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. 35 [ x ]
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ x ]
Amendment No. 31 [ 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, 2000
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>
Oppenheimer
Money Fund/VA
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000
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 risk and 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
As with all mutual funds, the policies, strategies and risks.
The Securities and Exchange Please read this Prospectus (and
has not your insurance product
approved or disapproved the Fund's prospectus) carefully before you
securities nor has it determined invest and keep them for future
that this Prospecuts is reference about your account.
accurate or
complete.
It is a criminal offense to
represent otherwise.
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(OppenheimerFunds logo)
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 investments in "money market" securities consistent with low capital risk
and the maintenance of liquidity.
WHAT DOES THE FUND INVEST IN? The Fund 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.
"High quality" instruments must be rated in one of the two highest
credit-quality categories for short-term securities by nationally recognized
rating services. If unrated, a security must be determined by the Fund's
investment manager to be of comparable quality to rated securities.
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. Income on
short-term securities tends to be lower than income on longer-term debt
securities, so that the Fund's yield will likely be lower than the yield on
longer-term fixed income funds. The Fund does not invest for the purpose of
seeking capital appreciation or gains. However, the Fund is not a complete
investment program.
Main Risks of Investing in the Fund
All investments have 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's investments must meet strict 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
o 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 any of the Fund's holdings could have its
credit rating downgraded, or the issuer could default, or that interest rates
could rise sharply, causing the value of the Fund's investments (and its 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. Also, there is the risk that the value of your investment could be eroded
over time by the effects of inflation, and that poor security selection by
OppenheimerFunds, Inc. (the "Manager") could cause the Fund to underperform
other funds that have a similar objective.
The Fund's investment manager, OppenheimerFunds, Inc., tries to reduce
risks by diversifying investments and by carefully researching securities before
they are purchased. 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 1.43%. 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 2.13% (2nd Q `90) and the lowest return for a
calendar quarter was 0.77% (2ndQ `93 ).
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Average Annual
Total 1 Year 5 Years 10 Years
Returns for the
periods
ended December
31, 1999
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Oppenheimer Money 4.96% 5.26% 5.16%
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 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 information, please call the Transfer Agent toll-free at
1.800.525.7048.
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
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TheFund 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, Service Shares, 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 instruments that must meet quality, maturity and diversification
standards established by its Board of Trustees as well as rules that apply to
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.
The Fund's Manager tries to reduce risks by diversifying investments and by
carefully researching investments before the Fund buys them. The rate of the
Fund's income will vary from day to day, generally reflecting changes in overall
short-term interest rates
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. Some U.S.
Government securities are supported by the right of the issuer to borrow from
the U.S. Treasury. Others may be supported only by the credit of the
instrumentality. 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:
o obligations of a domestic bank having total assets of at least
$1 billion, or
o 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 Debt Obligations. The Fund can invest in other short-term
corporate debt obligations, besides commercial paper.
Other Money Market Obligations. The Fund can invest in money market
obligations other than those listed above if they 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 the Manager
approves under Board approved policies. 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.
WHAT CREDIT QUALITY AND MATURITY STANDARDS APPLY TO THE FUND'S INVESTMENTS?
Money market instruments are subject to credit risk. This is the risk that the
issuer might not make timely payments of interest on the security or 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, the Fund buys only high-quality investments that the Manager
believes present minimal credit risk at the time of purchase. "High-quality"
investments are:
o rated in one of the two highest short-term rating categories of two
national rating organizations, or
o rated by one rating organization in one of its two highest rating
categories (if only one rating organization has rated the investment),
or
o unrated investments that the Manager determines are comparable in
quality to the two highest rating categories.
In general, these 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. 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.
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 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 them. These techniques involve certain risks, although some of
them are designed to help reduce overall investment or market risks. The
Statement of Additional Information contains more information about some of
these practices.
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.
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:
o political and economic developments in the country in which the bank
or branch is located,
o imposition of withholding taxes on interest income payable on the
securities,
o government seizure or nationalization of foreign deposits, o the
establishment of exchange control regulations and o 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.
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.
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.
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.
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.
How the Fund Is Managed
THE MANAGER. The Manager 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 been an investment adviser since 1960. The Manager
(including subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $120 billion as of January 31, 2000,
and with more than 5 million shareholder accounts. The Manager is located at Two
World Trade Center, 34th Floor, New York, New York 10048-0203.
Portfolio Manager. The portfolio manager of the Fund is Carol E. Wolf. She
is the person principally responsible for the day-to-day management of
the Fund's portfolio. Ms. Wolf has had that responsibility since July
1998. She is also a Vice President of the Fund and of the Manager. Ms.
Wolf also serves as an officer and portfolio manager for other
Oppenheimer funds and has been an officer of the Manager since 1990.
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, 1999, was 0.45% 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 share 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 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.
CLASSES OF SHARES. The Fund may offer two different classes of shares. The class
of shares offered by this Prospectus has no "name" designation. The other class
is designated as Service shares. 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 Service shares. A
description of the Service Plans that affect only Service shares of the Fund is
contained in the Fund's prospectus that offers Service shares. That prospectus
may be obtained without charge by contacting any participating insurance company
that offers Service 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.
<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>
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Financial Highlights
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<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
====================================================================================================================
<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 .05 .06
Dividends and/or distributions to shareholders (.05) (.05) (.05) (.05) (.06)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
====================================================================================================================
Total Return(1) 4.96% 5.25% 5.31% 5.13% 5.62%
====================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $201,066 $151,799 $126,782 $129,719 $65,386
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Average net assets (in thousands) $166,727 $137,633 $133,707 $ 99,263 $75,136
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 4.87% 5.12% 5.19% 5.01% 5.52%
Expenses 0.48% 0.50%(3) 0.48%(3) 0.49%(3) 0.51%(3)
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns reflect changes in net investment income only. Total returns are not
annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
<PAGE>
INFORMATION AND SERVICES
For More Information on 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:
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- ----------------------------------------------------------------------------
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By Telephone: Call OppenheimerFunds
Services toll-free:
1-888-470-0861
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- ---------------------------- Write to:
By Mail: ------------------------------
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
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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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
publicinfo@secgov, or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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
PR0660.001.0500
Printed on recycled paper.
(OppenheimerFunds logo)
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
12/31/90 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%
12/31/99 4.96%
<PAGE>
Oppenheimer
Bond Fund/VA
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000
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
As with all mutual funds, the Prospectus and explains how to
Securities select shares of the Fund as an
and Exchange Commission has not investment under that insurance
approved or disapproved the Fund's product.
securities nor has it determined This Prospectus contains
that important information
this Prospectus is accurate or about the Fund's objective, its
complete. investment policies, strategies
It is a criminal offense to and risks. Please read this
represent otherwise. Prospectus (and your insurance
product prospectus) carefully
before you invest and keep them
for future reference about your
account.
- ------------------------------------
(OppenheimerFunds logo)
<PAGE>
Contents
About the Fund
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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
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How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
<PAGE>
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.
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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 Do the Portfolio Managers 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, described below.
There is also the risk that the value of your investment could be eroded over
time by the effects of inflation and that poor security selection by the Fund's
investment manager, OppenheimerFunds, Inc., will cause the Fund to underperform
other funds having similar objectives.
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.
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 derivatives 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 performance 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 1.00%. 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 5.60% (2nd Q '95) and the lowest return (not
annualized) for a calendar quarter was -1.90% (1st Q '94).
- ----------------------------------------------------------------------
Average Annual
Total Returns for 1 Year 5 Years 10 Years
the periods ended
December 31, 1999
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Oppenheimer Bond -1.52% 7.10% 7.76%
Fund/VA
(inception 4/3/85)
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Lehman Brothers -1.96% 8.18% 8.21%
Corporate Bond
Index
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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. 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. 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 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, Service shares, 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 different types of investments will vary over time based upon the
Manager's evaluation of economic and market trends. 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.
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.
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." 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.
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.
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 them. These techniques involve risks, although some are designed to
help reduce overall 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| Illiquid and Restricted Securities. Investments may be illiquid
because they do not have an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted security
is one that has a contractual restriction on 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 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.
How the Fund Is Managed
The Manager. The Manager 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 Fund's Board of Trustees, under an investment advisory
agreement that states the Manager's responsibilities. The agreement sets the
fees the Fund pays to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has been an investment adviser since January, 1960. The
Manager (including subsidiaries and affiliates) managed more than $120 billion
as of March 31, 2000, including other Oppenheimer funds with more than 5 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, 1999, 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 Colorado.
|X| Classes of Shares. The Fund may offer two different classes of shares.
The class of shares offered by this Prospectus has no class name designation.
The other class is designated as Service shares. 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 Service shares. A
description of the distribution and service plans that affect only Service
shares of the Fund is contained in the Fund's Prospectus that offers Service
shares. That Prospectus, when available, may be obtained without charge by
contacting any participating insurance company that offers Service 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 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>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $12.32 $11.91 $11.63 $11.84 $10.78
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .88 .72 .76 .69 .72
Net realized and unrealized gain (loss) (1.06) .07 .28 (.15) 1.07
- ------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations (.18) .79 1.04 .54 1.79
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.57) (.20) (.72) (.74) (.73)
Distributions from net realized gain (.05) (.18) (.04) (.01) --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.62) (.38) (.76) (.75) (.73)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.52 $12.32 $11.91 $11.63 $11.84
====== ====== ====== ====== ======
==============================================================================================================================
Total Return, at Net Asset Value(1) (1.52)% 6.80% 9.25% 4.80% 17.00%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $601,064 $655,543 $520,078 $426,439 $211,232
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $633,059 $586,242 $449,760 $296,253 $170,929
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 7.22% 6.31% 6.72% 6.72% 6.91%
Expenses 0.73% 0.74%(3) 0.78%(3) 0.78%(3) 0.80%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 256% 76% 117% 82% 79%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $1,625,487,960 and $1,547,628,962, respectively.
