gain (2.94)
(1.52) (1.67) (.26) (.04)
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (3.18)
(1.67) (1.92) (.48) (.19)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $36.67
$32.44 $27.24 $23.55 $17.68
-----------
- ----------- ------ ----------- -----------
-----------
- ----------- ------ ----------- -----------
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 24.00%
26.68% 25.20% 36.65% 0.97%
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $768,550
$493,906 $285,920 $117,710 $63,283
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $609,246
$390,447 $152,466 $ 88,803 $59,953
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.50%
1.02% 1.08% 1.46% 1.38%
Expenses 0.75%
0.75% 0.81%(2) 0.79% 0.58%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 55.7%
66.0% 65.4% 58.2% 53.8%
</TABLE>
1. 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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The expense ratio was 0.79% net of the voluntary reimbursement by the
Manager.
3. 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $478,348,867 and $297,133,286, respectively.
See accompanying Notes to Financial Statements.
124
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------
1998
1997 1996 1995 1994
<S> <C>
<C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period
$17.01 $15.63 $14.55 $12.91 $13.88
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income
.71 .62 .72 .66 .63
Net realized and unrealized gain (loss)
.42 1.95 1.45 2.00 (.90)
- ----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations
1.13 2.57 2.17 2.66 (.27)
- ----------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
(.16) (.61) (.74) (.65) (.60)
Distributions from net realized gain
(.93) (.58) (.35) (.37) (.10)
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders
(1.09) (1.19) (1.09) (1.02) (.70)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
$17.05 $17.01 $15.63 $14.55 $12.91
----------
- ---------- ---------- ---------- ----------
----------
- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1)
6.66% 17.22% 15.50% 21.36% (1.95)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $622,333
$637,545 $484,285 $381,263 $292,067
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $640,131
$564,369 $428,277 $344,745 $279,949
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income
4.05% 3.86% 4.89% 4.81% 4.90%
Expenses
0.76% 0.75% 0.77% 0.77% 0.56%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2)
42.5% 41.9% 40.3% 39.0% 31.4%
</TABLE>
1. 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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $235,924,766 and $252,937,156, respectively.
See accompanying Notes to Financial Statements.
125
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------------------
1998 1997 1996
1995 1994
<S> <C> <C> <C>
<C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $21.37 $17.67 $15.00
$15.09 $16.30
- -----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .24 .25 .15
.12 .04
Net realized and unrealized gain
(loss) 2.64 3.68 2.52
.19 (.96)
- -----------------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.88 3.93 2.67
.31 (.92)
- -----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.46) (.23) --
- -- (.04)
Distributions from net realized
gain (1.72) -- --
(.40) (.25)
- -----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (2.18) (.23) --
(.40) (.29)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 22.07 $ 21.37 $ 17.67 $
15.00 $ 15.09
-------- -------- --------
- -------- --------
-------- -------- --------
- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 14.11% 22.42% 17.80%
2.24% (5.72)%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $1,135,029 $959,110 $582,080
$360,979 $297,842
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $1,055,123 $802,389 $466,750
$332,336 $214,545
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.22% 1.51% 1.09%
0.86% 0.54%
Expenses 0.74% 0.76% 0.81%
0.89% 0.91%
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(2) 80.9% 67.1% 89.9%
131.3% 70.4%
</TABLE>
1. 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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $786,354,899 and $769,035,230, respectively.
See accompanying Notes to Financial Statements.
126
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ------------------------------------------------------------------------
1998
1997 1996 1995 1994
<S> <C>
<C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $5.12
$5.09 $4.91 $4.60 $5.12
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .39
.39 .38 .38 .35
Net realized and unrealized gain (loss) (.24)
.04 .19 .30 (.54)
- ----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations .15
.43 .57 .68 (.19)
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.09)
(.39) (.39) (.37) (.32)
Distributions from net realized gain (.06)
(.01) -- -- (.01)
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (.15)
(.40) (.39) (.37) (.33)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.12
$5.12 $5.09 $4.91 $4.60
-----
- ----- ----- ----- -----
-----
- ----- ----- ----- -----
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 2.90%
8.71% 12.07% 15.33% (3.78)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $279,200
$207,839 $118,716 $60,098 $20,320
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $250,227
$159,934 $82,604 $37,698 $15,389
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.17%
8.23% 8.48% 9.32% 8.36%
Expenses 0.80%
0.83% 0.85% 0.85% 0.87%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 133.7%
149.7% 144.3% 87.0% 136.6%
</TABLE>
1. 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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $358,275,325 and $301,159,735, respectively.
See accompanying Notes to Financial Statements.
127
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------------------------------
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $20.58 $16.37 $12.51
$10.00
- -------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .13 .19 .14
.01
Net realized and unrealized
gain .92 4.91 3.91
2.52
- -------------------------------------------------------------------------------
Total income from investment
operations 1.05 5.10 4.05
2.53
- -------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.05) (.17) (.14)
(.02)
Distributions from net
realized gain (1.10) (.72) (.05)
- --
- -------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (1.15) (.89) (.19)
(.02)
- -------------------------------------------------------------------------------
Net asset value, end of period $20.48 $20.58 $16.37
$12.51
-------- -------- --------
- --------
-------- -------- --------
- --------
- -------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(2) 4.70% 32.48% 32.51%
25.25%
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $308,353 $155,368 $47,009
$4,288
- -------------------------------------------------------------------------------
Average net assets (in
thousands) $234,306 $94,906 $21,562
$1,809
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.74% 1.15% 1.41%
0.50%(3)
Expenses 0.79% 0.83% 1.00%
2.07%(3)
- -------------------------------------------------------------------------------
Portfolio turnover rate(4) 85.7% 78.5% 112.6%
23.7%
</TABLE>
1. For the period from July 5, 1995 (commencement of operations) to December
31,
1995.
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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce 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. Purchases
and
sales of investment securities (excluding short-term securities) for the
period
ended December 31, 1998 were $287,405,235 and $199,780,365, respectively.
See accompanying Notes to Financial Statements.
128
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1998(1)
<S> <C>
- ------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 10.00
- ------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss
(.02)
Net realized and unrealized gain (loss)
(.38)
- ------------------------------------------------------------------------------
Total loss from investment operations
(.40)
- ------------------------------------------------------------------------------
Net asset value, end of period $ 9.60
------
------
- ------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2)
(4.00)%
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $994
- ------------------------------------------------------------------------------
Average net assets (in thousands) $441
- ------------------------------------------------------------------------------
Ratios to average net assets:
Net investment loss
(0.79)%(3)
Expenses
0.87%(3)
- ------------------------------------------------------------------------------
Portfolio turnover rate(4)
61.4%
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
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 returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce 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. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $1,023,289 and $242,621, respectively.
See accompanying Notes to Financial Statements.
129
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Money Fund (OMF), Oppenheimer High Income Fund (OHIF), Oppenheimer
Bond Fund (OBF), Oppenheimer Aggressive Growth Fund (OAGF) operated under the
name Oppenheimer Capital Appreciation Fund through April 30, 1998, Oppenheimer
Growth Fund (OGF), Oppenheimer Multiple Strategies Fund (OMSF), Oppenheimer
Global Securities Fund (OGSF), Oppenheimer Strategic Bond Fund (OSBF),
Oppenheimer Growth & Income Fund (OGIF) and Oppenheimer Small Cap Growth Fund
(OSCGF), (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 OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Funds.
The Funds' objectives are as follows:
OPPENHEIMER MONEY FUND seeks the maximum current income from investments in
"money market" securities consistent with low capital risk and the maintenance
of liquidity.
OPPENHEIMER HIGH INCOME FUND seeks a high level of current income from
investment in high yield fixed-income securities. The 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.
OPPENHEIMER BOND FUND primarily seeks a high level of current income.
Secondarily, this Fund seeks capital growth when consistent with its primary
objective. The Fund will, under normal market conditions, invest at least 65% of
its total assets in investment grade debt securities.
OPPENHEIMER AGGRESSIVE GROWTH FUND seeks to achieve capital appreciation by
investing in "growth-type" companies.
OPPENHEIMER GROWTH FUND seeks to achieve capital appreciation by investing in
securities of well-known established companies.
OPPENHEIMER 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 GLOBAL SECURITIES FUND seeks long-term capital appreciation by
investing a substantial portion of its assets in securities of foreign
issuers,
"growth-type" companies, cyclical industries and special institutions which
are
considered to have appreciation possibilities, but which may be considered to
be
speculative.
OPPENHEIMER STRATEGIC BOND FUND seeks 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.
OPPENHEIMER 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 SMALL CAP GROWTH FUND seeks investments in securities of
"growth-type" companies with market capitalization less than $1 billion,
including common stocks, preferred stocks, convertible securities, rights,
warrants and options.
130
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION. Portfolio securities of OMF are valued on the basis of
amortized cost, which approximates market value. Portfolio securities of OHIF,
OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF are valued at the close of
the
New York Stock Exchange 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
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by
an
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 are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" 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. Forward foreign currency exchange contracts are valued
based on the closing prices of the forward currency contract rates in the
London
foreign exchange markets on a daily basis as provided by a reliable bank or
dealer. 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 is used.
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Funds may invest in commodity and foreign
currency-linked
structured notes whereby the market value and redemption price are linked to
commodity indices and foreign currency exchange rates. The structured notes
may
be leveraged, which increase the notes' volatility relative to the face value
of
the security. Fluctuations in values of the securities are recorded as
unrealized gains and losses in the accompanying financial statements. During
the
year ended December 31, 1998, the market value of these securities comprised
an
average of 8% and 5%, respectively, of the net assets of OHIF and OSBF, and
resulted in realized and unrealized gains of $4,745,329 and $3,012,491,
respectively.
- --------------------------------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for
securities
that have been purchased by OHIF, OBF, OMSF, OSBF and OGIF on a forward
commitment or when-issued basis can take place a month or more after the
transaction date. During this period, such securities do not earn interest,
are
subject to market fluctuation and may increase or decrease in value prior to
their delivery. The Funds maintain, in segregated accounts with the custodian,
assets with a market value equal to the amount of their purchase commitments.
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Funds' net asset values to the extent the Funds
make such purchases while remaining substantially fully invested. As of
December
31, 1998, OBF had entered into outstanding when-issued or forward commitments
of
$47,434,432.
In connection with their ability to purchase securities on a when-issued or
forward commitment basis, OHIF, OBF and OSBF may enter into mortgage
dollar-rolls in which the Funds sell securities for delivery in the current
month and simultaneously contract with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Funds record each dollar-roll as a sale and a new
purchase transaction.
- --------------------------------------------------------------------------------
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. The aggregate market value of
securities in default as of December 31, 1998 for OHIF and OSBF are shown
below:
<TABLE>
<CAPTION>
PERCENTAGE
OF
AMOUNT NET ASSETS
<S>
<C> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer High Income
Fund $ 493,580
0.15%
Oppenheimer Strategic Bond
Fund 666,711 0.24
</TABLE>
131
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are
maintained
in U.S. dollars. Prices of securities purchased by OHIF, OBF, OAGF, OGF, OMSF,
OGSF, OSBF and OGIF 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 foreign securities and investment income are translated
at
the rates of exchange prevailing on the respective dates of such transactions.
For OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF and OGIF, the effect of changes in
foreign currency exchange rates on investments is separately identified from
the
fluctuations arising from changes in market values of securities held and
reported with all other foreign currency gains and losses in the Funds'
Statements 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 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.
As
of December 31, 1998, OHIF, OAGF, OSBF, OSCGF had available for federal income
tax purposes an approximate unused capital loss carryover, which expires in
2006, as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYOVER
<S> <C>
- -------------------------------------------------
Oppenheimer High Income Fund $ 3,402,000
Oppenheimer Aggressive Growth Fund 66,771,000
Oppenheimer Strategic Bond Fund 1,014,000
Oppenheimer Small Capital Growth
Fund 33,000
</TABLE>
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders of
OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF 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.
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 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 its 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 fiscal year in which
the income or realized gain was recorded by the Funds.
132
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. The Funds adjusted the
classification of distributions to shareholders to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. Changes in classification during the year ended
December 31, 1998 are shown below:
<TABLE>
<CAPTION>
ADJUSTMENTS FOR THE YEAR ENDED DECEMBER
31, 1998
------------------------------------------
INCREASE
INCREASE (DECREASE)
(DECREASE) IN
IN ACCUMULATED
UNDISTRIBUTED NET REALIZED INCREASE
NET GAIN (DECREASE)
INVESTMENT ON IN PAID-IN
INCOME INVESTMENTS CAPITAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Oppenheimer Money Fund $ 11,314 $ (11,314) $ --
Oppenheimer High Income
Fund 34,624 18,470 (16,154)
Oppenheimer Bond Fund 231,189 (231,189) --
Oppenheimer Aggressive
Growth Fund 1,194,015 32,432 (1,226,447)
Oppenheimer Growth Fund (34,690) 34,690 --
Oppenheimer Multiple
Strategies Fund (463,747) 463,747 --
Oppenheimer Global
Securities Fund 1,863,648 (1,863,648) --
Oppenheimer Strategic
Bond Fund (1,792,174) 1,817,242 (25,068)
Oppenheimer Growth &
Income Fund 432 (432) --
Oppenheimer Small Cap
Growth Fund 2,339 -- (2,339)
</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, OMSF, OGSF,
OSBF and OGIF 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual
results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF 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>
YEAR
ENDED YEAR ENDED
DECEMBER 31, 1998
DECEMBER 31, 1997
-------------------------------
- -------------------------------
OPPENHEIMER MONEY FUND SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 318,160,993 $ 318,160,993
390,437,217 $ 390,437,217
Dividends and distributions
reinvested 7,008,382 7,008,382
6,901,000 6,901,000
Redeemed (300,162,058) (300,162,058)
(400,273,601) (400,273,601)
-------------- --------------
- -------------- --------------
Net increase (decrease) 25,007,317 $ 25,007,317
(2,935,384) $ (2,935,384)
-------------- --------------
- -------------- --------------
-------------- --------------
- -------------- --------------
</TABLE>
133
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
YEAR
ENDED YEAR ENDED
DECEMBER 31, 1998
DECEMBER 31, 1997
-------------------------------
- -------------------------------
OPPENHEIMER HIGH INCOME FUND SHARES AMOUNT
SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C>
Sold 15,303,847 $171,699,925
14,372,458 $163,481,515
Dividends and distributions reinvested 1,300,031 14,807,349
1,658,451 18,684,961
Redeemed (12,094,532) (135,374,607)
(7,919,351) (89,671,819)
----------- ------------
- ----------- ------------
Net increase 4,509,346 $ 51,132,667
8,111,558 $ 92,494,657
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER BOND FUND
<S> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 24,245,723 $293,126,941
12,079,029 $142,326,116
Dividends and distributions reinvested 1,463,254 17,163,972
2,509,897 29,264,275
Redeemed (16,150,244) (195,000,147)
(7,613,095) (89,294,128)
----------- ------------
- ----------- ------------
Net increase 9,558,733 $115,290,766
6,975,831 $ 82,296,263
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER AGGRESSIVE GROWTH FUND
<S> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 13,376,589 $556,408,810
9,511,150 $368,762,665
Dividends and distributions reinvested 580,166
25,556,280 952,236 32,014,171
Redeemed (11,344,620) (471,453,144)
(4,981,695) (193,507,968)
----------- ------------
- ----------- ------------
Net increase 2,612,135 $110,511,946
5,481,691 $207,268,868
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH FUND
<S> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 8,866,513 $293,095,063
10,437,357 $318,824,006
Dividends and distributions reinvested 1,565,397
51,470,268 720,274 18,842,365
Redeemed (4,699,071) (153,929,105)
(6,429,313) (191,417,975)
----------- ------------
- ----------- ------------
Net increase 5,732,839 $190,636,226
4,728,318 $141,248,396
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 3,352,415 $ 56,547,384
6,728,904 $110,124,465
Dividends and distributions reinvested 2,387,019 40,555,451
2,517,354 39,597,113
Redeemed (6,714,957) (111,314,362)
(2,765,980) (45,296,683)
----------- ------------
- ----------- ------------
Net increase (decrease) (975,523) $(14,211,527)
6,480,278 $104,424,895
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL SECURITIES FUND
<S> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 11,735,029 $248,354,528
17,881,768 $354,780,849
Dividends and distributions reinvested 4,877,993
101,511,033 446,370 8,181,958
Redeemed (10,067,775) (208,745,766)
(6,390,329) (127,270,051)
----------- ------------
- ----------- ------------
Net increase 6,545,247 $141,119,795
11,937,809 $235,692,756
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 21,445,910 $109,659,739
18,907,314 $ 96,727,423
Dividends and distributions reinvested 1,279,028 6,535,835
2,528,920 12,861,470
Redeemed (8,759,684) (44,577,039)
(4,147,991) (21,213,934)
----------- ------------
- ----------- ------------
Net increase 13,965,254 $ 71,618,535
17,288,243 $ 88,374,959
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH & INCOME FUND
<S> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 9,181,075 $189,060,690
5,209,743 $ 95,997,604
Dividends and distributions reinvested 468,325
10,340,604 216,162 3,646,792
Redeemed (2,145,877) (42,198,296)
(745,544) (13,620,674)
----------- ------------
- ----------- ------------
Net increase 7,503,523 $157,202,998
4,680,361 $ 86,023,722
----------- ------------
- ----------- ------------
----------- ------------
- ----------- ------------
</TABLE>
134
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1998(1)
- -------------------------
OPPENHEIMER SMALL CAP GROWTH FUND
SHARES AMOUNT
<S>
<C> <C>
- ------------------------------------------------------------------------------------------------------
Sold
114,434 $ 1,030,883
Redeemed
(10,903) (93,910)
- ----------- ------------
Net
increase
103,531 $ 936,973
- ----------- ------------
- ----------- ------------
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December
31,
1998.
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of December 31, 1998, net unrealized appreciation or depreciation on
investments and options written consisted of the following:
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER
OPPENHEIMER MULTIPLE
HIGH INCOME OPPENHEIMER AGGRESSIVE
OPPENHEIMER STRATEGIES
FUND BOND FUND GROWTH FUND
GROWTH FUND FUND
<S> <C> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------------------------------
Gross appreciation $ 8,629,297 $ 13,200,055 $355,515,405
$235,480,248 $121,405,881
Gross depreciation 22,128,011 6,999,293 5,290,500
44,296,850 39,917,220
------------- ------------- -------------
- ------------- -------------
Net unrealized
appreciation
(depreciation) $(13,498,714) $ 6,200,762 $350,224,905
$191,183,398 $ 81,488,661
------------- ------------- -------------
- ------------- -------------
------------- ------------- -------------
- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
GLOBAL OPPENHEIMER OPPENHEIMER
OPPENHEIMER
SECURITIES STRATEGIC GROWTH &
SMALL CAP
FUND BOND FUND INCOME FUND
GROWTH FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
Gross appreciation $255,177,315 $ 8,361,107 $ 55,571,813
$ 134,186
Gross depreciation 52,100,686 17,283,663
30,983,707 29,215
------------- ------------- -------------
- -------------
Net unrealized
appreciation
(depreciation) $203,076,629 $ (8,922,556) $ 24,588,106
$ 104,971
------------- ------------- -------------
- -------------
------------- ------------- -------------
- -------------
</TABLE>
- --------------------------------------------------------------------------------
4. 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 OAGF, OGF, OMSF, OGSF, OGIF and OSCGF,
the annual fees are 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 over $800
million.
For OHIF, OBF and OSBF, the annual fees are 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 over $200 million. In addition, management fees for OHIF, OBF and OSBF
are 0.50% of average annual net assets in excess of $1 billion. Management
fees
for OMF are 0.45% of the first $500 million of average annual net assets,
0.425%
of the next $500 million, 0.40% of the next $500 million and 0.375% of average
annual net assets over $1.5 billion.
135
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
The management fee for the year ended December 31, 1998 (computed on an
annualized basis as a percentage of the average annual net assets of each of
the
Funds) were as follows:
<TABLE>
<CAPTION>
FUND
MANAGEMENT FEES
<S>
<C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer Money
Fund
0.45%
Oppenheimer High Income
Fund
0.74
Oppenheimer Bond
Fund
0.72
Oppenheimer Aggressive Growth
Fund 0.69
Oppenheimer Growth
Fund
0.72
Oppenheimer Multiple Strategies
Fund 0.72
Oppenheimer Global Securities
Fund 0.68
Oppenheimer Strategic Bond
Fund 0.74
Oppenheimer Growth & Income
Fund 0.74
Oppenheimer Small Cap Growth
Fund 0.75
</TABLE>
- --------------------------------------------------------------------------------
5. FORWARD 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.
The Funds (except OMF) 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 based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. The Funds will realize a gain or loss
upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statements of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statements of Assets and Liabilities. Realized gains and losses are reported
with all other foreign currency gains and losses in the Funds' Statements of
Operations.
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.
136
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS (CONTINUED)
As of December 31, 1998, outstanding forward contracts were as follows:
<TABLE>
<CAPTION>
VALUATION AS OF
EXPIRATION CONTRACT
DECEMBER 31, UNREALIZED UNREALIZED
OPPENHEIMER HIGH INCOME FUND DATES AMOUNT (000'S)
1998 APPRECIATION DEPRECIATION
<S> <C> <C> <C>
<C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
British Pound Sterling (GBP) 3/15/99 1,680 GBP
$2,779,282 $ 50,410 $ --
Canadian Dollar (CAD) 3/15/99 540 CAD
352,663 -- 2,014
- ------- ------------
Total Unrealized Appreciation and
Depreciation $ 50,410
$ 2,014
- ------- ------------
- ------- ------------
OPPENHEIMER BOND FUND
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
Canadian Dollar (CAD) 3/15/99 4,000 CAD
$2,612,319 $ 14,916 $ --
OPPENHEIMER GLOBAL SECURITIES FUND
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
German Mark (DEM) 1/4/99-1/5/99 8,837 DEM
$5,306,742 $ 12,154 $ --
Italian Lira (ITL) 1/7/99-1/8/99 5,005,679 ITL
3,034,123 13,901 --
- ------- ------------
26,055 --
- ------- ------------
CONTRACTS TO SELL
Finnish Markka (FIM) 1/4/99-1/5/99 1,161 FIM
229,251 -- 1,403
- ------- ------------
Total Unrealized Appreciation and
Depreciation $ 26,055
$ 1,403
- ------- ------------
- ------- ------------
OPPENHEIMER STRATEGIC BOND FUND
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Canadian Dollar (CAD) 1/27/99 650 CAD $
424,445 $ 1,764 $ --
- ------- ------------
CONTRACTS TO SELL
Australian Dollar (AUD) 2/22/99 1,620 AUD
993,532 14,756 --
British Pound Sterling (GBP) 2/22/99-3/9/99 1,290 GBP
2,134,521 7,058 13,431
Canadian Dollar (CAD) 1/11/99-1/27/99 1,950 CAD
1,273,327 397 6,753
German Mark (DEM) 2/8/99 2,550 DEM
1,534,924 -- 11,672
Japanese Yen (JPY) 2/8/99 40,000 JPY
355,206 -- 15,705
New Zealand Dollar (NZD) 1/26/99 210 NZD
110,553 2,364 --
- ------- ------------
24,575 47,561
- ------- ------------
Total Unrealized Appreciation and
Depreciation $ 26,339 $
47,561
- ------- ------------
- ------- ------------
</TABLE>
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
The Funds (except OMF) 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.
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.
137
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS (CONTINUED)
Securities held in collateralized accounts to cover initial margin
requirements
on open futures contracts are noted in the Statements of Investments. The
Statements of Assets and Liabilities reflect a receivable or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the
value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of December 31, 1998, outstanding futures contracts were as follows:
<TABLE>
<CAPTION>
VALUATION AS OF
UNREALIZED
EXPIRATION NUMBER OF DECEMBER 31,
APPRECIATION
OPPENHEIMER HIGH INCOME FUND DATE CONTRACTS 1998
(DEPRECIATION)
<S> <C> <C> <C>
<C>
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Standard & Poors 500 Index 3/99 9 $2,802,375
$ 15,700
OPPENHEIMER BOND FUND
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Treasury Nts., 5 yr. 3/99 335 $37,970,156
$ 147,016
U.S. Treasury Bonds, 20 yr. 3/99 127
16,228,219 10,031
- --------------
157,047
- --------------
CONTRACTS TO SELL
U.S. Treasury Nts., 10 yr. 3/99 37
4,408,781 (4,781)
- --------------
$ 152,266
- --------------
- --------------
OPPENHEIMER STRATEGIC BOND FUND
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
United Kingdom Long Gilt 3/99 5 $ 987,174
$ 4,410
- --------------
CONTRACTS TO SELL
Canadian Government Bonds 3/99 5
420,633 1,828
U.S. Treasury Nts., 10 yr. 3/99 11
1,310,719 1,852
- --------------
3,680
- --------------
$ 8,090
- --------------
- --------------
</TABLE>
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Funds (except OMF) may buy and sell put and call options, or write put and
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.
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.
138
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY (CONTINUED)
Securities designated to cover outstanding call options are noted in the
Statements of Investments where applicable. Options written are reported as a
liability in the Statements of Assets and Liabilities. Gains and losses are
reported in the Statements 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.
The Funds may also write over-the-counter options where the completion of the
obligation is dependent upon the credit standing of the counterparty.