11
<PAGE>
INFORMATION AND SERVICES
For More Information About Oppenheimer Bond 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 or instructions on how
to contact the sponsor of your insurance product:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
[email protected], or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
- ----------------------------------------------------------------------------
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 PR0630.001.0500 Printed on recycled paper.
67890
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
12/31/90 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%
12/31/99 -1.52%
<PAGE>
Oppenheimer
Capital Appreciation Fund/VA
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000
Oppenheimer Capital Appreciation Fund/VA is
a mutual fund that seeks capital
appreciation to make your investment grow.
It emphasizes investments in common stocks
of well-known, established 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.
As with all mutual funds, the Please read this Prospectus (and
Securities your insurance product
and Exchange Commission has not prospectus) carefully before you
approved or disapproved the Fund's invest and keep them for future
securities nor has it determined reference about your account.
that
this Prospectus is accurate or
complete.
It is a criminal offense to
represent otherwise.
- ------------------------------------
(OppenheimerFunds logo)
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
<PAGE>
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 MAINLY INVEST IN? The Fund invests mainly in common
stocks of established, well-known U.S. companies that OppenheimerFunds, Inc.
(the "Manager") believes may appreciate in value over the long-term. While
the Fund can invest in securities of issuers of all market capitalization
ranges, the Manager currently emphasizes "large capitalization" issuers
(having a market capitalization of $5 billion or more). The Fund generally
focuses on well-known and established companies that have a history of earnings
and dividends. In addition, these companies tend to be seasoned issuers with an
operating history of at least five years, including any predecessors.
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. The portfolio manager looks for stocks that are reasonably priced in
relation to overall stock market valuations. The portfolio manager focuses on
factors that may vary in particular cases and over time in seeking broad
diversification of the Fund's portfolio among industries and market sectors.
Currently the portfolio manager looks for: o Companies with management that has
a proven record,
Companies with relatively stable or established businesses in established
markets, that are entering into a growth cycle.
Companies with strong 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. However, the Fund is not a complete investment program.
Main Risks of Investing in the Fund
All investments have some degree of risk. The Fund's investments, in
particular, are subject to changes in their value from a number of factors
described below. 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. There is also the risk that poor
security selection by the Manager will cause the Fund to underperform other
funds having a similar objective. 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").
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.
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. Securities in the Fund's portfolio may not increase
as much as the market as a whole. Growth stocks may at times be favored by the
market and at other times may be out of favor. Some securities may be inactively
traded, and therefore, may not be readily bought or sold. Although some growth
stocks may appreciate quickly, investors should not expect the Fund's
investments to act in this manner because the Fund is designed for long-term
capital appreciation.
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 mainly in securities of large companies, but can also invest in small
and medium-size companies, which may have more volatile stock prices than large
companies.
Industry and Sector Focus. At times the Fund may increase the relative emphasis
of its investments in a particular industry or sector. The prices of
stocks of issuers in a particular industry or sector may go up and down in
response to changes in economic conditions, government regulations,
availability of basic resources or supplies, or other events that affect
that industry or sector more than others. To the extent that the Fund
increases the relative emphasis of its investments in a particular
industry or sector, its share values may fluctuate in response to events
affecting that industry or sector. 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.
Risks of Growth Stocks. Stocks of growth companies, particularly newer
companies, may offer opportunities for greater capital appreciation but
may be more volatile than stocks of larger, more established companies. If
the company's earnings growth fails to increase as expected the stock
price of a growth company may decline sharply.
HOW RISKY IS THE FUND OVERALL? The risks described above collectively form the
overall risk profile of the Fund and can affect the value of the Fund's
investments, its investment performance and its price per share. Particular
investments and investment strategies also have risks. 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. There is no assurance that
the Fund will achieve its investment objective.
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
for 1, 5 and 10 years 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 14.60%. 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 28.49% (4th Q'99) and the lowest return (not
annualized) for a calendar quarter was -16.41% (3rd Q'98).
- ----------------------------------------------------------------------
Average Annual
Total Returns for 1 Year 5 Years 10 Years
the periods ended
December 31, 1999
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Oppenheimer 41.66% 30.65% 17.61%
Capital
Appreciation
Fund/VA
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
S&P 500 Index 21.03% 28.54% 18.19%
- ----------------------------------------------------------------------
The Fund's returns in the table measure the performance (1) 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.
Stock Investments. The types of growth companies the Manager focuses on are
larger, more established growth companies with an operating history of at
least five years (including any predecessors) and a history of earnings
and dividends. Although not a focus of the Fund, mid-cap and small-cap
companies may be held to a lesser degree. 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.
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 1940, 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. Other 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 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.
Other Equity Securities. 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.
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.
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, options,
futures contracts, and other hedging instruments the Fund might use may be
considered "derivative" investments. In addition to using derivatives for
hedging, the Fund might use certain derivative investments because they
offer the potential for increased value. The Fund currently does not use
derivatives to a significant degree and is not required to use them in
seeking its objective.
Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, the Fund can lose money on the investment. The
underlying security or investment on which a derivative is based, and the
derivative itself, may not perform the way the Manager expected it to. As a
result of these risks the Fund could realize less principal or income from
the investment than expected or its hedge might be unsuccessful. As a
result, the Fund's share prices could fall. Certain derivative investments
held by the Fund might be illiquid.
o Hedging. The Fund can buy and sell futures contracts, put and call
options, and forward contracts. These are all referred to as "hedging
instruments." The Fund does not currently use hedging extensively nor for
speculative purposes. It has limits on its use of hedging instruments and is not
required to use them in seeking its objective.
Some of these strategies would hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call
options, would tend to increase the Fund's exposure to the securities
market.
Options trading involves the payment of premiums and has special tax
effects on the Fund. 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. 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 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.
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 been an investment adviser since 1960 and currently
manages investment companies, including other Oppenheimer funds. The Manager
(including subsidiaries and affiliates) manages assets of more than $120 billion
as of January 31, 2000 with more than 5 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
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.
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, 1999, was 0.68% 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 may offer two different classes of shares. The class
of shares offered by this Prospectus has no class name designation. The other
class is designated as Service shares. 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 Service shares. A description of
the Service Plans that affect only Service shares of the Fund is contained in
the Fund's Prospectus that offers Service shares. That Prospectus, when
available, may be obtained without charge by contacting any participating
insurance company that offers Service 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>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
=========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $36.67 $32.44 $27.24 $23.55 $17.68
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .06 .13 .25 .15 .25
Net realized and unrealized gain 14.68 7.28 6.62 5.46 6.10
- -------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 14.74 7.41 6.87 5.61 6.35
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.13) (.24) (.15) (.25) (.22)
Distributions from net realized gain (1.44) (2.94) (1.52) (1.67) (.26)
- -------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.57) (3.18) (1.67) (1.92) (.48)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $49.84 $36.67 $32.44 $27.24 $23.55
====== ====== ====== ====== ======
=========================================================================================================================
Total Return, at Net Asset Value(1) 41.66% 24.00% 26.68% 25.20% 36.65%
=========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,425 $769 $494 $286 $118
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,003 $609 $390 $152 $ 89
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.21% 0.50% 1.02% 1.08% 1.46%
Expenses 0.70% 0.75%(3) 0.75%(3) 0.81%(3)(4) 0.79%(3)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 56% 56% 66% 65% 58%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. The expense ratio was 0.79% net of the voluntary reimbursement by
the Manager.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $751,087,611 and $525,369,517, respectively.
9
<PAGE>
INFORMATION AND SERVICES
For More Information on 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).
- --------------------------------------------------------------------
By Telephone: Call OppenheimerFunds
Services toll-free:
1-888-470-0861
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- ---------------------------- Write to:
By Mail: ------------------------------
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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
publicinfo@secgov., or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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
PR0610.001.0500
Printed on recycled paper.
890
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
12/31/90 -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%
12/31/99 41.66%
<PAGE>
Oppenheimer
High Income Fund/VA
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000 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
As with all mutual funds, the about the Fund's objective, its
Securities investment policies, strategies
And Exchange Commission has not and risks. Please read this
approved or disapproved the Fund's Prospectus (and your insurance
securities nor has it determined product prospectus) carefully
that before you invest and keep them
This Prospectus is accurate or for future reference about your
complete. account.
It is a criminal offense to
represent otherwise.
- ------------------------------------
(OppenheimerFunds logo)
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
<PAGE>
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),
o mortgage-related securities and asset-backed securities,
o preferred stocks,
o "structured" notes,
o foreign government bonds and notes, and
o "zero-coupon" and "step" bonds.
Under normal market conditions, the Fund invests at least 65% of its total
assets, and 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 below "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 Do the Portfolio Managers 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
described below. There is also the risk that the value of your investment could
be eroded over time by the effects of inflation and that poor security selection
by the Fund's investment manager, OppenheimerFunds, Inc., will cause the Fund to
underperform other funds having similar objectives.
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.
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 performance 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was -1.35%. 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).
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Average Annual
Total Returns for 1 Year 5 Years 10 Years
the periods ended
December 31, 1999
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Oppenheimer High 4.29% 10.24% 12.65%
Income Fund/VA
(inception
4/30/86)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Merrill Lynch 1.57% 9.61% 10.79%
High Yield 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. 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. 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 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, Service shares, 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 different types of investments will vary over time based upon the
Manager's evaluation of economic and market trends. 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.
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.
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 are 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 assigns 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 below), 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 securities 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 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 them. These techniques involve risks, although some are
designed to help reduce overall 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 prevailing
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| Illiquid and Restricted Securities. Investments may be illiquid
because they do not have an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted security
is one that has a contractual restriction on 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 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.
How the Fund Is Managed
The Manager. The Manager 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 Fund's Board of Trustees, under an investment advisory
agreement that states the Manager's responsibilities. The agreement sets the
fees the Fund pays to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has been an investment adviser since 1960. The Manager
(including subsidiaries and affiliates) manages more than $120 billion as of
March 31, 2000, including other Oppenheimer funds with more than 5 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, 1999, 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.
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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.
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|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 Colorado.
|X| Classes of Shares. The Fund may offer two different classes of shares.
The class of shares offered by this Prospectus has no "name" designation. The
other class is designated as Service shares. 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 Service shares. A
description of the distribution and service plans that affect only Service
shares of the Fund is contained in the Fund's prospectus that offers Service
shares. That prospectus may be obtained without charge by contacting any
participating insurance sponsor that offers Service 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.
<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>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $11.02 $11.52 $11.13 $10.63 $ 9.79
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.01 .95 .94 .97 .98
Net realized and unrealized gain (loss) (.55) (.90) .37 .58 .94
- ---------------------------------------------------------------------------------------------------------------------------
Total income from investment operations .46 .05 1.31 1.55 1.92
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.76) (.25) (.91) (1.05) (1.08)
Distributions from net realized gain -- (.30) (.01) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.76) (.55) (.92) (1.05) (1.08)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.72 $11.02 $11.52 $11.13 $10.63
====== ====== ====== ====== ======
===========================================================================================================================
Total Return, at Net Asset Value(1) 4.29% 0.31% 12.21% 15.26% 20.37%
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $340,829 $328,563 $291,323 $191,293 $133,451
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $340,519 $322,748 $223,617 $157,203 $115,600
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.61% 8.65% 8.88% 9.18% 9.81%
Expenses 0.75% 0.78%(3) 0.82%(3) 0.81%(3) 0.81%(3)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 33% 161% 168% 125% 107%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $147,560,583 and $101,280,643, respectively.
11
<PAGE>
INFORMATION AND SERVICES
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 or instructions on how
to contact the sponsor of your insurance product:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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 1.202.942.8090) or the SEC's EDGAR database on the
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
[email protected], or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
- ----------------------------------------------------------------------------
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 PR0640.001.0500 Printed on recycled paper.
67890
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
12/31/90 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%
12/31/99 4.29%
<PAGE>
2
Oppenheimer
Aggressive Growth Fund/VA
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000
Oppenheimer Aggressive Growth Fund/VA is a
mutual fund that seeks capital appreciation
by investing in "growth type" companies. It
currently emphasizes investments in stocks
of mid-cap 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
As with all mutual funds, the Fund's objective, its investment Securities
policies, strategies and risks. and Exchange Commission has not Please read this
Prospectus (and approved or disapproved the Fund's your insurance product
securities nor has it determined prospectus) carefully before you that invest
and keep them for future this Prospectus is accurate or reference about your
account.
complete.
It is a criminal offense to
represent otherwise.
- ------------------------------------
(OppenheimerFunds logo)
<PAGE>
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
<PAGE>
ABOUT THE FUND
The Fund's Investment Objective and Strategies
WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks capital appreciation by
investing in "growth type" companies.
WHAT DOES THE FUND MAINLY 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 stocks. The Fund
emphasizes investments in companies believed by the investment manager,
OppenheimerFunds, Inc. (the "Manager") to have significant growth potential.
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
"mid-cap" issuers (currently those issuers between $2.5 billion and $11.5
billion). The Fund can invest in domestic and foreign companies, although most
of its investments are in stocks of U.S. companies.
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:
o What the portfolio manager believes to be a high rate of sustainable earnings
growth;
o Undiscovered and undervalued emerging growth characteristics;
o Innovative management and strong leadership positions in unique market niches;
and/or
o 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. However,
the Fund is not a complete investment program.
Main Risks of Investing in the Fund
All investments have some degree of risk. The Fund's investments, in
particular, are subject to changes in their value from a number of factors
described below. They include changes in general stock market movements (this is
referred to as "market risk"). There is also the risk that poor security
selection by the Manager will cause the Fund to underperform other funds having
a similar objective. 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.
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 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.
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. Securities in
the Fund's portfolio may not increase as much as the market as a whole. Growth
stocks may at times be favored by the market and at other times may be out of
favor. Some securities may be inactively traded, and therefore, may not be
readily bought or sold. Although in some growth stocks may appreciate quickly,
investors should not expect that investments of the Fund will appreciate
rapidly. Some investments should be expected to decline in value.
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 but may also invests in small and
medium-size companies, which may have more volatile stock prices than large
companies.
Industry and Sector Focus. At times the Fund may increase the relative emphasis
of its investments in a particular industry or sector. The prices of
stocks of issuers in a particular industry or sector may go up and down in
response to changes in economic conditions, government regulations,
availability of basic resources or supplies, or other events that affect
that industry or sector more than others. To the extent that the Fund
increases the relative emphasis of its investments in a particular
industry or sector, its share values may fluctuate in response to events
affecting that industry or sector. 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.
Risks of Growth Stocks. Stocks of growth companies, particularly newer
companies, may offer opportunities for greater capital appreciation but
may be more volatile than stocks of larger, more established companies. If
the company's earnings growth or stock price fails to increase as expected
the stock price of a growth company may decline sharply.
HOW RISKY IS THE FUND OVERALL? The risks described above collectively form the
overall risk profile of the Fund and can affect the value of the Fund's
investments, its investment performance and its price per share. Particular
investments and investment strategies also have risks. 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. There is no assurance that
the Fund will achieve its investment objective.
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 for
1, 5 and 10 years 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, Service Shares, is not offered in this
Prospectus.
For the period from 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 25.65%. 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 45.84% (4thQ'99) and the lowest return (not
annualized) for a calendar quarter was -23.25% (3rdQ'98).
- ----------------------------------------------------------------------
Average Annual
Total Returns for 1 Year 5 Years 10 Years
the periods ended
December 31, 1999
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Oppenheimer 83.60% 29.70% 20.43%
Aggressive
Growth Fund/VA
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
S&P 500 Index 21.03% 28.54% 18.19%
- ----------------------------------------------------------------------
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.
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. Newer 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. Stocks of growth companies are selected for
the Fund's portfolio because the Manager believes the price of the stock
will increase in value over time.
The Fund does not limit its investments to issuers in a particular market
capitalization range or ranges, although it currently focuses on large-cap
issuers. "Market capitalization" refers to the total market value of an
issuer's common stock. The stock prices of large-cap issuers tend to be
less volatile than the prices of mid-cap and small-cap companies in the
short term, but these large-cap companies may not afford the same growth
opportunities as mid-cap and small-cap companies.
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.
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 OF 1940 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. Other 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 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.
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). 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.
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.
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.
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.
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, options,
futures contracts, and other hedging instruments the Fund might use may be
considered "derivative" investments. In addition to using derivatives for
hedging, the Fund might use other derivative investments because they offer the
potential for increased value. The Fund currently does not use
derivatives to a significant degree and is not required to use them in
seeking its objective.
Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, the Fund can lose money on the investment. The
underlying security or investment on which a derivative is based, and the
derivative itself, may not perform the way the Manager expected it to. As
a result of these risks the Fund could realize less principal or income
from the investment than expected or its hedge might be unsuccessful. As a
result, the Fund's share prices could fall. Certain derivative investments
held by the Fund might be illiquid.
o Hedging. The Fund can buy and sell futures contracts, put and call
options, and forward contracts. These are all referred to as "hedging
instruments." The Fund does not currently use hedging extensively nor for
speculative purposes. It has limits on its use of hedging instruments and is
not required to use them in seeking its objective.
Some of these strategies would hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call
options, would tend to increase the Fund's exposure to the securities
market.
Options trading involves the payment of premiums and has special tax
effects on the Fund. 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. 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.
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 been an investment adviser since January 1960 and
currently manages investment companies including other Oppenheimer funds. The
Manager (including subsidiaries and affiliates) manages assets of more than $120
billion as of January 31, 2000 with more than 5 million shareholder accounts.
The Manager is located at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
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.
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, 1999, was 0.66%
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 Service shares. 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 Service shares. A description of
the Service Plans that affect only Service shares of the Fund is contained in
the Fund's Prospectus that offers Service shares. That Prospectus, when
available, may be obtained without charge by contacting any participating
insurance company that offers Service 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>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
=============================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $44.83 $40.96 $38.71 $34.21 $25.95
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.09) (.05) .10 .09 .11
Net realized and unrealized gain 37.57 5.09 4.01 6.59 8.29
- -----------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 37.48 5.04 4.11 6.68 8.40
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.10) (.09) (.11) (.09)
Distributions from net realized gain -- (1.07) (1.77) (2.07) (.05)
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (1.17) (1.86) (2.18) (.14)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $82.31 $44.83 $40.96 $38.71 $34.21
====== ====== ====== ====== ======
=============================================================================================================================
Total Return, at Net Asset Value(1) 83.60% 12.36% 11.67% 20.22% 32.52%
=============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $2,104 $1,078 $878 $617 $325
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,314 $ 955 $754 $467 $241
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income (loss) (0.17)% (0.12)% 0.31% 0.32% 0.47%
Expenses 0.67% 0.71%(3) 0.73%(3) 0.75%(3) 0.78%(3)
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 66% 80% 88% 100% 126%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $821,119,876 and $835,938,199, respectively.