Written option activity for the year ended December 31, 1998 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT
OPTIONS
---------------------------
- --------------------------
NUMBER OF AMOUNT OF NUMBER
OF AMOUNT OF
OPPENHEIMER HIGH INCOME FUND OPTIONS PREMIUMS
OPTIONS PREMIUMS
<S> <C> <C>
<C> <C>
- ---------------------------------------------------------------------------------------------
Options outstanding as of December
31, 1997 -- $ --
- -- $ --
Options written 200
45,875 6 50,220
Options closed or expired (200) (45,875)
(6) (50,220)
------------ ------------
- ------------- ----------
Options outstanding as of December
31, 1998 -- $ --
- -- $ --
------------ ------------
- ------------- ----------
------------ ------------
- ------------- ----------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1997 6,056
$1,797,849 -- $ --
Options written 14,157
4,642,269 -- --
Options closed or expired (9,606)
(3,358,067) -- --
Options exercised (4,736)
(1,395,664) -- --
---------- ----------
- ----------- -----------
Options outstanding as of December 31, 1998 5,871
$1,686,387 -- $ --
---------- ----------
- ----------- -----------
---------- ----------
- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C>
<C> <C>
- --------------------------------------------------------------------------------------------
Options outstanding as of December
31, 1997 400 $ 3,679
224,820,000 $ 31,046
Options written 150,816,100 50,369
565,183,580 237,481
Options closed or expired (3,210,400) (28,813)
(420,932,320) (145,971)
Options exercised -- --
(369,071,260) (122,556)
------------ ------------
- ------------- ---------
Options outstanding as of December
31, 1998 147,606,100 $ 25,235
- -- $ --
------------ ------------
- ------------- ---------
------------ ------------
- ------------- ---------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH & INCOME FUND
<S> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1997 880 $
61,758 -- $ --
Options written 11,965
2,578,629 200 74,397
Options closed or expired (9,495)
(1,306,303) -- --
Options exercised (2,025)
(763,924) (100) (32,824)
---------- ----------
- ----------- -----------
Options outstanding as of December 31, 1998 1,325 $
570,160 100 $ 41,573
---------- ----------
- ----------- -----------
---------- ----------
- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER AGGRESSIVE GROWTH FUND
<S> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1997 -- $
- -- -- $ --
Options written 638
53,343 -- --
Options closed or expired (500)
(18,579) -- --
---------- ----------
- ----------- -----------
Options outstanding as of December 31, 1998 138 $
34,764 -- $ --
---------- ----------
- ----------- -----------
---------- ----------
- ----------- -----------
</TABLE>
139
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES
As of December 31, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be
considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Funds intend to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid and restricted
securities
subject to this 10% limitation as of December 31, 1998 are shown below:
Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
PERCENTAGE
OF
NET
AMOUNT ASSETS
<S> <C> <C>
- ---------------------------------------------
Oppenheimer Money Fund $13,000,000 8.56%
- ---------------------------------------------
Oppenheimer High Income
Fund 19,677,807 5.99
- ---------------------------------------------
Oppenheimer Bond Fund 47,819,400 7.29
- ---------------------------------------------
Oppenheimer Multiple
Strategies Fund 2,293,795 0.37
- ---------------------------------------------
Oppenheimer Global
Securities Fund 3,769,145 0.33
- ---------------------------------------------
Oppenheimer Strategic
Bond Fund 11,110,683 3.98
- ---------------------------------------------
Oppenheimer Growth &
Income Fund 4,030 0.01
OPPENHEIMER MONEY FUND
The aggregate value of
restricted securities is
$2,000,000.
</TABLE>
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT
DECEMBER 31, 1998
<S> <C> <C>
<C>
- ----------------------------------------------------------------------------------------------
SHORT-TERM NOTES
Travelers Insurance Co., 5.034%, 1/4/99 9/16/98
100.00% 100.00%
OPPENHEIMER HIGH INCOME FUND
The aggregate value of restricted
securities is $3,362,687.
BONDS
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92
100.00% 100.25%
- ----------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub.
Nts., 12/15/05 12/8/95-8/13/96
100.00-105.75 116.10
- ----------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14%
Equipment Trust, 7/2/08 3/19/98
101.00 99.00
STOCKS AND WARRANTS
ECM Fund, L.P.I. 4/14/92 $ 1,000.00
$ 885.00
- ----------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred 6/17/97-9/28/98
25.00 25.00
- ----------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 6/17/97
- -- .30
- ----------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 11/29/95
- -- 9.31
OPPENHEIMER BOND FUND
The aggregate value of restricted
securities is $1,130,000.
Merrill Lynch & Co., Inc., Units, 9.75%,
6/15/99 5/15/95 110.05%
$ 113.00
OPPENHEIMER MULTIPLE STRATEGIES FUND
The aggregate value of restricted
securities is $2,293,795.
STOCKS
Intermedia Communications, Inc. 9/29/98 $ 21.69
$ 13.80
</TABLE>
140
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT
DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
<C>
OPPENHEIMER STRATEGIC BOND FUND
The aggregate value of restricted
securities is $598,651.
BONDS
TAG Heuer International SA, 12% Sr. Sub.
Nts., 12/15/05 12/8/95
100.00% 116.10%
STOCKS AND WARRANTS
CGA Group Ltd., Preferred 6/17/97 $ 25.00
$ 25.00
- ----------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 6/17/97
- -- .30
OPPENHEIMER GROWTH & INCOME FUND
The aggregate value of restricted
securities is $4,030.
STOCKS
Intermedia Communications, Inc. 9/29/98 $ 21.54
$ 13.80
</TABLE>
Appendix A
RATINGS DEFINITIONS
Below are summaries of the rating definitions used by the nationally-recognized
rating agencies listed below. Those ratings represent the opinion of the agency
as to the credit quality of issues that they rate. The summaries below are based
upon publicly-available information provided by the rating organizations.
Moody's Investors Service, Inc.
Long-Term (Taxable) Bond Ratings
Aaa: Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk. 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, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are 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 with Aaa securities or fluctuation 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 those of Aaa securities.
A: Bonds rated 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: Bonds rated Baa are considered medium grade obligations; that is, 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: Bonds rated Ba are 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: Bonds rated Caa are of poor standing and may be in default or there may be
present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree
and are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest class of rated bonds and 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 Caa. The modifier "1" indicates
that the obligation ranks in the higher end of its category; the
modifier "2: indicates a mid-range ranking and the modifier "3"
indicates a "ranking in the lower end of the category.
Short-Term Ratings - Taxable Debt
These ratings apply to the ability of issuers to repay punctually senior debt
obligations having an original maturity not exceeding one year:
Prime-1: Issuer has a superior ability for repayment of senior short-term
debt obligations.
Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage, while sound, may be subject to
variation. Capitalization characteristics, while appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained.
Not Prime: Issuer does not fall within any Prime rating category.
Standard & Poor's Rating Services
Long-Term Credit Ratings
AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: Bonds rated "AA" differ from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: Bonds rated "A" are somewhat more susceptible to adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is still strong.
BBB: Bonds rated BBB exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
Bonds rated BB, B, CCC, CC and C are regarded as having significant speculative
characteristics. BB indicates the least degree of speculation and C the highest.
While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: Bonds rated BB are less vulnerable to nonpayment than other speculative
issues. However, these face major uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B: A bond rated B is more vulnerable to nonpayment than an obligation
rated BB, but the obligor currently has the capacity to meet
its financial commitment on the obligation.
CCC: A bond rated CCC is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may used where a bankruptcy petition has been filed or similar
action has been taken, but payments on this obligation are being continued.
D: Bonds rated D are in default. Payments on the obligation are not being
made on the date due.
The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories. The
"r" symbol is attached to the ratings of instruments with significant noncredit
risks.
Short-Term Issue Credit Ratings
A-1: Rated in the highest category. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category, a plus (+) sign
designation indicates the issuer's capacity to meet its financial obligation is
very strong.
A-2: Obligation is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher rating
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is satisfactory.
A-3: Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.
B: Regarded as having significant speculative characteristics. The obligor
currently has the capacity to meet its financial commitment on the obligation.
However, it faces major ongoing uncertainties which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
C: Currently vulnerable to nonpayment and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its financial
commitment on the obligation.
D: In payment default. Payments on the obligation have not been made on the due
date. The rating may also be used if a bankruptcy petition has been filed or
similar actions jeopardize payments on the obligation.
Fitch IBCA, Inc.
International Long-Term Credit Ratings
Investment Grade: AAA: Highest Credit Quality. "AAA" ratings denote the lowest
expectation of credit risk. They are assigned only in the case of exceptionally
strong capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
Speculative Grade:
BB: Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available to allow
financial commitments to be met.
B: Highly Speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met. However, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.
CCC, CC C: High Default Risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.
DDD, DD, and D: Default. Securities are not meeting current obligations and are
extremely speculative. "DDD" designates the highest potential for recovery of
amounts outstanding on any securities involved.
Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the rating category. Plus and minus signs are not added
to the "AAA" category or to categories below "CCC."
International Short-Term Credit Ratings
F1: Highest credit quality. Strongest capacity for timely payment. May
have an added "+" to denote exceptionally strong credit
feature.
F2: Good credit quality. A satisfactory capacity for timely payment, but the
margin of safety is not as great as in higher ratings.
F3: Fair credit quality. Capacity for timely payment is adequate. However,
near-term adverse changes could result in a reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment, plus vulnerability to
near-term adverse changes in financial and economic conditions.
C: High default risk. Default is a real possibility, Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
D: Default. Denotes actual or imminent payment default.
Duff & Phelps Credit Rating Co. Ratings
Long-Term Debt and Preferred Stock
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA-: High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
A+, A & A-: Protection factors are average but adequate. However, risk factors
are more variable in periods of greater economic stress.
BBB+, BBB & BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
BB+, BB & BB-: Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate according to
industry conditions. Overall quality may move up or down frequently within the
category.
B+, B & B-: Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a higher of
lower rating grade.
CCC: Well below investment-grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD: Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.
DP: Preferred stock with dividend arrearages.
Short-Term Debt:
High Grade: D-1+: Highest certainty of timely payment. Safety is just below
risk-free U.S. Treasury short-term debt.
D-1: Very high certainty of timely payment. Risk factors are minor.
D-1-: High certainty of timely payment. Risk factors are very small.
Good Grade:
D-2: Good certainty of timely payment. Risk factors are small.
Satisfactory Grade:
D-3: Satisfactory liquidity and other protection factors qualify issues as to
investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.
Non-Investment Grade:
D-4: Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service.
Default:
D-5: Issuer failed to meet scheduled principal and/or interest payments.
Appendix B
Industry Classifications
Aerospace/Defense Food and DrugRetailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks IndustrialServices
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil -International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
APPENDIX C - MAJOR SHAREHOLDERS
As of April 1, 1999, the number of shares and approximate percentage of shares
held of record by separate accounts of the following insurance companies (and
their respective subsidiaries) that held 5% or more of the outstanding shares of
one of the Funds as shown in the tables below. The full name and address of each
insurance company is shown on page 37:
<TABLE>
<CAPTION>
Monarch ReliaStar GE Nationwide Aetna
<S> <C> <C> <C> <C> <C>
Money Fund/VA 25,145,916.770 9,153,762.542 * * 10,150,889.250
16.48% 6.00% 6.65%
High Income Fund/VA * 1,885,144.642 17,269,050.642 ** 1,778,832.069
5.70% 52.18% 5.37%
Bond Fund/VA * * 6,066,946.035 30,957,444.228 *
10.75% 55.39%
Aggressive Growth * * 4,702,545.948 * 1,248,988.180
Fund/VA 20.00% 5.31%
Capital Appreciation
Fund/VA * * 5,577,643.166 4,845,945.654 1,288,654.479
23.52% 20.44% 5.44%
Multiple Strategies 3,057,791.713 2,460,350.504 5,231,829.734 21,096,649.563 2,206,895.128
Fund/VA 8.12% 6.53% 13.89% 56.00% 5.86%
Global Securities * * * 25,806,270.802 *
Fund/VA 49.83%
Strategic Bond Fund/VA * * * * 4,966,074.026
10.72%
Main Street
Growth & Income * * * 2,999,652.343 2,398,958.391
Fund/VA 19.04% 15.34
Small Cap Growth/VA * * * * *
</TABLE>
_______________
*Less than 5% of the outstanding shares of that Fund.
(continued)
<TABLE>
<CAPTION>
MassMutual Jefferson-Pilot CUNA American General Protective
<S> <C> <C> <C> <C> <C>
Money Fund/VA 108,169,643.695 * * * *
70.87%
High Income Fund/VA 5,681,835.175 * 4,641,289.720 * *
17.17% 14.02%
Bond Fund/VA 12,829,726.419 3,959,387.875 * * *
22.95% 7.08%
Aggressive Growth 14,964,195,124 * * * *
Fund/VA 63.64%
Capital Appreciation
Fund/VA 6,326,279.04 1 3,430,222.806 * * *
26.68% 14.47%
Multiple Strategies 3,555,224.212 * * * *
Fund/VA 9.44%
Global Securities 22,911,099.051 * * * *
Fund/VA 44.24%
Strategic Bond Fund/VA 44,005,016.230 * * * 4,074,940
76.45% 7.08%
Main Street
Growth & Income 8,512,628.396 * * * 1,272,918
Fund/VA 54.44% 8.14%
Small Cap Growth/VA 115,682.817 * * 36,971.693 *
75.74% 24.20%
</TABLE>
___________
*Less than 5% of the outstanding shares of that Fund.
Oppenheimer Variable Account Funds
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-888-470-0861
Custodian Bank
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Ninth Restated Declaration of Trust dated 5/1/99: Filed herewith.
(b) Amended By-Laws dated 6/26/90: Previously filed with Registrant's
Post-Effective Amendment No. 26 (2/13/95), and incorporated herein by reference.
(i) Oppenheimer Money Fund/VA specimen share certificate: Filed herewith.
(ii) Oppenheimer Bond Fund/VA specimen share certificate: Filed herewith.
C-4
(iii) Oppenheimer Capital Appreciation Fund/VA specimen share certificate: Filed
herewith.
(iv) Oppenheimer High Income Fund/VA specimen share certificate: Filed herewith.
(v) Oppenheimer Aggressive Growth Fund/VA specimen share certificate: Filed
herewith.
(vi) Oppenheimer Multiple Strategies Fund/VA specimen share certificate: Filed
herewith.
(vii) Oppenheimer Global Securities Fund/VA specimen share certificate: Filed
herewith.
(viii) Oppenheimer Strategic Bond Fund/VA specimen share certificate: Filed
herewith.
(ix) Oppenheimer Main Street Growth & Income Fund/VA specimen share certificate:
Filed herewith.
(x) Oppenheimer Small Cap Growth Fund/VA specimen share certificate: Filed
herewith.
(xi) Oppenheimer Money Fund/VA Class 2 specimen share certificate: Filed
herewith.
(xii) Oppenheimer Bond Fund/VA Class 2 specimen share certificate: Filed
herewith.
(xiii) Oppenheimer Capital Appreciation Fund/VA Class 2 specimen share
certificate: Filed herewith.
(xiv) Oppenheimer High Income Fund/VA Class 2 specimen share certificate: Filed
herewith.