9
<PAGE>
INFORMATION AND SERVICES
For More Information on 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.
- --------------------------------------------------------------------
By Telephone: Call OppenheimerFunds
Services toll-free:
1-888-470-0861
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- ---------------------------- Write to:
By Mail: ------------------------------
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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
publicinfo@secgov., or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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
PR0620.001.0500
Printed on recycled paper.
890
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
- ----- --------------------
12/31/90 -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%
12/31/99 83.60%
<PAGE>
Oppenheimer
Multiple Strategies Fund/VA
A series of Oppenheimer Variable
Account Funds Oppenheimer Multiple
Strategies Fund/VA is a mutual
Prospectus dated May 1, 2000 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.
As with all mutual funds, the This Prospectus contains
Securities important information about the
and Exchange Commission has not Fund's objective, its investment
approved or disapproved the Fund's policies, strategies and risks.
securities nor has it determined Please read this Prospectus (and
that your insurance product
this Prospectus is accurate or prospectus) carefully before you
complete. invest and keep them for future
It is a criminal offense to reference about your account.
represent otherwise.
- ------------------------------------
(OppenheimerFunds logo)
<PAGE>
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
<PAGE>
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 Do the Portfolio Managers 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 and debt securities (including money market
instruments), although the Fund is not required 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, described below.
There is also the risk that the value of your investment could be eroded over
time by the effects of inflation and that poor security selection by the Fund's
investment manager, OppenheimerFunds, Inc., will cause the Fund to underperform
other funds having similar objectives.
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.
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 performance 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 6.12%. 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 1 Year 5 Years 10 Years
December 31, 1999
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Oppenheimer 11.80% 14.40% 10.83%
Multiple
Strategies Fund/VA
(inception 2/9/87)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
S&P 500 Index 21.03% 28.54% 18.19%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Lehman Bros. -0.82% 7.73% 7.70%
Aggregate Bond
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. 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. 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. 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 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, Service shares, 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 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 different types of investments will vary over time based upon the
Manager's evaluation of economic and market trends. 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.
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.
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 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 them. These techniques involve risks, although some are designed to
help reduce overall 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 they do not have an active trading market, , making it difficult to
value them or dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual restriction on 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 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.
How the Fund Is Managed
The Manager. The Manager 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 Fund's Board of Trustees, under an investment advisory
agreement that states the Manager's responsibilities. The agreement sets the
fees paid the Fund pays to the Manager and describes the expenses that the Fund
is responsible to pay to conduct its business.
The Manager has been an investment adviser since January, 1960. The
Manager (including subsidiaries and affiliates) managed more than $120 billion
as of March 31, 2000, including other Oppenheimer funds with more than 5 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, 1999, 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.
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|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 Colorado.
|X| Classes of Shares. The Fund may offer two different classes of shares.
The class of shares offered by this Prospectus has no class name designation.
The other class is designated as Service shares. 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 Service shares. A
description of the distribution and service plans that affect only Service
shares of the Fund is contained in the Fund's prospectus that offers Service
shares. That prospectus may be obtained without charge by contacting any
participating insurance company that offers Service 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 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.
<PAGE>
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>
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Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
================================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $17.05 $17.01 $15.63 $14.55 $12.91
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .82 .71 .62 .72 .66
Net realized and unrealized gain 1.04 .42 1.95 1.45 2.00
- --------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 1.86 1.13 2.57 2.17 2.66
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.59) (.16) (.61) (.74) (.65)
Distributions from net realized gain (.86) (.93) (.58) (.35) (.37)
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (1.45) (1.09) (1.19) (1.09) (1.02)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.46 $17.05 $17.01 $15.63 $14.55
====== ====== ====== ====== ======
================================================================================================================================
Total Return, at Net Asset Value(1) 11.80% 6.66% 17.22% 15.50% 21.36%
================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $578,783 $622,333 $637,545 $484,285 $381,263
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $593,151 $640,131 $564,369 $428,277 $344,745
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 4.46% 4.05% 3.86% 4.89% 4.81%
Expenses 0.73% 0.76%(3) 0.75%(3) 0.77%(3) 0.77%(3)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 17% 43% 42% 40% 39%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $94,111,384 and $130,260,786, respectively.
11
<PAGE>
INFORMATION AND SERVICES
For More Information About Oppenheimer Multiple Strategies 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, or instructions on
how to contact the sponsor of your insurance product:
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By Telephone:
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Call OppenheimerFunds Services toll-free:
1-888-470-0861
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
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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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
[email protected], or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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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 PR0670.001.0500 Printed on recycled paper.
67890
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
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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%
12/31/99 11.80%
<PAGE>
Oppenheimer
Global Securities Fund/VA
A series of Oppenheimer Variable
Account Funds Oppenheimer Global
Securities Fund/VA is a mutual
Prospectus dated May 1, 2000 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
As with all mutual funds, the select shares of the Fund as an
Securities investment under that insurance
and Exchange Commission has not product, and whether you are
approved or disapproved the Fund's only eligible to purchase
securities nor has it determined Service shares of the Fund.
that This Prospectus contains
this Prospectus is accurate or important information about the
complete. Fund's objective, its investment
It is a criminal offense to policies, strategies and risks.
represent otherwise. Please read this Prospectus (and
your insurance product prospectus) carefully
before you invest and keep them for future
reference about your account.
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(OppenheimerFunds logo)
<PAGE>
Contents
About the Fund
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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
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How to Buy and Sell Shares
Dividends, Capital Gains and Taxes
Financial Highlights
<PAGE>
About the Fund
The Fund's Objective and Investment Strategies
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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.
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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 Portfolio 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 described below.
There is also the risk that the value of your investment could be eroded over
time by the effects of inflation and that poor security selection by the Fund's
investment manager, OppenheimerFunds, Inc., will cause the Fund to underperform
other funds having similar objectives.
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.
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 performance 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. Performance is not shown for the Fund's Service
shares, which were not offered prior to May 1, 2000. Because Service shares are
subject to a service fee, the performance is expected to be lower for any given
period. 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 14.44%. 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 36.93% (4th Q '99) and the lowest return (not
annualized) for a calendar quarter was -15.62% (3rd Q '98).
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Average Annual
Total Returns for 1 Year 5 Years Life of Fund
the periods ended
December 31, 1999
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Oppenheimer Global 58.48% 21.67% 16.79%
Securities
Fund/VA
(inception
11/12/90)
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MSCI World Index 25.34% 20.25% 15.42% 1
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1. From 10/31/90.
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. 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. 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 different types of investments will vary over time based upon the
Manager's evaluation of economic and market trends. 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.
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.
|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 Fund's 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 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 them. These techniques involve risks, although some are designed to
help reduce overall investment or market risks.
|X| Illiquid and Restricted Securities. Investments may be illiquid
because there is no active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on 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 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.
How the Fund Is Managed
The Manager. The Fund's 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 Fund's Board of Trustees,
under an investment advisory agreement that states the Manager's
responsibilities. The agreement sets the fees the Fund pays to the Manager and
describes the expenses that the Fund is responsible to pay to conduct its
business.
The Manager has been an investment adviser since 1960. The Manager
(including subsidiaries and affiliates) manages more than $120 billion as of
March 31, 2000, including other Oppenheimer funds with more than 5 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 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, 1999, was
0.67% 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. That prospectus will indicate whether you are only eligible
to purchase Service shares of the Fund. 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.
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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.
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|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 Colorado.
|X| Classes of Shares. The Fund offers two different classes of shares. The
class of shares designated as Service shares are subject to a distribution and
service plan. The impact of the expenses of that plan on Service shares is
described below. The class of shares that are not subject to a plan has no class
name designation. The different classes of shares represent investments in the
same portfolio of securities but are expected to have different expenses and
share prices.
|X| Distribution and Service Plan for Service shares. The Fund has adopted
a distribution and service plan for Service shares to pay OppenheimerFunds
Distributor, Inc., the distributor, for distribution related services for the
Fund's Service shares. Although the plan allows for payment to be made quarterly
at an annual rate of up to 0.25% of the average annual net assets of Service
shares of the Fund, that rate is currently reduced to 0.15%. The Board may
increase that rate to no more than 0.25% per annum, without advance
notification. The distributor currently expects to use those fees to compensate
sponsor(s) of the insurance products that offer Service shares of the Fund and
other entities, for providing personal service and maintenance of accounts of
contract owners that may hold Service shares. The impact of the service plan is
to increase operating expenses of the Service shares, which results in lower
performance compared to the Fund's shares that are not subject to a service fee.
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 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. Dividends and
distributions will generally be lower for Service shares,
which normally have higher expenses. 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.
Because Service shares of the Fund were not issued prior to May 1, 2000, no
financial information is shown for Service shares in the Financial Highlights
table or in the financial statements included in the Statement of Additional
Information.
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $22.07 $21.37 $17.67 $15.00 $15.09
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .14 .24 .25 .15 .12
Net realized and unrealized gain 12.21 2.64 3.68 2.52 .19
- ---------------------------------------------------------------------------------------------------------------------
Total income from investment operations 12.35 2.88 3.93 2.67 .31
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.14) (.46) (.23) -- --
Dividends in excess of net investment income (.13) -- -- -- --
Distributions from net realized gain (.74) (1.72) -- -- (.40)
- ---------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (1.01) (2.18) (.23) -- (.40)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.41 $22.07 $21.37 $17.67 $15.00
====== ====== ====== ====== ======
=====================================================================================================================
Total Return, at Net Asset Value(1) 58.48% 14.11% 22.42% 17.80% 2.24%
=====================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,762 $1,135 $959 $582 $361
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,251 $1,055 $802 $467 $332
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.57% 1.22% 1.51% 1.09% 0.86%
Expenses 0.69% 0.74%(3) 0.76%(3) 0.81%(3) 0.89%(3)
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 64% 81% 67% 90% 131%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $772,038,559 and $956,384,357, respectively.
9
<PAGE>
INFORMATION AND SERVICES
For More Information About Oppenheimer Global Securities 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, or instructions on
how to contact the sponsor of your insurance product:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
[email protected], or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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 PR0485.001.0500 Printed on recycled paper.
(OppenheimerFunds logo)
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 nine 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%
12/31/99 58.48%
<PAGE>
Oppenheimer
Strategic Bond Fund/VA
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000
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 invest
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.
and foreign 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
As with all mutual funds, the policies, strategies and risks.
Securities Please read this Prospectus (and
and Exchange Commission has not your insurance product
approved or disapproved the Fund's prospectus) carefully before you
securities nor has it determined invest and keep them for future
that reference about your account.
this Prospectus is accurate or
complete.
It is a criminal offense to
represent otherwise.
- ------------------------------------
(OppenheimerFunds logo)
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
<PAGE>
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 options on debt securities.
WHAT DOES THE FUND MAINLY 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. and foreign 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. (the "Manager") believes that in doing so the
Fund can achieve its objective without undue risk. The Fund can invest in
securities having short, medium, or long-term maturities and may invest with out
limit in lower-grade, high-yield debt obligations, also called "junk bonds."
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.
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:
o Securities offering high current income,
o Overall diversification for the portfolio by seeking securities whose
markets and prices tend to move in different directions, and
o 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 have some degree of risk. The Fund's investments, in
particular, are subject to changes in their value from a number of factors
described below. There is also the risk that poor security selection by the
Manager will cause the Fund to underperform other funds having a similar
objective.
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. The Fund's diversification strategies, both with respect to
securities in different sectors and securities issued by different companies and
governments are intended to help reduce the volatility of the Fund's share
prices while seeking current income. 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.
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. The market for these securities may be less liquid, making it
difficult for the Fund to sell them quickly at an acceptable price. These
risks can reduce the Fund's share prices and the income it earns.
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 securities 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.
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. Also, if interest rates
fall, the Fund's investments in newly issued securities with lower yields will
reduce the Fund's income.
PREPAYMENT RISK. Prepayment risk is the risk that the issuer of a security can
prepay the principal prior to the security's expected maturity. The prices and
yields of mortgage-related securities 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 general interest rates rise. Securities subject to
prepayment risk, including the mortgage-related securities that the Fund buys,
have greater potential for losses when interest rates rise than other types of
debt securities.
The impact of prepayments on the price of a security may be difficult to predict
and may increase the volatility of the price. Interest-only and principal-only
"stripped" securities can be particularly volatile when interest rates change.
If the Fund buys mortgage-related securities at a premium, accelerated
prepayments on those securities could cause the Fund to lose a portion of its
principal investment represented by the premium the Fund paid.
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. 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 the value of the security to
fluctuate more widely in response to changes in interest rates and this could
cause the value of the Fund's shares to fall.
SECTOR ALLOCATION RISKS. The Manager's expectations about the relative
performance of the three principal sectors in which the Fund invests may be
inaccurate, and the Fund's returns might be less than other funds using similar
strategies.
RISK OF 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,
forwards, 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? The risks described above collectively form the
overall risk profile of the Fund and can affect the value of the Fund's
investments, its investment performance and its price per share. Particular
investments and investment strategies also have risks. 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. There is no assurance that
the Fund will achieve its investment objective.
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 bond 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 performance(1) from year to year
since the Fund's inception and 1, 5 and 10 years 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 1.10%. 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% (2ndQ'95) and the lowest return (not
annualized) for a calendar quarter was -3.70% (1stQ'94).
- ----------------------------------------------------------------------
Average Annual
Total Returns for 1 Year 5 Years Life of Fund*
the periods ended
December 31, 1999
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Oppenheimer 2.83% 8.25% 6.18%
Strategic
Bond Fund/VA
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Lehman Brothers -0.82% 7.73% 6.00%
Aggregate Bond
Index
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Salomon Brothers -4.27% 6.42% 5.96%
World 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.
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 Manager's evaluation of economic and market trends. 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. 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.
The Fund can invest in different types of debt securities described below.
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 are 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 strategies. The
Fund's portfolio might not always include all of the different types of
investments described below. The statement of Addition Information contains more
detailed information about the Fund's investment policies and risks.
o 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 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").
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. 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.
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 assigns 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.
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.
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, as
well as interest rate and prepayment risks.
Foreign Securities. The Fund can buy a variety of 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'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.
Investments in Emerging and Developing Markets. 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.
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. Other 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, although some are designed to
help reduce investment or market risks.
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. The Fund can invest
up to 50% of its total assets in zero-coupon securities issued by either
the U.S. Treasury or companies.
The values of interest-only and principal only mortgage-related securities
are also very sensitive to prepayments of underlying mortgages.
Principal-only securities are also sensitive to prepayment of underlying
mortgages and 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.
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.
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.
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, options,
futures contracts, and other hedging instruments the Fund might use may be
considered "derivative" investments. In addition to using derivatives for
hedging, the Fund might use other derivative investments because they offer the
potential for increased value. The Fund currently does not use
derivatives to a significant degree and is not required to use them in
seeking its objective.
Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, the Fund can lose money on the investment. The
underlying security or investment on which a derivative is based, and the
derivative itself, may not perform the way the Manager expected it to. As
a result of these risks the Fund could realize less principal or income
from the investment than expected or its hedge might be unsuccessful. As a
result, the Fund's share prices could fall. Certain derivative investments
held by the Fund might 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 value of these notes will 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. The prices of these
notes 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.
o Hedging. The Fund can buy and sell futures contracts, put and call
options, and forward contracts. These are all referred to as "hedging
instruments." Writing covered call options is a principal strategy that is part
of the Fund's objective, and is used when deemed appropriate by the Manager. The
Fund is not required to use other 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 hedge against falling prices
of its portfolio securities 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 and currency options can be used to try to manage
foreign currency risks on the Fund's foreign investments. The Fund could
write covered call options to seek cash for liquidity purposes or to
distribute to shareholders.
Options trading involves the payment of premiums and has special tax
effects on the Fund. 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. 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 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.
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 been an investment adviser since 1960 and currently
manages investment companies including other Oppenheimer funds. The Manager
(including subsidiaries and affiliates ) manages assets of $120 billions as of
January 31, 2000 and with more than 5 million shareholder accounts. The Manager
is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203.
Portfolio Managers. 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.
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, 1999, was 0.74%
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 Service shares. 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 Service shares. A
description of the Service Plans that affect only Service shares of the Fund is
contained in the Fund's Prospectus that offers Service shares. That Prospectus,
when available, may be obtained without charge by contacting any participating
insurance company that offers Service 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>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $5.12 $5.12 $5.09 $4.91 $4.60
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .39 .39 .38 .38
Net realized and unrealized gain (loss) (.31) (.24) .04 .19 .30
- ------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations .14 .15 .43 .57 .68
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.29) (.09) (.39) (.39) (.37)
Distributions from net realized gain -- (.06) (.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.29) (.15) (.40) (.39) (.37)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.97 $5.12 $5.12 $5.09 $4.91
===== ===== ===== ===== =====
- ------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(1) 2.83% 2.90% 8.71% 12.07% 15.33%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $282,086 $279,200 $207,839 $118,716 $60,098
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $278,668 $250,227 $159,934 $82,604 $37,698
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.08% 8.17% 8.23% 8.48% 9.32%
Expenses 0.78% 0.80%(3) 0.83%(3) 0.85%(3) 0.85%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 81% 134% 150% 144% 87%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $242,578,613 and $216,840,010, respectively.
11
<PAGE>
INFORMATION AND SERVICES
For More Information on 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.
- --------------------------------------------------------------------
By Telephone: Call OppenheimerFunds
Services toll-free:
1-888-470-0861
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- ---------------------------- Write to:
By Mail: ------------------------------
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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
publicinfo@secgov., or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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
PR0265.001.0500
Printed on recycled paper.
(OppenheimerFunds logo)
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
12/31/95 15.33%
12/31/96 12.07%
12/31/97 8.71%
12/31/98 2.90%
12/31/99 2.83%
<PAGE>
Oppenheimer
Small Cap Growth Fund/VA
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000
Oppenheimer Small Cap Growth Fund/VA is a
mutual fund that seeks capital appreciation
to make your investment grow. The Fund
invests mainly in common stocks of
"small-cap" 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.
As with all mutual funds, the Please read this Prospectus (and
Securities your insurance product
and Exchange Commission has not prospectus) carefully before you
approved or disapproved the Fund's invest and keep them for future
securities nor has it determined reference about your account.
that
this Prospectus is accurate or
complete.
It is a criminal offense to
represent otherwise.
- ------------------------------------
(OppenheimerFunds logo)
<PAGE>
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
<PAGE>
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 MAINLY INVEST IN? The Fund invests mainly in common stocks of
small cap companies that OppenheimerFunds, Inc. (the "Manager") believes have
favorable growth prospects. The Fund currently defines a "small cap issuer" as
one having a market capitalization of up to $2.5 billion. However, that
definition can change over time as relative capitalizations of issuers change.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in common stocks and other equity securities of growth companies having a
small market capitalization. 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.