(xv) Oppenheimer Aggressive Growth Fund/VA Class 2 specimen share certificate:
Filed herewith.
(xvi) Oppenheimer Multiple Strategies Fund/VA Class 2 specimen share
certificate: Filed herewith.
(xvii) Oppenheimer Global Securities Fund/VA Class 2 specimen share certificate:
Filed herewith.
(viii) Oppenheimer Strategic Bond Fund/VA Class 2 specimen share certificate:
Filed herewith.
(xix) Oppenheimer Main Street Growth & Income Fund/VA Class 2 specimen share
certificate: Filed herewith.
(xx) Oppenheimer Small Cap Growth Fund/VA Class 2 specimen share certificate:
Filed herewith.
(d) (i) Investment Advisory Agreement for Oppenheimer Money Fund/VA 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/VA 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/VA 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 Aggressive Growth Fund/VA
dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and
incorporated herein by reference.
(v) Amended and Restated Investment Advisory Agreement for Oppenheimer
Aggressive Growth Fund/VA dated 5/1/99: Filed herewith.
(vi) Investment Advisory Agreement for Oppenheimer Capital Appreciation Fund/VA
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 Multiple Strategies Fund/VA
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 Global Securities Fund/VA
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 Strategic Bond Fund/VA dated
9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated
herein by reference.
(x) Investment Advisory Agreement for Oppenheimer Main Street Growth & Income
Fund/VA dated 5/1/95: Filed with Post-Effective Amendment No. 29, 4/22/96, and
incorporated herein by reference.
(xi) Investment Advisory Agreement for Oppenheimer Small Cap Growth Fund/VA
dated 5/1/98 - Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98,
and incorporated herein by reference.
(e) (i) General Distributor=s Agreement for Class 2 shares of Oppenheimer Money
Fund /VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and
incorporated herein by reference.
(ii) General Distributor=s Agreement for Class 2 shares of Oppenheimer Bond
Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and
incorporated herein by reference.
(iii) General Distributor=s Agreement for Class 2 shares of Oppenheimer Capital
Appreciation Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32,
4/29/98, and incorporated herein by reference.
(iv) General Distributor=s Agreement for Class 2 shares of Oppenheimer High
Income Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32,
4/29/98, and incorporated herein by reference.
(v) General Distributor=s Agreement for Class 2 shares of Oppenheimer Aggressive
Growth Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32,
4/29/98, and incorporated herein by reference.
(vi) General Distributor=s Agreement for Class 2 shares of Oppenheimer Multiple
Strategies Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32,
4/29/98, and incorporated herein by reference.
(vii) General Distributor=s Agreement for Class 2 shares of Oppenheimer Global
Securities Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32,
4/29/98, and incorporated herein by reference.
(viii) General Distributor=s Agreement for Class 2 shares of Oppenheimer
Strategic Bond Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32,
4/29/98, and incorporated herein by reference.
(ix) General Distributor=s Agreement for Class 2 shares of Oppenheimer Main
Street Growth & Income Fund/VA dated 5/1/98: Filed with Post-Effective Amendment
No. 32, 4/29/98, and incorporated herein by reference.
(x) General Distributor=s Agreement for Class 2 shares of Oppenheimer Small Cap
Growth Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32,
4/29/98, and incorporated herein by reference.
(f) Form of Deferred Compensation Plan for Disinterested Trustees\Directors:
Filed with Post-Effective Amendment No. 40 to the Registration Statement of
Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/27/98, and incorporated
herein by reference.
(g) 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, refiled with Registrant's Post-Effective Amendment
No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.
(h) Not applicable.
(i) (i) Opinion and Consent of Counsel, 3/14/85: Previously filed with
Registrant's Pre-Effective Amendment No. 1, 3/20/85, refiled with Registrant's
Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(ii) Opinion and Consent of Counsel, 4/28/86: Previously filed with Registrant's
Post-Effective Amendment No. 5, 8/12/86, refiled with Registrant's
Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(iii) Opinion and Consent of Counsel, 7/31/86: Previously filed with
Registrant's Post-Effective Amendment No. 5, 8/12/86, refiled with Registrant's
Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(iv) Opinion and Consent of Counsel, 1/21/87: Previously filed with Registrant's
Post-Effective Amendment No. 7, 2/6/87, refiled with Registrant's Post-Effective
Amendment No. 27, 4/27/95, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(v) Opinion and Consent of Counsel, dated July 31, 1990: Previously filed with
Registrant's Post-Effective Amendment No. 15, 9/19/90, refiled with Registrant's
Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(vi) Opinion and Consent of Counsel dated April 23, 1993: Previously filed with
Registrant's Post-Effective Amendment No. 22, 4/30/93, refiled with Registrant's
Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(vii) Opinion and Consent of Counsel dated April 18, 1995: Filed with
Post-Effective Amendment No. 29, 4/22/96, and incorporated herein by reference.
(viii) Opinion and Consent of Counsel: Filed with Post-Effective Amendment No.
32, 4/29/98, and incorporated herein by reference.
(j) Independent Auditors' Consent: Filed herewith.
(k) Not applicable.
(l) Not applicable.
(m) (i) Service Plan and Agreement for Class 2 shares of Oppenheimer Money
Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and
incorporated herein by reference.
(ii) Service Plan and Agreement for Class 2 shares of Oppenheimer Bond Fund/VA:
Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and
incorporated herein by reference.
(iii) Service Plan and Agreement for Class 2 shares of Oppenheimer Capital
Appreciation Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31,
1/30/98 and incorporated herein by reference.
(iv) Service Plan and Agreement for Class 2 shares of Oppenheimer High Income
Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and
incorporated herein by reference.
(v) Service Plan and Agreement for Class 2 shares of Oppenheimer Aggressive
Growth Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98
and incorporated herein by reference.
(vi) Service Plan and Agreement for Class 2 shares of Oppenheimer Multiple
Strategies Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31,
1/30/98 and incorporated herein by reference.
(vii) Service Plan and Agreement for Class 2 shares of Oppenheimer Global
Securities Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31,
1/30/98 and incorporated herein by reference.
(viii) Service Plan and Agreement for Class 2 shares of Oppenheimer Strategic
Bond Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98
and incorporated herein by reference.
(ix) Service Plan and Agreement for Class 2 shares of Oppenheimer Main Street
Growth & Income Fund/VA: Filed with Registrant's Post-Effective Amendment No.
31, 1/30/98 and incorporated herein by reference.
(x) Service Plan and Agreement for Class 2 shares of Oppenheimer Small Cap
Growth Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98
and incorporated herein by reference.
(n) Financial Data Schedules: Filed herewith.
(o) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through
8/25/98: Previously filed with Post-Effective Amendment No. 70 to the
Registration Statement of Oppenheimer Global Fund (Reg. No. 2-31661), 9/14/98,
and incorporated herein by reference.
- -- Powers of Attorney: Filed with Post-Effective Amendment No. 29, 4/22/96, and
with Registrant's Post-Effective Amendment No. 24, 2/25/94, and incorporated
herein by reference.
- -- Powers of Attorney of Brian W. Wixted: Filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Reference is made to the provisions of Article Seventh of Registrant's Amended
and Restated Declaration of Trust filed as Exhibit 23(a) to this Registration
Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, 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 trustee, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, 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 26. Business and Other Connections of the Investment Adviser
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and
certain subsidiaries and affiliates act in the same capacity to other investment
companies, including with limitation those described in Parts A and B hereof and
listed in Item 26(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 OppenheimerFunds, Inc. 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.
Name and Current Position Other Business and
Connections
with OppenheimerFunds, Inc. During the Past Two Years
Charles E. Albers, Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer funds (since April
1998); a Chartered Financial Analyst;
formerly, a Vice
President and portfolio manager for
Guardian Investor
Services, the investment management
subsidiary of The
Guardian Life Insurance Company (since
1972).
Edward Amberger,
Assistant Vice President Formerly Assistant
Vice President, Securities Analyst for
Morgan Stanley Dean
Witter (May 1997 - April 1998); and
Research Analyst (July
1996 - May 1997), Portfolio Manager
(February 1992 - July
1996) and Department Manager (June
1988 to February 1992)
for The Bank of New York.
Mark J.P. Anson,
Vice President Vice President of
Oppenheimer Real Asset Management, Inc.
("ORAMI"); formerly,
Vice President of Equity Derivatives at
Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; a Chartered
Financial Analyst; Senior Vice President
of HarbourView Asset
Management Corporation ("HarbourView");
prior to March, 1996
he was the senior equity portfolio
manager for the
Panorama Series Fund, Inc. (the "Company")
and other mutual funds
and pension funds managed by G.R.
Phelps & Co. Inc.
("G.R. Phelps"), the Company's former
investment adviser,
which was a subsidiary of Connecticut
Mutual Life Insurance
Company; he was also responsible for
managing the common
stock department and common stock
investments of
Connecticut Mutual Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds. Formerly, a
Vice President and Senior Portfolio
Manager at First of
America Investment Corp.
George Batejan,
Executive Vice President,
Chief Information Officer Formerly Senior Vice
President, Group Executive, and Senior
Systems Officer for
American International Group (October
1994 - May, 1998).
John R. Blomfield,
Vice President Formerly Senior
Product Manager (November, 1995 - August,
1997) of International
Home Foods and American Home Products
(March, 1994 - October,
1996).
Connie Bechtolt,
Assistant Vice President None.
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President Formerly, Vice
President (January 1992 - February, 1996) of
Asian Equities for
Barclays de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of
Mutual Fund Accounting (since May 1996);
an officer of other
Oppenheimer funds; formerly, an
Assistant Vice
President of OFI/Mutual Fund Accounting
(April 1994-May 1996),
and a Fund Controller for OFI.
Chad Boll,
Assistant Vice President None
George C. Bowen,
Senior Vice President, Treasurer
and Director Vice President (since
June 1983) and Treasurer (since March
1985) of
OppenheimerFunds Distributor, Inc. (the
"Distributor"); Vice
President (since October 1989) and
Treasurer (since
April 1986) of HarbourView; Senior Vice
President (since
February 1992), Treasurer (since July
1991)and a director
(since December 1991) of Centennial;
President, Treasurer
and a director of Centennial Capital
Corporation (since June
1989); Vice President and Treasurer
(since August 1978)
and Secretary (since April 1981) of
Shareholder
Services, Inc. ("SSI"); Vice President,
Treasurer and Secretary
of Shareholder Financial Services,
Inc. ("SFSI") (since
November 1989); Assistant Treasurer of
Oppenheimer
Acquisition Corp. ("OAC") (since March, 1998);
Treasurer of
Oppenheimer Partnership Holdings, Inc. (since
November 1989);
Vice President and Treasurer of ORAMI
(since July 1996); an
officer of other Oppenheimer funds.
Scott Brooks,
Vice President None.
Kevin Brosmith,
Vice President None.
Nancy Bush,
Assistant Vice President
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant
Vice President of Rochester Fund
Services, Inc.
Michael Carbuto,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; Vice President of
Centennial.
John Cardillo,
Assistant Vice President None.
Mark Curry,
Assistant Vice President
H.C. Digby Clements,
Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Chief Executive
Officer and Senior Manager of HarbourView
Asset Management
Corporation; Trustee (1993 - present) of
Awhtolia College -
Greece.
William DeJianne, None.
Assistant Vice President
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Craig P. Dinsell
Executive Vice President Formerly, Senior
Vice President of Human Resources for
Fidelity
Investments-Retail Division (January, 1995 -
January, 1996),
Fidelity Investments FMR Co. (January, 1996
- June, 1997) and
Fidelity Investments FTPG (June, 1997 -
January, 1998).
Robert Doll, Jr.,
Executive Vice President and
Chief Investment Officer and
Director An officer and/or
portfolio manager of certain Oppenheimer
funds.
John Doney,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice
President (since September 1993), and a
director (since January
1992) of the Distributor; Executive
Vice President,
General Counsel and a director of
HarbourView, SSI, SFSI
and Oppenheimer Partnership Holdings,
Inc. since (September
1995); President and a director of
Centennial (since
September 1995); President and a director
of ORAMI (since July
1996); General Counsel (since May
1996) and Secretary
(since April 1997) of OAC; Vice
President and
Director of OppenheimerFunds International,
Ltd. ("OFIL") and
Oppenheimer Millennium Funds plc (since
October 1997); an
officer of other Oppenheimer funds.
Patrick Dougherty, None.
Assistant Vice President
Bruce Dunbar, None.
Vice President
Daniel Engstrom,
Assistant Vice President
George Evans,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Edward Everett,
Assistant Vice President None.
George Fahey,
Vice President None.
Scott Farrar,
Vice President Assistant Treasurer
of Oppenheimer Millennium Funds plc
(since October
1997); an officer of other Oppenheimer
funds; formerly, an
Assistant Vice President of OFI/Mutual
Fund Accounting (April
1994-May 1996), and a Fund Controller
for OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and
Secretary of the Distributor; Secretary
of HarbourView, and
Centennial; Secretary, Vice President
and Director of
Centennial Capital Corporation; Vice
President and Secretary
of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director
and/or portfolio manager of certain
Oppenheimer funds;
Presently he holds the following other
positions: Director
(since 1995) of ICI Mutual Insurance
Company; Governor
(since 1994) of St. John's College;
Director (since 1994 -
present) of International Museum of
Photography at George
Eastman House. Formerly, he held the
following positions:
formerly, Chairman of the Board and
Director of Rochester
Fund Distributors, Inc. ("RFD");
President and Director
of Fielding Management Company, Inc.
("FMC"); President
and Director of Rochester Capital
Advisors, Inc.
("RCAI"); Managing Partner of Rochester
Capital Advisors,
L.P., President and Director of Rochester
Fund Services, Inc.
("RFS"); President and Director of
Rochester Tax Managed
Fund, Inc.; Director (1993 - 1997) of
VehiCare Corp.; Director
(1993 - 1996) of VoiceMode.
Patricia Foster,
Vice President Formerly, she held the
following positions: An officer of
certain former
Rochester funds (May, 1993 - January, 1996);
Secretary of
Rochester Capital Advisors, Inc. and General
Counsel (June, 1993 -
January 1996) of Rochester Capital
Advisors, L.P.
David Foxhoven,
Assistant Vice President
Jennifer Foxson,
Vice President None.
Erin Gardiner,
Assistant Vice President None.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly, Vice
President (1987-1997) for Schroder Capital
Management International.
Jill Glazerman,
Vice President None.
Robyn Goldstein-Liebler
Assistant Vice President None.
Mikhail Goldverg
Assistant Vice President None.
Jeremy Griffiths,
Executive Vice President and
Chief Financial Officer Chief Financial Officer
and Treasurer (since March, 1998) of
Oppenheimer
Acquisition Corp.; a Member and Fellow of the
Institute of Chartered
Accountants; formerly, an accountant
for Arthur Young
(London, U.K.).
Robert Grill,
Senior Vice President Formerly, Marketing
Vice President for Bankers Trust Company
(1993-1996);
Steering Committee Member, Subcommittee
Chairman for American
Savings Education Council (1995-1996).
Caryn Halbrecht,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Elaine T. Hamann,
Vice President Formerly, Vice
President (September, 1989 - January, 1997)
of Bankers Trust Company.
Robert Haley
Assistant Vice President Formerly, Vice
President of Information Services for Bankers
Trust Company (January,
1991 - November, 1997).
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager President and
Director of SFSI; President and Chief
executive Officer of SSI.
Dorothy Hirshman, None.
Assistant Vice President
Merryl Hoffman,
Vice President None.
Nicholas Horsley,
Vice President Formerly, a Senior
Vice President and Portfolio Manager for
Warburg, Pincus
Counsellors, Inc. (1993-1997), Co-manager of
Warburg, Pincus
Emerging Markets Fund (12/94 - 10/97),
Co-manager Warburg,
Pincus Institutional Emerging Markets
Fund - Emerging
Markets Portfolio (8/96 - 10/97), Warburg
Pincus Japan OTC
Fund, Associate Portfolio Manager of
Warburg Pincus
International Equity Fund, Warburg Pincus
Institutional Fund -
Intermediate Equity Portfolio, and
Warburg Pincus EAFE Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Vice President None.
Jane Ingalls,
Vice President None.
Kathleen T. Ives,
Vice President None.
Christopher Jacobs,
Assistant Vice President None.
William Jaume,
Vice President
Frank Jennings,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Susan Katz,
Vice President
Thomas W. Keffer,
Senior Vice President None.
Erica Klein,
Assistant Vice President
Avram Kornberg,
Vice President None.
John Kowalik,
Senior Vice President An officer
and/or portfolio manager for certain
OppenheimerFunds;
formerly, Managing Director and Senior
Portfolio Manager at
Prudential Global Advisors (1989 -
1998).
Joseph Krist,
Assistant Vice President None.
Michael Levine,
Vice President None.
Shanquan Li,
Vice President None.
Stephen F. Libera,
Vice President An officer and/or
portfolio manager for certain Oppenheimer
funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to
March 1996, the senior bond portfolio
manager for Panorama
Series Fund Inc., other mutual funds
and pension
accounts managed by G.R. Phelps; also
responsible for
managing the public fixed-income securities
department at
Connecticut Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Dan Loughran,
Assistant Vice President:
Rochester Division None.
David Mabry,
Assistant Vice President None.
Steve Macchia,
Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive
Officer (since September 1995); President
and director (since
June 1991) of HarbourView; Chairman and
a director of SSI
(since August 1994), and SFSI (September
1995); President
(since September 1995) and a director
(since October 1990)
of OAC; President (since September
1995) and a director
(since November 1989) of Oppenheimer
Partnership Holdings,
Inc., a holding company subsidiary of
OFI; a director of ORAMI
(since July 1996) ; President and a
director (since
October 1997) of OFIL, an offshore fund
manager subsidiary of
OFI and Oppenheimer Millennium Funds
plc (since October
1997); President and a director of other
Oppenheimer funds; a
director of Hillsdown Holdings plc (a
U.K. food company);
formerly, an Executive Vice President of
OFI.
Philip T. Masterson,
Vice President
Loretta McCarthy,
Executive Vice President None.
Kelley A. McCarthy-Kane
Assistant Vice President Formerly, Product
Manager, Assistant Vice President (June
1995- October, 1997) of
Merrill Lynch Pierce Fenner & Smith.
Beth Michnowski,
Assistant Vice President Formerly Senior
Marketing Manager May, 1996 - June, 1997)
and Director of Product
Marketing (August, 1992 - May, 1996)
with Fidelity
Investments.
Lisa Migan,
Assistant Vice President None.
Denis R. Molleur,
Vice President None.
Nikolaos Monoyios,
Vice President A Vice President
and/or portfolio manager of certain
Oppenheimer funds
(since April 1998); a Certified Financial
Analyst; formerly, a
Vice President and portfolio manager
for Guardian Investor
Services, the management subsidiary of
The Guardian Life
Insurance Company (since 1979).
Linda Moore,
Vice President Formerly, Marketing
Manager (July 1995-November 1996) for
Chase Investment
Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Ray Olson,
Assistant Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
James Phillips
Assistant Vice President None.
Stephen Puckett,
Vice President None.
Jane Putnam,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Michael Quinn,
Assistant Vice President Formerly, Assistant
Vice President (April, 1995 - January,
1998) of Van Kampen
American Capital.
Julie Radtke,
Vice President
Russell Read,
Senior Vice President Vice President of
Oppenheimer Real Asset Management, Inc.
(since March, 1995).
Thomas Reedy,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; formerly, a
Securities Analyst for the Manager.
John Reinhardt,
Vice President: Rochester Division None
Ruxandra Risko,
Vice President None.
Michael S. Rosen,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President & Director None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Martha Shapiro,
Assistant Vice President None
Stephanie Seminara,
Vice President None.
Michelle Simone,
Assistant Vice President None.
Richard Soper,
Vice President None.
Cathleen Stahl,
Vice President
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and
Trustee of the New York-based Oppenheimer
Funds; formerly,
Chairman of the Manager and the Distributor.
Richard A. Stein,
Vice President: Rochester Division Assistant Vice
President (since 1995) of Rochester Capitol
Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Ralph Stellmacher,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
John Stoma,
Senior Vice President None.
Michael C. Strathearn,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; a Chartered
Financial Analyst; a Vice President of
HarbourView.
Wayne Strauss,
Assistant Vice President: Rochester
Division
James C. Swain,
Vice Chairman of the Board Chairman, CEO and
Trustee, Director or Managing Partner of
the Denver-based
Oppenheimer Funds; formerly, President and
Director of OAMC, CAMC
and Chairman of the Board of SSI.
Anthony A. Tanner,
Vice President: Rochester Division None.
Jay Tracey,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
James Turner,
Assistant Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Ashwin Vasan,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds.
Annette Von Brandis,
Assistant Vice President None.
Teresa Ward,
Assistant Vice President None.
Jerry Webman,
Senior Vice President Director of New
York-based tax-exempt fixed income
Oppenheimer funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; a Chartered
Financial Analyst; Vice President of
HarbourView.
William L. Wilby,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; Vice President of
HarbourView.
Brian Wixted Formerly Principal and
Chief Operating Officer,
Senior Vice President Bankers Trust Company.
Carol Wolf,
Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; Vice President of
Centennial; Vice President, Finance
and Accounting; Point
of Contact: Finance Supporters of
Children; Member of
the Oncology Advisory Board of the
Childrens Hospital.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of
SSI (since May 1985), SFSI (since
November 1989), OFIL
(since 1998), Oppenheimer Millennium
Funds plc (since
October 1997); an officer of other
Oppenheimer funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior Vice President An officer and/or
portfolio manager of certain Oppenheimer
funds; Vice President of
Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the
Oppenheimer Quest /Rochester Funds, as set forth below:
New York-based Oppenheimer Funds
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Europe Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Large Cap Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester Funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
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
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Capital Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds, the
Quest Funds, OppenheimerFunds 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 Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New
York 14625-2807.
Item 27. Principal Underwriter
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the Registrant's
Class 2 shares. It is also the Distributor of each of the other registered
open-end investment companies for which OppenheimerFunds, Inc. is the investment
adviser, as listed in Item 26(b) above (except Oppenheimer Multi-Sector Income
Trust and Panorama Series Fund, Inc.) and for MassMutual Institutional Funds.
(b) The directors and officers of the Registrant's principal underwriter
are:
Name & Principal Positions &
Offices Positions & Offices
Business Address with
Underwriter with Registrant
Jason Bach VicePresident
None
31 Racquel Drive
Marietta, GA 30364
Peter Beebe Vice President
None
876 Foxdale Avenue
Winnetka, IL 60093
Douglas S. Blankenship Vice
President None
17011 Woodbank
Spring, TX 77379
George C. Bowen(1) Vice President
and Vice President and
Treasurer Treasurer of the
Oppenheimer funds.
Peter W. Brennan Vice
President None
1940 Cotswold Drive
Orlando, FL 32825
Susan Burton(2) Vice
President None
Erin Cawley(2) Assistant Vice
President None
Robert Coli Vice
President None
12 White Tail Lane
Bedminster, NJ 07921
William Coughlin Vice
President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
Daniel Deckman Vice
President None
12252 Rockledge Circle
Boca Raton, FL 33428
Christopher DeSimone Vice
President None
5105 Aldrich Avenue South
Minneapolis, MN 55403
Joseph DiMauro Vice
President None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236
Rhonda Dixon-Gunner(1) Assistant Vice
President None
Andrew John Donohue(2) Executive
Vice Secretary of the
President &
Director Oppenheimer funds.
And General Counsel
John Donovan Vice
President None
868 Washington Road
Woodbury, CT 06798
Kenneth Dorris Vice
President None
4104 Harlanwood Drive
Fort Worth, TX 76109
Eric Edstrom(2) Vice
President None
Wendy H. Ehrlich Vice
President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice
President None
35 Crown Terrace
Yardley, PA 19067
Todd Ermenio Vice
President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice
President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice
President None
412 Commons Way
Doylestown, PA 18901
Eric Fallon Vice
President None
10 Worth Circle
Newton, MA 02158
Katherine P. Feld(2) Vice
President None
& Secretary
Mark Ferro Vice
President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice
President None
John ("J") Fortuna(2) Vice
President None
Ronald R. Foster Senior Vice
President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki-Wells Vice
President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice
President None
10239 Rougemont Lane
Charlotte, NC 28277
Michelle Gans Vice
President None
8327 Kimball Drive
Eden Prairie, MN 55347
L. Daniel Garrity Vice
President None
2120 Brookhaven View, N.E.
Atlanta, GA 30319
Mark Giles Vice
President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice
President/National None
Sales Manager
Michael Guman Vice
President None
3913 Pleasent Avenue
Allentown, PA 18103
Allen Hamilton Vice
President None
5 Giovanni
Aliso Viejo, CA 92656
C. Webb Heidinger Vice
President None
138 Gales Street
Portsmouth, NH 03801
Byron Ingram(1) Assistant Vice
President None
Kathleen T. Ives(1) Vice
President None
Eric K. Johnson Vice
President None
3665 Clay Street
San Francisco, CA 94118
Mark D. Johnson Vice
President None
409 Sundowner Ridge Court
Wildwood, MO 63011
Elyse Jurman Vice
President None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL 33062
Michael Keogh(2) Vice
President None
Brian Kelly Vice
President None
60 Larkspur Road
Fairfield, CT 06430
John Kennedy Vice
President None
799 Paine Drive
Westchester, PA 19382
Richard Klein Vice
President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice
President None
560 Beacon Hill Drive
Orange Village, OH 44022
Oren Lane Vice
President None
5286 Timber Bend Drive
Brighton, MI 48116
Todd Lawson Vice
President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Dawn Lind Vice
President None
7 Maize Court
Melville, NY 11747
James Loehle Vice
President None
2714 Orchard Terrace
Linden, NJ 07036
Steve Manns Vice
President None
1941 W. Wolfram Street
Chicago, IL 60657
Todd Marion Vice
President None
39 Coleman Avenue
Chatham, N.J. 07928
Marie Masters Vice
President None
8384 Glen Eagle Drive
Manlius, NY 13104
LuAnn Mascia(2) Assistant Vice
President None
Wesley Mayer(2) Vice
President None
Theresa-Marie Maynier Vice
President None
2421 Charlotte Drive
Charlotte, NC 28203
Anthony Mazzariello Vice
President None
100 Anderson Street, #427
Pittsburgh, PA 15212
John McDonough Vice
President None
3812 Leland Street
Chevey Chase, MD 20815
Wayne Meyer Vice
President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Tanya Mrva(2) Assistant Vice