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. He also evaluates research on particular industries, market trends and
general economic conditions. The portfolio manager focuses on factors that may
vary in particular cases and over time.
Currently he looks for:
o Companies with small capitalizations,
o Companies with management that has a proven ability to handle growth, o
Companies that self-finance expansion rather than adding to their debt, o
Companies with accelerating earnings and sustainable earnings growth, and
o 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. However, the Fund is not a
complete investment program.
Main Risks of Investing in the Fund
All investments have some degree of risk. The Fund's investments, in
particular, are subject to changes in their value from a number of factors
described below. Investments in stocks can be volatile and are subject to
changes in general stock market movements (this is referred to as "market
risk"). There is also the risk that poor security selection by the Manager will
cause the Fund to underperform other funds having a similar objective. 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.
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 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.
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.
Securities in the Fund's portfolio may not increase as much as the market
as a whole. Growth stocks may at times be favored by the market and at other
times may be out of favor. Some small cap securities may be inactively traded,
and therefore, may not be readily bought or sold. Although profits in some Fund
holdings may be realized quickly, investors should not expect the Fund's
investments to appreciate rapidly. 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.
Industry and Sector Focus. At times the Fund may increase the relative emphasis
of its investments in a particular industry or sector. The prices of
stocks of issuers in a particular industry or sector may go up and down in
response to changes in economic conditions, government regulations,
availability of basic resources or supplies, or other events that affect
that industry or sector more than others. To the extent that the Fund
increases the relative emphasis of its investments in a particular
industry or sector, its share values may fluctuate in response to events
affecting that industry or sector. 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.
Risks of Growth Stocks. Stocks of growth companies, particularly newer
companies, may offer opportunities for greater capital appreciation but
may be more volatile than stocks of larger, more established companies. If
the company's earnings growth or stock price fails to increase as expected
the stock price of a growth company may decline sharply.
Special Risks of Small-Cap Stocks. The Fund focuses its investments on
securities of companies having a small market capitalization, 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 no more than 20% of total assets.
HOW RISKY IS THE FUND OVERALL? The risks described above collectively form the
overall risk profile of the Fund and can affect the value of the Fund's
investments, its investment performance and its price per share. Particular
investments and investment strategies also have risks. 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. There is no assurance that
the Fund will achieve its investment objective.
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. However, the Fund is not a complete investment program.
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.
<PAGE>
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 return of the
Fund's shares compare to those of a small-capitalization sector 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 1/1/00 through 3/31/00, the Fund's cumulative return (not
annualized) was 9.20%. 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 49.05% (4thQ'99) and the lowest return (not
annualized) for a calendar quarter was -7.50% (1stQ'99).
- --------------------------------------------------------------------
Average Annual Total
Returns for the periods 1 Year Life of Fund*
ended
December 31, 1999
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Oppenheimer Small Cap 46.56% 22.74%
Growth Fund/VA
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Russell 2000(R)Index 21.26% 6.78%
- --------------------------------------------------------------------
* The Fund's inception date was 5/1/98. The "life of class" index performance is
shown from 4/30/98. 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 small-cap stocks, the Fund's performance is compared to the
Russell 2000 Index, an unmanaged index of equity securities of small
capitalization companies that is a measure of the small company 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.
<PAGE>
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.
Portfolio Turnover. The Fund may engage in short-term trading to try to achieve
its objective, and will likely have a portfolio turnover rate in excess of
100% annually. 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.
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.
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.
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.
Foreign Securities. 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.
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.
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, options,
futures contracts, and other hedging instruments the Fund might use may be
considered "derivative" investments. In addition to using derivatives for
hedging, the Fund might use other derivative investments because they
offer the potential for increased value. The Fund currently does not use
derivatives to a significant degree and is not required to use them in
seeking its objective.
Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, the Fund can lose money on the investment. The
underlying security or investment on which a derivative is based, and the
derivative itself, may not perform the way the Manager expected it to. As a
result of these risks the Fund could realize less principal or income from
the investment than expected or its hedge might be unsuccessful. As a
result, the Fund's share prices could fall. Certain derivative investments
held by the Fund might be illiquid.
o Hedging. The Fund can buy and sell futures contracts, put and call
options, and forward contracts. These are all referred to as "hedging
instruments." The Fund does not currently use hedging extensively nor for
speculative purposes. It has limits on its use of hedging instruments and is not
required to use them in seeking its objective.
Some of these strategies would hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call
options, would tend to increase the Fund's exposure to the securities
market.
Options trading involves the payment of premiums and has special tax
effects on the Fund. 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. 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 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.
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 been an investment adviser since 1960 and currently
manages investment companies, including other Oppenheimer funds. The Manager
(including subsidiaries and affiliates) manages assets of more than $120 billion
as of January 31, 2000 with more than 5 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
Portfolio Manager. The Portfolio Manager of the Fund is Jay W. Tracey, III. He
has been the person principally responsible for the day-to-day management
of the Fund since its inception in May 1998, and is a Vice President of
the Fund and of the Manager. He also serves as an officer and portfolio
manager of other Oppenheimer funds. He has been employed by the Manager
since July 1991, except during the period from February through September
1994, during which he was a managing director of another firm.
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, 1999, was 0.75% 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 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 may 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 Service shares. 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 Service shares. A description of
the Service Plans that affect only Service shares of the Fund is contained in
the Fund's Prospectus that offers Service shares. That Prospectus, when
available, may be obtained without charge by contacting any participating
insurance company that offers Service 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>
- ------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998(1)
===========================================================================================
<S> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 9.60 $10.00
- -------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.02) (.02)
Net realized and unrealized gain (loss) 4.49 (.38)
- -------------------------------------------------------------------------------------------
Total income (loss) from investment operations 4.47 (.40)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $14.07 $ 9.60
====== ======
===========================================================================================
Total Return, at Net Asset Value(2) 46.56% (4.00)%
===========================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $6,927 $994
- -------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,738 $441
- -------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment loss (0.37)% (0.79)%
Expenses 1.83% 0.87%(4)
Expenses, net of voluntary assumption of expenses 1.34% N/A
- -------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 176% 61%
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods less than one full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $7,060,737 and $4,155,665, respectively.
9
<PAGE>
INFORMATION AND SERVICES
For More Information on 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.
- --------------------------------------------------------------------
By Telephone: Call OppenheimerFunds
Services toll-free:
1-888-470-0861
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- ---------------------------- Write to:
By Mail: ------------------------------
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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
publicinfo@secgov., or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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
PR0297.001.0500
Printed on recycled paper.
(OppenheimerFunds logo)
<PAGE>
Appendix to Prospectus of
Oppenheimer Small Cap Growth Fund/VA
(a series of Oppenheimer Variable Account Funds)
Graphic material included in the Prospectus of Oppenheimer Small Cap
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 the most recent calendar year, without deducting separate account expenses.
Set forth below are the relevant data that will appear on the bar chart:
Calendar
Year
Ended Annual Total Return
12/31/99 45.56%
<PAGE>
Oppenheimer Main Street Growth &
Income Fund/VA(R)
A series of Oppenheimer Variable
Account Funds
Prospectus dated May 1, 2000 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.
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.
It explains how to select shares of the Fund
as an
As with all mutual funds, the investment under the insurance
Securities and Exchange Commission product, and whether you are
has not approved or disapproved only eligible to purchase
the Fund's securities nor has it Service shares of the Fund.
determined that this Prospectus is This Prospectus contains
accurate or complete. It is a important information about the
criminal offense to represent Fund's objective, its investment
otherwise. policies, strategies and risks.
Please read this Prospectus (and your
insurance product prospectus) carefully
before you invest and keep it for future
reference about your account.
- ------------------------------------
(OppenheimerFunds logo)
<PAGE>
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
<PAGE>
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 Do the Portfolio Managers 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:
o 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. 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, described below.
There is also the risk that value of your investment could be eroded over time
by the effects of inflation and that poor security selection by the Fund's
Investment Manager, OppenheimerFunds, Inc. will cause the Fund to underperform
other funds having similar objectives.
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.
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 by 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.
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 performance 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.
Performance is not shown for the Fund's Service shares, which were not offered
prior to May 1, 2000. Because Service shares are subject to a service fee, the
performance is expected to be lower for any given period. 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 1/1/2000 through 3/31/2000, the Fund's cumulative return
(not annualized) was 3.07%. 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 1 Year Life of Fund*
the periods ended
December 31, 1999
- -----------------------------------------------------
- -----------------------------------------------------
Oppenheimer Main 21.71% 25.80%
Street Growth &
Income Fund/VA
(inception 7/5/95)
- -----------------------------------------------------
- -----------------------------------------------------
S&P 500 Index 21.03% 26.89%1
- -----------------------------------------------------
1. 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. The Fund's performance is compared to the
Standard & Poor's 500 Index, an unmanaged index of U.S. equity securities. 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.
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 different types of investments will vary over time based upon the
Manager's evaluation of economic and market trends. 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.
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.
|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 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 them. These techniques involve risks, although some are designed to
help reduce overall 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| Illiquid and Restricted Securities. Investments may be illiquid
because they do not have an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted security
is one that has a contractual restriction on 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 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.
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 Manager 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 Fund's Board of Trustees, under an investment advisory
agreement that states the Manager's responsibilities. The agreement sets the
fees the Fund pays to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has been an investment adviser since 1960. The Manager
(including subsidiaries and affiliates) managed more than $120 billion as of
March 31, 2000, including other Oppenheimer funds with more than 5 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, 1999, was
0.73% 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. That prospectus will indicate whether you are only eligible
to purchase Service shares of the Fund. 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 Colorado.
|X| Classes of Shares. The Fund offers two different classes of shares. The
class of shares designated as Service shares are subject to a distribution and
service plan. The impact of the expenses of that plan on Service shares is
described below. The class of shares that are not subject to a plan has no class
"name" designation. 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.
|X| Distribution and Service Plan for Service shares. The Fund has adopted a
distribution and service plan for Service shares to pay OppenheimerFunds
Distributor, Inc., the distributor, for distribution related services for the
Fund's Service shares. Although the plan allows for payment to be made quarterly
at an annual rate of up to 0.25% of the average annual net assets of Service
shares of the Fund, that rate is currently reduced to 0.15%. The Board may
increase that rate to no more than 0.25% per annum, without advance
notification. The distributor currently uses all of those fees to compensate
sponsor(s) of the insurance product that offers Fund shares, for providing
personal service and maintenance of accounts of their variable contract owners
that hold Service shares. The impact of the service plan is to increase
operating expenses of the Service shares, which results in lower performance
compared to the Fund's shares that are not subject to a service fee.
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 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. Dividends and
distributions will generally be lower for Service shares, which normally have
higher expenses. 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 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. Because Service shares
of the Fund were not issued prior to May 1, 2000, no financial information is
shown for Service shares in the Financial Highlights table or in the financial
statements included in the Statement of Additional Information.
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995(1)
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $20.48 $20.58 $16.37 $12.51 $10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .11 .13 .19 .14 .01
Net realized and unrealized gain 4.29 .92 4.91 3.91 2.52
- ---------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 4.40 1.05 5.10 4.05 2.53
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) (.05) (.17) (.14) (.02)
Distributions from net realized gain (.16) (1.10) (.72) (.05) --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.25) (1.15) (.89) (.19) (.02)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.63 $20.48 $20.58 $16.37 $12.51
====== ====== ====== ====== ======
===========================================================================================================================
Total Return, at Net Asset Value(2) 21.71% 4.70% 32.48% 32.51% 25.25%
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $555,311 $308,353 $155,368 $47,009 $4,288
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $391,063 $234,306 $ 94,906 $21,562 $1,809
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 0.63% 0.74% 1.15% 1.41% 0.50%
Expenses 0.78% 0.79%(4) 0.83%(4) 1.00%(4) 2.07%(4)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 118% 86% 79% 113% 24%
</TABLE>
1. For the period from July 5, 1995 (commencement of operations) to December 31,
1995.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 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 for periods less than one full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $585,193,287 and $443,805,600, respectively.
9
<PAGE>
INFORMATION AND SERVICES
For More Information About Oppenheimer Main Street Growth & 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, other information about the Fund, or instructions on how to
contact the sponsor of your insurance product:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
[email protected], or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
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 PR0650.001.0500 Printed on recycled paper.
(OppenheimerFunds logo)
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 four 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%
12/31/99 21.71%
<PAGE>
-30-
- -------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
- -------------------------------------------------------------------------------
6803 S. Tucson Way, Englewood, Colorado 80112
1-888-470-0861
Statement of Additional Information dated May 1, 2000
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 Oppenheimer Small Cap Growth Fund/VA
Oppenheimer Global Securities Fund/VA Oppenheimer Multiple Strategies Fund/VA
Oppenheimer Main Street Growth & Income Fund(R)/VA
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, 2000. 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.
<PAGE>
Contents
Page
About the Funds
Additional Information About the Funds' Investment
Policies and Risks 3
The Funds' Investment Policies............................ 3
Other Investment Techniques and Strategies................ 11
Investment Restrictions................................... 30
How the Funds are Managed ................................... 32
Organization and History.................................. 32
Trustees and Officers..................................... 34
The Manager............................................... 41
Brokerage Policies of the Funds.............................. 43
Distribution and Service Plans (Service Shares Only)......... 45
Performance of the Funds..................................... 46
About Your Account
How To Buy and Sell Shares................................... 52
Dividends, Capital Gains and Taxes........................... 56
Additional Information About the Funds....................... 56
Financial Information About the Funds
Independent Auditors' Report................................. 58
Financial Statements......................................... 59
Appendix A: Ratings Definitions.............................. A-1
Appendix B: Industry Classifications......................... B-1
Appendix C: Major Shareholders............................... C-1
- -------------------------------------------------------------------------------
<PAGE>
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. The
allocation of Main Street Growth & Income Fund/VA's portfolio to equity
securities is generally substantially larger than its allocation to fixed-income
securities. 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.
|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 Manager 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 as segregated on their
respective books liquid assets 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 10% 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." As a matter
of fundamental policy, 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 Funds can buy and sell futures contracts that relate to
(1) broadly-based stock indices (these are referred to as "stock index
futures"), (2) bond indices (these are referred to as "bond index futures"), (3)
debt securities (these are referred to as "interest rate futures"), and (4)
foreign currencies (these are referred to as "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 identify as segregated on its
records 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 identifying as segregated on its
books liquid assets in an amount equal to the exercise price of the option.
|_| 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 a
Fund'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.
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
identify as segregated on its records liquid assets 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's rating is downgraded, the Manager and/or the Board may
have to reassess the security's credit risk. If a security has ceased to be a
First Tier Security, the Manager will promptly reassess whether the security
continues to present "minimal credit risk." If the Manager becomes aware that
any Rating Organization has downgraded its rating of a Second Tier Security or
rated an unrated security below its second highest rating category, the Trust's
Board of Trustees shall promptly reassess whether the security presents minimal
credit risk and whether it is in Money Fund/VA's best interests to dispose of
it.
If Money Fund/VA disposes of the security within 5 days of 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. In making that determination, the Board may take
into consideration default insurance coverage that Money Fund shares with other
money market funds managed by the Manager and an affiliate. If such coverage is
available for a portion of the loss caused by the default and the security can
only be sold at a depressed price, the Board may determine it is in Money
Fund/VA's best interests not to sell that defaulted security. In that case,
retention of the security would not violate Rule 2a-7. Due to coverage limits,
exclusions and deductibles, there can be no assurance of the adequacy or
availability of insurance coverage in the event a security is in default.
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.
G 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.
<PAGE>
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.
The Board of Trustees is expected to propose that shareholders approve a
number of changes to the fundamental policies listed above. Specifically, that
proposal would eliminate all but the first and last fundamental investment
policies listed above. That proposal would also amend the fundamental policy of
the Funds on lending and borrowing. There can be no assurance that the proposal
will be submitted to shareholders by any specific date, or that once submitted,
it will be approved. If adopted, these changes are not expected to change the
operation of any Fund in any material manner. For that reason, no revision or
supplement to this Statement of Additional Information may be made to reflect
these changes if and when they are approved and implemented.
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. The Board has done so, and each Fund currently has two classes of
shares:
(1) a class with no specific name, other than the name shown two paragraphs
above, and
(2) "Service shares," which are subject to a distribution and service plan,
described under that heading below. 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. Additionally, 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:
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 Centennial California Tax Exempt
Fund Trust
Oppenheimer Integrity Funds Centennial Government Trust
Oppenheimer Limited-Term Centennial Money Market Trust
Government Fund
Oppenheimer Main Street Funds, Centennial New York Tax Exempt
Inc. Trust
Oppenheimer Municipal Fund Centennial Tax Exempt Trust
Oppenheimer Real Asset Fund Oppenheimer Main Street Small Cap
Fund
Oppenheimer Strategic Income
Fund
Oppenheimer Senior Floating Rate 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, 2000, the Trustees and
officers of the Fund as a group did not beneficially own any shares of any
Fund.
William L. Armstrong, Trustee, Age: 63.
11 Carriage Lane, Littleton, Colorado 80121
Chairman of the following private mortgage banking companies: Cherry Creek
Mortgage Company (since 1991), Centennial State Mortgage Company (since 1994),
The El Paso Mortgage Company (since 1993), Transland Financial Services, Inc.
(since 1997), and Ambassador Media Corporation (since 1984); Chairman of the
following private companies: Frontier Real Estate, Inc. (residential real estate
brokerage) (since 1994), Frontier Title (title insurance agency) (since 1995)
and Great Frontier Insurance (insurance agency) (since 1995); Director of the
following public companies: Storage Technology Corporation (computer equipment
company) (since 1991), Helmerich & Payne, Inc. (oil and gas drilling/production
company) (since 1992), UNUMProvident (insurance company) (since 1991); formerly
Director of the following public companies: International Family Entertainment
(television channel) (1991 - 1997) and Natec Resources, Inc. (air pollution
control equipment and services company) (1991 - 1995); formerly U.S. Senator
(January 1979 - January 1991).
Robert G. Avis*, Trustee, Age: 68.
One North Jefferson Ave., St. Louis, Missouri 63103
Chairman, President and Chief Executive Officer of A.G. Edwards Capital, Inc.
(general partnership of private equity funds), Director of A.G. Edwards &
Sons, Inc. (a broker-dealer) and Director of A.G. Edwards Trust Companies
(trust companies), formerly, Vice Chairman of A.G. Edwards & Sons, Inc. and
A.G. Edwards, Inc. (its parent holding company) and Chairman of A.G.E. Asset
Management (an investment advisor).
William A. Baker, Trustee, Age: 85.
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
George C. Bowen, Trustee, Age: 64
9224 Bauer Court, Lone Tree, Colorado 80124
Formerly (until April 1999) Mr. Bowen held the following positions: Senior Vice
President (since September 1987) and Treasurer (since March 1985) of the
Manager; Vice President (since June 1983) and Treasurer (since March 1985) of
OppenheimerFunds Distributor, Inc. ("OFDI"); Vice President (since October 1989)
and Treasurer (since April 1986) of HarbourView Asset Management Corporation;
Senior Vice President (since February 1992), Treasurer (since July 1991)
Assistant Secretary and a director (since December 1991) of Centennial Asset
Management Corporation; 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.;
Vice President, Treasurer and Secretary of Shareholder Financial Services, Inc.