President None
Laura Mulhall(2) Senior Vice
President None
Charles Murray Vice
President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice
President None
32 Carolin Road
Upper Montclair, NJ 07043
Denise-Marke Nakamura Vice
President None
2870 White Ridge Place, #24
Thousand Oaks, CA 91362
Chad V. Noel Vice
President None
2408 Eagleridge Dr.
Henderson, NV 89014
Joseph Norton Vice
President None
2518 Fillmore Street
San Francisco, CA 94115
Kevin Parchinski Vice
President None
8409 West 116th Terrace
Overland Park, KS 66210
Gayle Pereira Vice
President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice
President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice
President None
130 E. 63rd Street, #10E
New York, NY 10021
Steve Puckett Vice
President None
5297 Soledad Mountain Road
San Diego, CA 92109
Elaine Puleo(2) Senior Vice
President None
Minnie Ra Vice
President None
100 Delores Street, #203
Carmel, CA 93923
Dustin Raring Vice
President None
378 Elm Street
Denver, CO 80220
Michael Raso Vice
President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice
President None
Douglas Rentschler Vice
President None
677 Middlesex Road
Grosse Pointe Park, MI 48230
Ruxandra Risko(2) Vice
President None
Ian Robertson Vice
President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(2) Vice
President None
Kenneth Rosenson Vice
President None
3505 Malibu Country Drive
Malibu, CA 90265
James Ruff(2)
President None
Alfredo Scalzo Vice
President None
19401 Via Del Mar, #303
Tampa, FL 33647
Timothy Schoeffler Vice
President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice
President None
785 Beau Chene Drive
Mandeville, LA 70471
Eric Sharp Vice
President None
862 McNeill Circle
Woodland, CA 95695
Michelle Simone(2) Assistant Vice
President None
Stuart Speckman(2) Vice
President None
Timothy Stegner Vice
President None
794 Jackson Street
Denver, CO 80206
Peter Sullivan Vice
President None
21445 S. E 35th Street
Issaquah, WA 98029
David Sturgis Vice
President None
44 Abington Road
Danvers, MA 0923
Scott Such(1) Senior Vice
President None
Brian Summe Vice
President None
239 N. Colony Drive
Edgewood, KY 41017
George Sweeney Vice
President None
5 Smokehouse Lane
Hummelstown, PA 17036
Andrew Sweeny Vice
President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice
President None
704 Inwood
Southlake, TX 76092
David G. Thomas Vice
President None
7009 Metropolitan Place, #300
Falls Church, VA 22043
Susan Torrisi(2) Assistant Vice
President None
Sarah Turpin Vice
President None
2201 Wolf Street, #5202
Dallas, TX 75201
Mark Vandehey(1) Vice
President None
Andrea Walsh(1) Vice
President None
Suzanne Walters(1) Assistant Vice
President None
James Wiaduck Vice
President None
29900 Meridian Place
#22303
Farmington Hills, MI 48331
Marjorie Williams Vice
President None
6930 East Ranch Road
Cave Creek, AZ 85331
Donn Weise Vice
President None
3249 Earlmar Drive
Los Angeles, CA 90064
(1) 6803 South Tucson Way, Englewood, CO 80112
(2) Two World Trade Center, New York, NY 10048
(3) 350 Linden Oaks, Rochester, NY 14623
(c) Not applicable.
Item 28. 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 of 1940 and rules promulgated thereunder are in the
possession of OppenheimerFunds, Inc.
at its offices at 6803 South Tucson Way, Englewood, Colorado 80112.
Item 29. Management Services
Not applicable
Item 30. Undertakings
Not applicable.
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 the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) of 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
County of Arapahoe and State of Colorado on the 27th day of April, 1999.
Oppenheimer Variable Account Funds
By: /s/ James C. Swain*
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 on
the dates indicated:
Signatures Title Date
/s/ James C. Swain* Chairman of the April 27, 1999
- -------------------- Board of Trustees
James C. Swain and Principal Executive
Officer
/s/ Brian W. Wixted* Treasurer April 27, 1999
- -------------------------------------
Brian W. Wixted
/s/ Bridget A. Macaskill* President April 27, 1999
- -------------------------------------
Bridget A. Macaskill
/s/ Robert G. Avis* Trustee April 27, 1999
- -------------------------------------
Robert G. Avis
/s/ William A. Baker* Trustee April 27, 1999
- -------------------------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee April 27, 1999
- -------------------------------------
Charles Conrad, Jr.
/s/ Jon S. Fossel* Trustee April 27, 1999
- -------------------------------------
Jon S. Fossel
/s/ Sam Freedman* Trustee April 27, 1999
- -------------------------------------
Sam Freedman
/s/ Raymond J. Kalinowski* Trustee April 27, 1999
- -------------------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee April 27, 1999
- -------------------------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee April 27, 1999
- -------------------------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee April 27, 1999
- -------------------------------------
Ned M. Steel
*By: /s/ Robert G. Zack
- ---------------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
EXHIBIT INDEX
Exhibit No. Description
- ------------ --------------
23 (a) Ninth Restated Declaration of Trust dated 5/1/99
23 (b)(i) Oppenheimer Money Fund/VA specimen share
certificate
23(b)(ii) Oppenheimer Bond Fund/VA specimen share certificate
23(b)(iii) Oppenheimer Capital Appreciation Fund/VA specimen
share certificate
23(b)(iv) Oppenheimer High Income Fund/VA specimen share
certificate
23(b)(v) Oppenheimer Aggressive Growth Fund/VA specimen
share certificate
23(b)(vi) Oppenheimer Multiple Strategies Fund/VA specimen
share certificate
23(b)(vii) Oppenheimer Global Securities Fund/VA specimen
share certificate
23(b)(viii) Oppenheimer Strategic Bond Fund/VA specimen share
certificate
23(b)(ix) Oppenheimer Main Street Growth & Income Fund/VA
specimen share certificate
23(b)(x) Oppenheimer Small Cap Growth Fund/VA specimen
share certificate
23(b)(xi) Oppenheimer Money Fund/VA Class 2 specimen share
certificate
23(b)(xii) Oppenheimer Bond Fund/VA Class 2 specimen share
certificate
23(b)(xiii) Oppenheimer Capital Appreciation Fund/VA Class 2
specimen share certificate
23(b)(xiv) Oppenheimer High Income Fund/VA Class 2
specimen share certificate
23(b)(xv) Oppenheimer Aggressive Growth Fund/VA Class 2
specimen share certificate
23(b)(xvi) Oppenheimer Multiple Strategies Fund/VA Class 2
specimen share certificate
23(b)(xvii) Oppenheimer Global Securities Fund/VA Class 2
specimen share certificate
23(b)(viii) Oppenheimer Strategic Bond Fund/VA Class 2
specimen share certificate
23(b)(xix) Oppenheimer Main Street Growth & Income Fund/VA
Class 2 specimen share certificate
23(b)(xx) Oppenheimer Small Cap Growth Fund/VA Class 2
specimen share certificate
23(d)(v) Amended and Restated Investment Advisory Agreement
for Oppenheimer Aggressive Growth Fund/VA dated 5/1/99
23(j) Independent Auditors' Consent
23(n) Financial Data Schedules
- -- Power of Attorney of Brian W. Wixted
-1-
NINTH
RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NINTH RESTATED DECLARATION OF TRUST, made as of May 1, 1999 by and
among the individuals executing this Ninth 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
reinvestment of funds 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, (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,
(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
of Shares, (vii) by the Sixth Restated Declaration of Trust dated February 28,
1995, the Trustees amended and restated said Declaration of Trust to create a
new Series of Shares, (viii) by the Seventh Restated Declaration of Trust dated
December 16, 1997, the Trustees amended and restated said Declaration of Trust
to create two new Series of Shares and (ix) by the Eighth Restated Declaration
of Trust dated May 1, 1998, the Trustees amended and restated said Declaration
of Trust to create a class of Shares for each Series and to change the names of
two Series; WHEREAS, the Trustees desire to amend such Declaration of Trust, as
amended, without Shareholder approval pursuant to Section (B) of Article Fourth,
(i) to add "/VA" as a suffix to the names of each Series, and (ii) to change the
name of the Series previously designated as Oppenheimer Growth Fund and
Oppenheimer Growth & Income Fund to "Oppenheimer Capital Appreciation Fund/VA"
and "Oppenheimer Main Street Growth & Income Fund/VA", respectively. 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 Ninth 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 6803 South Tucson Way, Englewood, Colorado 80112. The
Registered Agent for service is Massachusetts Mutual Life Insurance Company,
1295 State Street, Springfield, Massachusetts 01111, Attention: Legal
Department. 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. "Class" means a class of Shares of a
Series the Trust established and designated under or in accordance with the
provisions of ARTICLE FOURTH. 5. "Commission" means the Securities and Exchange
Commission. 6. "Declaration of Trust" shall mean this Declaration of Trust as
amended or restated from time to time. 7. 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. 8. "Series" refers to Series of
Shares established and designated under or in accordance with the provisions of
Article FOURTH.
9. "Shareholder" means a record owner of Shares of the Trust.
10. "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust or any Series or
Class 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.
11. The "Trust" refers to the Massachusetts business trust created
by this Declaration of Trust, as amended or restated from
time to time.
12. "Trustees" refers to the individual trustees in their capacity
as trustees hereunder of the Trust and their successor or
successors 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 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 Classes and in
such 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 or Class into one or more Series or
Classes 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, without obtaining Shareholder
approval, to create one or more Series of Shares in addition to
the Series specifically established and designated in part (B) of this
Article FOURTH, and to divide the Shares of any Series into
two or more Classes pursuant to part (B) of this Article FOURTH, all as
they deem necessary or desirable, to establish and designate
such Series and Classes, and to fix and determine the relative rights and
preferences as between the shares of the different Series
or Classes as to right of redemption and the price, terms and manner of
redemption, liabilities and expenses to be borne by any
Series or Class, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund
provisions, conversion on liquidation, conversion rights, and
conditions under which the several Series and Classes shall have
individual voting rights or no voting rights. Except as aforesaid, all
Shares of the different Series and Classes shall be identical.
The number of authorized Shares and the number of Shares of
each Series and each Class that may be issued is unlimited,
and the Trustees may issue Shares of any Series or Class 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 or Class into one or more Series or Class that may be
established and designated from time to time. The Trustees may hold as
treasury Shares (of the same or some other Series or Class),
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 or Class reacquired by the Trust.
The establishment and designation of any Series or any Class 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 such Class of such Series, or as otherwise
provided in such instrument. At any time that there are no Shares
outstanding of any particular Series or Class previously
established and designated, the Trustees may by an instrument executed by a
majority of their number abolish that Series or Class 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 or Class 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 or Class 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 or Class generally.
Expenses related directly or indirectly to the Shares of a Class
of a Series may be borne solely by such Class (as shall be
determined by the Trustees) and, as provided in Article FIFTH, a Class of a
Series may have exclusive voting rights with respect to
matters relating solely to such Class. The bearing of expenses solely
by a Class of Shares of a Series shall be appropriately
reflected (in the manner determined by the Trustees) in the net asset
value, dividend and liquidation rights of the Shares of such
Class of a Series. The division of the Shares of a Series into Classes
and the terms and conditions pursuant to which such Shares
will be issued must be made in compliance with the 1940 Act. No division
of Shares of a Series into Classes shall result in the
creation of a Class of Shares having a preference as to dividends or
distributions or a preference in the event of any liquidation,
termination or winding up of the Trust, to the extent such a preference is
prohibited by Section 18 of the 1940 Act as to the Trust.
The relative rights and preferences of Shares of different
Classes of Shares of the same Series shall be the same in all
respects except that, and unless and until the Board of Trustees shall
determine otherwise: (i) when a vote of Shareholders is
required under this Declaration of Trust or when a meeting of Shareholders
is called by the Board of Trustees, the Shares of a Class
shall vote exclusively on matters that affect that Class only; (ii) the
liability and expenses related to a Class shall be borne
solely by such Class (as determined and allocated to such Class by the
Trustees from time to time in a manner consistent with parts
(A) and (B) of Article FOURTH); and (iii) pursuant to paragraph 10 of
Article NINTH, the Shares of each Class shall have such other
rights and preferences as are set forth from time to time in the then
effective prospectus and/or statement of additional information
relating to such Shares. Dividends and distributions on Shares of
different Classes of the same Series may differ and the net asset
values of Shares of different Classes of the same Series may differ.
The Trustees shall have the authority from time to time, without
obtaining Shareholder approval, to divide the unissued
Shares of any Series into two or more Classes as they deem necessary or
desirable, and to establish and designate such classes. In
such event, each Class of a Series shall represent interests in the
designated Series of the Trust and have such voting, dividend,
liquidation and other rights as may be established and designated by the
Trustees.
(B) Without limiting the authority of the Trustees set forth in
part (A) of this Article FOURTH to establish and designate
any further such Classes or Series, the Trustees hereby establish and
designate ten Series of Shares: "Oppenheimer Money Fund/VA,"
"Oppenheimer Bond Fund/VA" and "Oppenheimer Capital Appreciation Fund/VA
(formerly "Oppenheimer Growth Fund") established by the
Declaration of Trust dated August 28, 1984 and renamed by this Ninth
Restated Declaration of Trust dated May 1, 1999; "Oppenheimer
High Income Fund/VA" and "Oppenheimer Aggressive Growth Fund/VA" (formerly
"Oppenheimer Capital Appreciation Fund") established by
the First Restated Declaration of Trust dated March 11, 1986 and renamed
by this Eighth Restated Declaration of Trust dated May 1,
1998; "Oppenheimer Multiple Strategies Fund/VA," established by the
Third Restated Declaration of Trust dated October 21, 1986;
"Oppenheimer Global Securities Fund/VA" established by the Fourth
Restated Declaration of Trust dated June 4, 1990; "Oppenheimer
Strategic Bond Fund/VA" established by the Fifth Restated Declaration of
Trust dated February 25, 1993; "Oppenheimer Main Street
Growth & Income Fund/VA" (formerly "Oppenheimer Growth & Income Fund")
established by the Sixth Restated Declaration of Trust dated
February 28, 1995 and renamed by this Ninth Restated Declaration of
Trust dated May 1, 1999; and "Oppenheimer Small Cap Growth
Fund/VA" (formerly "Oppenheimer Discovery Fund") established by the Seventh
Restated Declaration of Trust dated December 16, 1997 and
renamed by this Eighth Restated Declaration of Trust dated May 1, 1998.
The Shares of Oppenheimer Money Fund/VA, Oppenheimer High
Income Fund/VA, Oppenheimer Bond Fund/VA, Oppenheimer Global Securities
Fund/VA, Oppenheimer Aggressive Growth Fund/VA, Oppenheimer
Capital Appreciation Fund/VA, Oppenheimer Multiple Strategies Fund/VA,
Oppenheimer Strategic Bond Fund/VA, Oppenheimer Main Street
Growth & Income Fund/VA and Oppenheimer Small Cap Growth Fund/VA are hereby
divided into two Classes, as follows: (i) the Shares of
the Class of each Series outstanding since the inception of that Series
have no numerical class designation; and (ii) the Shares of
the Class initially issued upon the division of the Shares of each
Series into two Classes pursuant to this Eighth Restated
Declaration of Trust are hereby numerically designated Class 2 Shares.
The Shares of these Series and any Shares of any further
Series or Classes 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 or Classes 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) Liabilities Belonging to a Class. If a Series is
divided into more than one Class, the liabilities, expenses,
costs, charges and reserves attributable to a Class shall be charged and
allocated to the Class to which such liabilities, expenses,
costs, charges or reserves are attributable. Any general liabilities,
expenses, costs, charges or reserves belonging to the Series
which are not identifiable as belonging to any particular Class shall be
allocated and charged by the Trustees to and among any one
or more of the Classes 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 allocations in the two preceding
sentences shall be subject to the 1940 Act or any release,
rule, regulation, interpretation or order thereunder, relating to such
allocations. The liabilities, expenses, costs, charges and
reserves allocated and so charged to each Class are herein referred to as
"liabilities belonging to" that Class. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall
be conclusive and binding upon the holders of all Classes
for all purposes.
(iv) Dividends. Dividends and distributions on Shares of a
particular Series or Class may be paid to the holders of
Shares of that Series or Class, 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 or Class. All
dividends and distributions on Shares of a particular Series
or Class shall be distributed pro rata to the holders of that Series or
Class in proportion to the number of Shares of that Series or
Class 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.
(v) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Series and
Classes that have been established and designated shall be entitled to
receive, as a Series or Class, 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 Class and Series shall
be distributed among such Shareholders in proportion to
the number of Shares of such Class of that Series held by them and recorded
on the books of the Trust.
(vi) Transfer. All Shares of each particular Series or
Class shall be transferable, but transfers of Shares of a
particular Class and Series will be recorded on the Share transfer records
of the Trust applicable to that Series or Class only at
such times as Shareholders shall have the right to require the Trust to
redeem Shares of that Series or Class and at such other times
as may be permitted by the Trustees.
(vii) 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 or any Class of that Series), and each Share of any
particular Series shall be equal to each other Share of that Series
(Shares of each Class of a Series shall be equal to each other
Share of such Class); but the provisions of this sentence shall not restrict
any distinctions permissible under this Article FOURTH
that may exist with respect to Shares of a Series or the different Classes
of a Series. The Trustees may from time to time divide
or combine the Shares of any particular Series or Class of a Series into a
greater or lesser number of Shares of that Series or Class
of a Series without thereby changing the proportionate beneficial interest
in the assets belonging to that Class or Series or in any
way affecting the rights of Shares of any other Class or Series.
(viii)Fractions. Any fractional Share of any Series or Class,
if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share of that
Series or Class, including those rights and obligations with
respect to voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(ix) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the
authority to provide (i) whether holders of Shares of any Series shall
have the right to exchange said Shares into Shares of one or
more other Series of Shares (ii) whether holders of Shares of any Class of a
Series shall have the right to exchange said Shares into
Shares of one or more other Classes of the same or a different Series,
and/or (iii) that the Trust shall have the right to carry out
the aforesaid exchanges, in each case in accordance with such requirements
and procedures as may be established by the Trustees.
(x) 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 Class and 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 Class and Series held from time to time by each such Shareholder.
(xi) 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 or
sale of Shares that conform to such authorized terms and to reject any
purchase or sale orders for Shares whether or not conforming
to such authorized terms.
(C) The Trustees hereby terminate the Series of Shares,
"Oppenheimer Real Asset Fund," that was established by the Seventh
Restated Declaration of Trust dated December 16, 1997, for which no shares
were ever issued.
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. If the
Shares of a Series are divided into Classes as provided in
Article Fourth, the Shares of each Class shall have identical voting
rights except that the Trustees, in their discretion, may
provide a Class of a Series with exclusive voting rights with respect to
matters which relate solely to such Classes. If the Shares
of any Series shall be divided into Classes with a Class having exclusive
voting rights with respect to certain matters, the quorum
and voting requirements described below with respect to action to be taken
by the Shareholders of the Class of such Series on such
matters shall be applicable only to the Shares of such Class. 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 or Class 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 or Class 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 of 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 Class or 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 Shareholders 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 thereby 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
adviser 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 or Class, 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
belonging to that Series or with respect to a Class (i.e., the
value of the assets of that Series or Class less its liabilities
exclusive of its surplus) by the total number of Shares of that
Series or Class 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 belonging to any Series or Class 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 Class and Series in accordance with the
1940 Act and to authorize the voluntary purchase by any
Class and Series, either directly or through an agent, of Shares of any
Class and 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 Class and
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 such Class 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 Class
and 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 or Class of the Trust or the distributor 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 OppenheimerFunds, Inc. ("OFI"), incidental
to and as part of an advisory, management or supervisory
contract which may be entered into by the Trust with OFI. The license may
be terminated by OFI 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 (or Class)
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 and the names of any Series (or Classes)
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 canceled 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 1st day of May, 1999.
/s/ William A. Baker /s/ Charles Conrad, Jr.
William A. Baker Charles Conrad, Jr.
197 Desert Lakes Drive 6301Princeville Circle
Palm Springs, CA 92264 Huntington Beach, CA 92648
/s/ Ned M. Steel /s/ Robert M. Kirchner
Ned M. Steel Robert M. Kirchner
3416 S. Race Street 2800 S. University Blvd. #131
Englewood, CO 80110 Denver, Colorado 80210
/s/ Raymond J. Kalinowski /s/ C. Howard Kast
Raymond J. Kalinowski C. Howard Kast
44 Portland Drive 2252 East Alameda, #30
St. Louis, Missouri 63131 Denver, CO 80209
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain Jon S. Fossel
355 Adams Street Box 44-Mead Street
Denver, CO 80206 Waccabuc, NY 10597
/s/ Robert G. Avis /s/ Sam Freedman
Robert G. Avis Sam Freedman
1706 Warson Estates Drive 4975 Lake Shore Drive
St. Louis, MO 63124 Littleton, CO 80123
OPPENHEIMER MONEY FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER MONEY FUND/VA
(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 MONEY FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER BOND FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER BOND FUND/VA
(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 BOND FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVISON
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s) __________________________
guaranteed Name of Firm or
Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER CAPITAL APPRECIATION FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER CAPITAL APPRECIATION FUND/VA
(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 CAPITAL APPRECIATION FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER HIGH INCOME FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER HIGH INCOME FUND/VA
(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 HIGH INCOME FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
(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 AGGRESSIVE GROWTH FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
(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 MULTIPLE STRATEGIES FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER GLOBAL SECURITIES FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account
Funds A
MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER GLOBAL SECURITIES FUND/VA
(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 GLOBAL SECURITIES FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVISON
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s) __________________________
guaranteed Name of Firm or
Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER STRATEGIC BOND FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER STRATEGIC BOND FUND/VA
(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 STRATEGIC BOND FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER MAIN STREET GROWTH & INCOME
FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER MAIN STREET
GROWTH & INCOME FUND/VA
(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 MAIN STREET
GROWTH & INCOME FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER SMALL CAP GROWTH FUND/VA
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): NUMBER [of shares]
(upper right) SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER SMALL CAP GROWTH FUND/VA
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE
FOR
CERTAIN
DEFINITIONS
(box
with number)
(at left) is the owner of
(centered) FULLY PAID SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER SMALL CAP GROWTH FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER MONEY FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER MONEY FUND/VA
(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 CLASS 2 SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER MONEY FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER BOND FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER BOND FUND/VA
(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 CLASS 2 SHARES OF BENEFICIAL
INTEREST OF
OPPENHEIMER BOND FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVISON
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
_________________________________________________________ Class 2 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 tenancy)
Signature(s) __________________________
guaranteed Name of Firm or
Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER CAPITAL APPRECIATION FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER CAPITAL APPRECIATION FUND/VA
(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 CLASS 2 SHARES OF BENEFICIAL
INTEREST OF
OPPENHEIMER CAPITAL APPRECIATION FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER HIGH INCOME FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER HIGH INCOME FUND/VA
(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 CLASS 2 SHARES OF BENEFICIAL
INTEREST OF
OPPENHEIMER HIGH INCOME FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
(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 CLASS 2 SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
(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 CLASS 2 SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account
Funds A
MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER GLOBAL SECURITIES FUND/VA
(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 CLASS 2 SHARES OF BENEFICIAL
INTEREST OF
OPPENHEIMER GLOBAL SECURITIES FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVISON
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s) __________________________
guaranteed Name of Firm or
Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER STRATEGIC BOND FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER STRATEGIC BOND FUND/VA
(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 CLASS 2 SHARES OF BENEFICIAL
INTEREST OF
OPPENHEIMER STRATEGIC BOND FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER MAIN STREET GROWTH & INCOME
FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER MAIN STREET
GROWTH & INCOME FUND/VA
(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 CLASS 2 SHARES OF BENEFICIAL
INTEREST OF
OPPENHEIMER MAIN STREET
GROWTH & INCOME FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
OPPENHEIMER SMALL CAP GROWTH FUND/VA
Class 2 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): NUMBER [of shares]
(upper right) CLASS 2 SHARES
(centered
below boxes) Oppenheimer Variable Account Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER SMALL CAP GROWTH FUND/VA
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE
FOR
CERTAIN
DEFINITIONS
(box
with number)
(at left) is the owner of
(centered) FULLY PAID CLASS 2 SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER SMALL CAP GROWTH FUND/VA
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)
/s/ Brian W. Wixted /s/ Bridget A.
Macaskill
_______________________ ___________________
TREASURER
PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEAL
1984
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS
SERVICES (A DIVSION
OF OPPENHEIMERFUNDS, 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 on above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
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)
______________________________________________________
__________________________________________________________ Class 2 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 tenancy)
Signature(s)
__________________________
guaranteed Name
of Firm or Bank
by:
_____________________________
Signature of
Officer
(text printed NOTICE: The signature(s) to this assignment
vertically to right must correspond
with the name(s) as
of above paragraph) written upon the 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,
signature(s) a Federally-chartered savings and loan
association, a foreign bank
having a U.S.
firm of a national securities
exchange.
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT made the 1st day of May, 1999, by and
between OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter
referred to as the "Trust"), and OPPENHEIMERFUNDS, INC. (hereinafter referred
to as "OFI").
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 OFI is a
registered investment adviser;
WHEREAS, OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (the "Fund") is a series of
the Trust having a separate portfolio, investment policies
and investment restrictions; and
WHEREAS, the Trust and Oppenheimer Management Corporation have entered
into an Investment Advisory Agreement for the Fund dated
September 1, 1994 (the "Prior Agreement").
WHEREAS, the Trust and OFI have agreed, at a meeting of the Board of
Trustees held on December 15, 1998, to pay OFI an annual
management fee rate of 0.58% on average annual net assets of the Fund in
excess of $1.5 billion, and to replace the Prior Agreement
with this Agreement.
WHEREAS, since the Prior Agreement, OFI changed its name from "Oppenheimer
Management Corporation" to "OppenheimerFunds, Inc." and
the Fund changed its name from "Oppenheimer Capital Appreciation Fund" to
"Oppenheimer Aggressive Growth Fund/VA".
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 OFI and OFI 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. OFI
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 OFI 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.
-5-
a. OFI 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 for services under this Agreement other than as
provided by the terms of this Agreement and subject to the provisions of
paragraph 7 hereof, OFI 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. OFI 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 OFI'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 OFI 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
OFI 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 OFI of its duties
and obligations under this Agreement.
3. Other Duties of OFI.
OFI 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. OFI
shall, at its own cost and expense, also provide the Trust
with adequate office space, facilities and equipment. OFI 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 OFI 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
OFI; (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 OFI or any
entity controlling, controlled by or under common control with OFI, 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 OFI.
The Trust agrees to pay OFI on behalf of the Fund and OFI 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; .60% of the next $700
million; and .58% of average annual net assets in excess of $1.5 billion.
6. Use of Name "Oppenheimer."
OFI 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 OFI's
rights to the name "Oppenheimer" under applicable law, such license shall
allow OFI 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 OFI, 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 OFI in connection
with any of its activities, or licensed by OFI to any other
party.
7. Portfolio Transactions and Brokerage.
a. OFI 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 OFI of
its investment management functions.
b. OFI 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 OFI 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. OFI 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 OFI 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 OFI
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 OFI or its
affiliates with respect to the accounts as to which they
exercise investment discretion. In reaching such determination, OFI
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, OFI 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. OFI 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, OFI
may also consider sales of shares of the Fund and the other
funds advised by OFI 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,
whereupon it replaces the Prior Agreement. Unless earlier
terminated pursuant to paragraph 10 hereof, this Agreement shall continue
in effect until December 31, 1999, 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.
OFI 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. OFI 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 OFI 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 OFI (which
notice may be waived by OFI) 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 OFI 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 in the
Investment Company Act.
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
on behalf of OPPENHEIMER AGGRESSIVE
GROWTH FUND/VA
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Title: Vice President and Secretary
OPPENHEIMERFUNDS, INC.
By: /s/ Andrew J. Donohue
--------------------------------
Andrew J. Donohue
Title: Executive Vice President
Exhibit 23 (j)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No.34 to Registration
Statement No. 2-93177 on Form N-1A of Oppenheimer Variable Account Funds of our
report dated January 25,1999, appearing in the Statement of Additional
Information, which is part of such Registration Statement, and to the references
to us under the headings "Financial Highlights" appearing in the Prospectuses
which are also a part of such Registration Statement, and "Independent Auditors"
appearing in the Statement of Additional Information.
/s/ Deloitte & Touche LLP
- --------------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
April 28, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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126,798,538
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<PER-SHARE-NAV-END>
44.83
<EXPENSE-RATIO>
0.71
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 752737
<NAME> OPPENHEIMER CAPITAL APPRECIATION FUND/VA
<SERIES>
<NUMBER> 3
<NAME> OPPENHEIMER VARIABLE ACCOUNT FUNDS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END>
DEC-31-1998
<PERIOD-START>
JAN-01-1998
<PERIOD-END>
DEC-31-1998
<INVESTMENTS-AT-COST>
576,294,542
<INVESTMENTS-AT-VALUE>
767,477,940
<RECEIVABLES>
4,081,390
<ASSETS-OTHER>
9,025
<OTHER-ITEMS-ASSETS>
119,623
<TOTAL-ASSETS>
771,687,978
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
3,138,282
<TOTAL-LIABILITIES>
3,138,282
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
542,115,494
<SHARES-COMMON-STOCK>
20,956,201
<SHARES-COMMON-PRIOR>
15,223,362
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
2,959,139
<ACCUMULATED-NET-GAINS>
32,291,665
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
191,183,398
<NET-ASSETS>
768,549,696
<DIVIDEND-INCOME>
3,555,637
<INTEREST-INCOME>
4,035,121
<OTHER-INCOME>
0
<EXPENSES-NET>
4,554,509
<NET-INVESTMENT-INCOME>
3,036,249
<REALIZED-GAINS-CURRENT>
32,507,950
<APPREC-INCREASE-CURRENT>
99,933,565
<NET-CHANGE-FROM-OPS>
135,477,764
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
3,939,379
<DISTRIBUTIONS-OF-GAINS>
47,530,889
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
8,866,513
<NUMBER-OF-SHARES-REDEEMED>
4,699,071
<SHARES-REINVESTED>
1,565,397
<NET-CHANGE-IN-ASSETS>
274,643,722
<ACCUMULATED-NII-PRIOR>
0
<ACCUMULATED-GAINS-PRIOR>
47,279,914
<OVERDISTRIB-NII-PRIOR>
3,896,959
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
4,369,487
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
4,554,509
<AVERAGE-NET-ASSETS>
609,246,000
<PER-SHARE-NAV-BEGIN>
32.44
<PER-SHARE-NII>
0.13
<PER-SHARE-GAIN-APPREC>
7.28
<PER-SHARE-DIVIDEND>
0.24
<PER-SHARE-DISTRIBUTIONS>
2.94
<RETURNS-OF-CAPITAL>
0.00
<PER-SHARE-NAV-END>
36.67
<EXPENSE-RATIO>
0.75
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 752737
<NAME> OPPENHEIMER SMALL CAP GROWTH FUND/VA
<SERIES>
<NUMBER> 10
<NAME> OPPENHEIMER VARIABLE ACCOUNT FUNDS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END>
DEC-31-1998
<PERIOD-START>
MAY-01-1998
<PERIOD-END>
DEC-31-1998
<INVESTMENTS-AT-COST>
739,885
<INVESTMENTS-AT-VALUE>
844,856
<RECEIVABLES>
18,996
<ASSETS-OTHER>
1,514
<OTHER-ITEMS-ASSETS>
129,322
<TOTAL-ASSETS>
994,688
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
384
<TOTAL-LIABILITIES>
384
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
934,634
<SHARES-COMMON-STOCK>
103,531
<SHARES-COMMON-PRIOR>
0
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(45,301)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
104,971
<NET-ASSETS>
994,304
<DIVIDEND-INCOME>
173
<INTEREST-INCOME>
60
<OTHER-INCOME>
0
<EXPENSES-NET>
2,572
<NET-INVESTMENT-INCOME>
(2,339)
<REALIZED-GAINS-CURRENT>
(45,301)
<APPREC-INCREASE-CURRENT>
104,971
<NET-CHANGE-FROM-OPS>
57,331
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
0
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
114,434
<NUMBER-OF-SHARES-REDEEMED>
10,903
<SHARES-REINVESTED>
0
<NET-CHANGE-IN-ASSETS>
994,304
<ACCUMULATED-NII-PRIOR>
0
<ACCUMULATED-GAINS-PRIOR>
0
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
2,219
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
2,572
<AVERAGE-NET-ASSETS>
441,000
<PER-SHARE-NAV-BEGIN>
10.00
<PER-SHARE-NII>
(0.02)
<PER-SHARE-GAIN-APPREC>
(0.38)
<PER-SHARE-DIVIDEND>
0.00
<PER-SHARE-DISTRIBUTIONS>
0.00
<RETURNS-OF-CAPITAL>
0.00
<PER-SHARE-NAV-END>
9.60
<EXPENSE-RATIO>
0.87
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 752737
<NAME> Oppenheimer Global Securities Fund/VA
<SERIES>
<NUMBER> 7
<NAME> Oppenheimer Variable Account Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END>
DEC-31-1998
<PERIOD-START>
JAN-01-1998
<PERIOD-END>
DEC-31-1998
<INVESTMENTS-AT-COST>
943,081,348
<INVESTMENTS-AT-VALUE>
1,146,157,977
<RECEIVABLES>
1,663,432
<ASSETS-OTHER>
12,495
<OTHER-ITEMS-ASSETS>
179,560
<TOTAL-ASSETS>
1,148,013,464
<PAYABLE-FOR-SECURITIES>
10,966,196
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
2,018,134
<TOTAL-LIABILITIES>
12,984,330
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
885,257,467
<SHARES-COMMON-STOCK>
51,429,193
<SHARES-COMMON-PRIOR>
44,883,946
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
11,592,206
<ACCUMULATED-NET-GAINS>
35,108,448
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
203,071,013
<NET-ASSETS>
1,135,029,134
<DIVIDEND-INCOME>
11,995,300
<INTEREST-INCOME>
8,710,561
<OTHER-INCOME>
0
<EXPENSES-NET>
7,818,727
<NET-INVESTMENT-INCOME>
12,887,134
<REALIZED-GAINS-CURRENT>
36,962,992
<APPREC-INCREASE-CURRENT>
86,460,026
<NET-CHANGE-FROM-OPS>
136,310,152
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
21,307,082
<DISTRIBUTIONS-OF-GAINS>
80,203,951
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
11,735,029
<NUMBER-OF-SHARES-REDEEMED>
10,067,775
<SHARES-REINVESTED>
4,877,993
<NET-CHANGE-IN-ASSETS>
175,918,914
<ACCUMULATED-NII-PRIOR>
0
<ACCUMULATED-GAINS-PRIOR>
80,213,055
<OVERDISTRIB-NII-PRIOR>
18,148,506
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
7,167,836
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
7,818,727
<AVERAGE-NET-ASSETS>
1,055,123,000
<PER-SHARE-NAV-BEGIN>
21.37
<PER-SHARE-NII>
0.24
<PER-SHARE-GAIN-APPREC>
2.64
<PER-SHARE-DIVIDEND>
0.46
<PER-SHARE-DISTRIBUTIONS>
1.72
<RETURNS-OF-CAPITAL>
0.00
<PER-SHARE-NAV-END>
22.07
<EXPENSE-RATIO>
0.74
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 752737
<NAME> OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
<SERIES>
<NUMBER> 6
<NAME> OPPENHEIMER VARIABLE ACCOUNT FUNDS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END>
DEC-31-1998
<PERIOD-START>
JAN-01-1998
<PERIOD-END>
DEC-31-1998
<INVESTMENTS-AT-COST>
538,342,432
<INVESTMENTS-AT-VALUE>
623,885,456
<RECEIVABLES>
5,190,419
<ASSETS-OTHER>
8,967
<OTHER-ITEMS-ASSETS>
147,269
<TOTAL-ASSETS>
629,232,111
<PAYABLE-FOR-SECURITIES>
362,598
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
6,536,212
<TOTAL-LIABILITIES>
6,898,810
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
490,829,556
<SHARES-COMMON-STOCK>
36,497,549
<SHARES-COMMON-PRIOR>
37,473,072
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
20,748,181
<ACCUMULATED-NET-GAINS>
29,244,260
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
81,511,304
<NET-ASSETS>
622,333,301
<DIVIDEND-INCOME>
4,857,228
<INTEREST-INCOME>
25,898,105
<OTHER-INCOME>
0
<EXPENSES-NET>
4,844,238
<NET-INVESTMENT-INCOME>
25,911,095
<REALIZED-GAINS-CURRENT>
29,540,227
<APPREC-INCREASE-CURRENT>
(15,895,873)
<NET-CHANGE-FROM-OPS>
39,555,449
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
5,964,037
<DISTRIBUTIONS-OF-GAINS>
34,591,414
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
3,352,415
<NUMBER-OF-SHARES-REDEEMED>
6,714,957
<SHARES-REINVESTED>
2,387,019
<NET-CHANGE-IN-ASSETS>
(15,211,529)
<ACCUMULATED-NII-PRIOR>
0
<ACCUMULATED-GAINS-PRIOR>
33,831,700
<OVERDISTRIB-NII-PRIOR>
1,264,870
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
4,584,184
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
4,844,238
<AVERAGE-NET-ASSETS>
640,131,000
<PER-SHARE-NAV-BEGIN>
17.01
<PER-SHARE-NII>
0.71
<PER-SHARE-GAIN-APPREC>
0.42
<PER-SHARE-DIVIDEND>
0.16
<PER-SHARE-DISTRIBUTIONS>
0.93
<RETURNS-OF-CAPITAL>
0.00
<PER-SHARE-NAV-END>
17.05
<EXPENSE-RATIO>
0.76
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 752737
<NAME> OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/R/VA
<SERIES>
<NUMBER> 9
<NAME> OPPENHEIMER VARIABLE ACCOUNT FUNDS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END>
DEC-31-1998
<PERIOD-START>
JAN-01-1998
<PERIOD-END>
DEC-31-1998
<INVESTMENTS-AT-COST>
283,373,781
<INVESTMENTS-AT-VALUE>
308,317,926
<RECEIVABLES>
997,520
<ASSETS-OTHER>
5,528
<OTHER-ITEMS-ASSETS>
218,017
<TOTAL-ASSETS>
309,538,991
<PAYABLE-FOR-SECURITIES>
4,100
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
1,181,577
<TOTAL-LIABILITIES>
1,185,677
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
284,367,574
<SHARES-COMMON-STOCK>
15,054,704
<SHARES-COMMON-PRIOR>
7,551,181
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
1,425,924
<ACCUMULATED-NET-GAINS>
(2,028,281)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
24,588,097
<NET-ASSETS>
308,353,314
<DIVIDEND-INCOME>
2,688,093
<INTEREST-INCOME>
913,537
<OTHER-INCOME>
0
<EXPENSES-NET>
1,857,022
<NET-INVESTMENT-INCOME>
1,744,608
<REALIZED-GAINS-CURRENT>
(1,957,235)
<APPREC-INCREASE-CURRENT>
6,335,797
<NET-CHANGE-FROM-OPS>
6,123,170
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
449,201
<DISTRIBUTIONS-OF-GAINS>
9,891,403
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
9,181,075
<NUMBER-OF-SHARES-REDEEMED>
2,145,877
<SHARES-REINVESTED>
468,325
<NET-CHANGE-IN-ASSETS>
152,985,564
<ACCUMULATED-NII-PRIOR>
0
<ACCUMULATED-GAINS-PRIOR>
9,820,789
<OVERDISTRIB-NII-PRIOR>
130,085
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
1,742,253
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
1,857,022
<AVERAGE-NET-ASSETS>
234,306,000
<PER-SHARE-NAV-BEGIN>
20.58
<PER-SHARE-NII>
0.13
<PER-SHARE-GAIN-APPREC>
0.92
<PER-SHARE-DIVIDEND>
0.05
<PER-SHARE-DISTRIBUTIONS>
1.10
<RETURNS-OF-CAPITAL>
0.00
<PER-SHARE-NAV-END>
20.48
<EXPENSE-RATIO>
0.79
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for his and in his capacity as Treasurer of Oppenheimer Cash
Reserves, Oppenheimer Champion Income Fund, Oppenheimer Capital Income Fund,
Oppenheimer High Yield Fund, Oppenheimer International Bond Fund, Oppenheimer
Integrity Funds, Oppenheimer Limited-Term Government Fund, Oppenheimer Main
Street Funds, Inc., Oppenheimer Municipal Fund, Oppenheimer Real Asset Fund,
Oppenheimer Strategic Income Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Variable Account Funds, Panorama Series Fund, Inc., 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 (the "Funds"), to sign on his
behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully as to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, and each of them, may lawfully do or cause to be done by virtue
hereof.
Dated this 27th day of April, 1999.
/s/ Brian W. Wixted
- -------------------
Brian W. Wixted