(since November 1989); Assistant Treasurer of Oppenheimer Acquisition Corp.
(since March 1998); Treasurer of Oppenheimer Partnership Holdings, Inc. (since
November 1989); Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc. (since July 1996); Treasurer of OppenheimerFunds International
Ltd. and Oppenheimer Millennium Funds plc (since October 1997).
Edward L. Cameron, Trustee, Age: 66.
Spring Valley Road, Morristown, New Jersey 07960
Formerly (from 1974-1999) a partner with PricewaterhouseCoopers LLC (an
accounting firm) and Chairman, Price Waterhouse LLP Global Investment management
Industry Services Group (from 1994-1998).
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., the Manager's parent holding company, and
Shareholder Services, Inc. and Shareholder Financial Services, Inc., transfer
agent subsidiaries of the Manager.
Sam Freedman, Trustee, Age: 59.
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.,
Chairman, Chief Executive Officer and director of Shareholder Financial
Services, Inc., Vice President and director of Oppenheimer Acquisition Corp.
and a director of OppenheimerFunds, Inc.
Raymond J. Kalinowski, Trustee, Age: 70.
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products
training company), self-employed consultant (securities matters).
C. Howard Kast, Trustee, Age: 77.
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee, Age: 78.
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
James C. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 66.
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, an investment adviser
subsidiary of the Manager and Chairman of the Board of Shareholder Services,
Inc.
Bridget A. Macaskill*, President and Trustee, Age: 51.
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation, an investment adviser
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
(since August 1994) and Shareholder Financial Services, Inc. (since September
1995), transfer agent subsidiaries of the Manager; President (since September
1995) and a director (since October 1990) of Oppenheimer Acquisition Corp., the
Manager's parent holding company; 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 of Oppenheimer Millennium Funds plc; President and
a director of other Oppenheimer funds; a director of Prudential Corporation plc
(a U.K. financial service company).
Ned M. Steel, Trustee, Age: 85.
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
Charles Albers, Senior Vice President and Portfolio Manager, Age: 60.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since April 1998); 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 Bartlett, Senior Vice President and Portfolio Manager, Age: 51.
Two World Trade Center, New York, New York 10048-0203
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 Portfolio Manager, Age: 71.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since June 1992); prior to joining the Manager in
June 1992, he was Senior Vice President and Chief Investment Officer Equities of
National Securities & Research Corporation (mutual fund adviser) and Vice
President of the National Affiliated Investment Companies.
John S. Kowalik, Vice President and Portfolio Manager, Age: 44.
Two World Trade Center, New York, New York 10048-0203
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 (June 1989 - June 1998).
Michael S. Levine, Vice President and Portfolio Manager, Age: 35.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since April 1996); formerly Assistant Portfolio
Manager of the Manager (from June 1994 - April 1996) and portfolio manager and
research associate for Amas Securities, Inc. (from February 1990 - February
1994).
Nikolaos D. Monoyios, Vice President and Portfolio Manager, Age: 51.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since April 1998); 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 Portfolio Manager, Age: 46.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since June 1989); an officer of other
Oppenheimer funds.
Jane Putnam, Vice President and Portfolio Manager, Age: 40.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since October 1995); before joining the Manager
in May 1994, she was a portfolio manager and equity research analyst for
Chemical Bank (June 1989 - May 1994).
Thomas P. Reedy, Vice President and Portfolio Manager, Age: 39.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since June 1993); an officer of other
Oppenheimer funds.
Richard H. Rubinstein, Vice President and Portfolio Manager, Age: 52.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since October 1995); an officer of
other Oppenheimer funds (since joining the Manager in June 1990).
Arthur P. Steinmetz, Vice President and Portfolio Manager, Age: 42.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since March 1993); an officer of other
Oppenheimer funds.
Jay W. Tracey III, Vice President and Portfolio Manager, Age: 47.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since September 1994); Vice President and
portfolio manager 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 other Oppenheimer funds and a
Vice President of the Manager (July 1991 - February 1994).
William L. Wilby, Vice President and Portfolio Manager, Age: 56.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since July 1994) and Vice President of
HarbourView Asset Management Corporation (since October 1993); an 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.
Carol E. Wolf, Vice President and Portfolio Manager, Age: 48.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager and Centennial Asset Management Corporation
(since June 1990); an officer of other Oppenheimer funds.
Andrew J. Donohue, Vice President and Secretary, Age: 49.
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of OFDI; Executive Vice President, General Counsel and a director
of HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc., Oppenheimer Partnership Holdings, Inc.
(since September 1995) and Oppenheimer Trust Company (since March 2000);
President and a director of Centennial Asset Management Corporation (since
September 1995); President, General Counsel 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 (since April 1999) of the Manager; Treasurer
of HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc.
(since April 1999); Assistant Treasurer of Oppenheimer Acquisition Corp. (since
April 1999); Assistant Secretary of Centennial Asset Management Corporation
(since April 1999); 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: 41.
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: 34.
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: 51.
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 of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
|X| Remuneration of Trustees. The officers of the Funds and two Trustees of
the Fund (Ms. Macaskill and 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, 1999. 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 1999.
- --------------------------------------------------------------------
Aggregate Compensation Total Compensation
Trustee's Name and from Oppenheimer From all
Other Positions Variable Denver-Based
Account Funds Oppenheimer Funds 1
- --------------------------------------------------------------------
- --------------------------------------------------------------------
William H. Armstrong2 $1,148 $14,542
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Robert G. Avis $5,370 $67,998
- --------------------------------------------------------------------
- --------------------------------------------------------------------
William A. Baker $5,370 $67,998
- --------------------------------------------------------------------
- --------------------------------------------------------------------
George Bowen2 None $23,879
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Edward L. Cameron2 $193 $2,430
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Jon S. Fossel $5,256 $66,586
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Sam Freedman
Review Committee $5,841 $73,998
Member
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Raymond J. Kalinowski
Audit Committee Member
$5,780 $73,248
- --------------------------------------------------------------------
- --------------------------------------------------------------------
C. Howard Kast
Chairman, Audit and
Review Committees $6,226 $78,873
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Robert M. Kirchner $5,467 $69,248
Audit Committee Member
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Ned M. Steel $5,366 $67,998
- --------------------------------------------------------------------
1. For the 1999 calendar year.
2. Mr. Armstrong and Mr. Cameron were not Trustees or Directors of the
Denver-based Oppenheimer funds prior to August 24, 1999 and December 14,
1999, respectively, and Mr. Bowen was not a Trustee of the Fund prior to
December 14, 1999.
|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, 2000 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 Service
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.
|X| Code of Ethics. The Fund, the Manager and OFDI 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. Covered persons include persons
with knowledge of the investments and investment intentions of the Fund and
other funds advised by the Manager. The Code of Ethics does permit personnel
subject to the Code to invest in securities, including securities that may be
purchased or held by the Fund, subject to a number of restrictions and controls.
Compliance with the Code of Ethics is carefully monitored and enforced by the
Manager.
The Code of Ethics is an exhibit to the Fund's registration statement
filed with the Securities and Exchange Commission and can be reviewed and copied
at the SEC's Public Reference Room in Washington, D.C. You can obtain
information about the hours of operation of the Public Reference Room by calling
the SEC at 1-202-942-8090. The Code of Ethics can also be viewed as part of the
Fund's registration statement on the SEC's EDGAR database at the SEC's Internet
web site at http://www.sec.gov. Copies may be obtained, after paying a
duplicating fee, by electronic request at the following E-mail address:
[email protected]., or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
|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, or by the Distributor under the General Distributor's
Agreements for Service shares. 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 are 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: 1997 1998 1999
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Money Fund/VA $ 601,698 $ 619,030 $ 749,665
- -----------------------------------------------------------------
- -----------------------------------------------------------------
High Income Fund/VA $1,667,490 $2,383,008 $2,511,521
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Bond Fund/VA $3,281,556 $4,218,231 $4,539,138
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Aggressive Growth $5,324,309 $6,564,650 $8,700,904
Fund/VA
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Capital Appreciation $2,859,202 $4,369,487 $6,845,473
Fund/VA
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Multiple Strategies $4,068,887 $4,584,184 $4,271,996
Fund/VA
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Global Securities $5,615,606 $7,167,836 $8,336,850
Fund/VA
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Strategic Bond Fund/VA $1,197,613 $1,860,227 $2,066,323
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Main Street Growth
& Income Fund/VA $ 790,577 $1,742,253 $2,864,220
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Small Cap Growth
Fund/VA(2) N/A $2,219(1) $20,414
- -----------------------------------------------------------------
- --------------------
(1) From May 1, 1998 (commencement of operations) to December 31, 1998.
(2) The Manager voluntarily reimbursed certain expenses other than management
fees during the periods shown.
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, 1997, 1998 and 1999; and (ii) for the Funds'
fiscal year ended December 31, 1999, 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:
- ----------------------------------------------------------------------
Transaction Commissions
Total Brokerage Commissions Directed Paid
Paid by the Funds for For
Research 1 Research 1
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Fund 1997 1998 1999 1999 1999
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
High Income
Fund/VA $ 20,256 $ 62,251 $ 12,736 $605,887 $50
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Bond Fund/VA $ 26,799 $ 91,170 $ 294,377 $13,530,189 $1,837
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Strategic
Bond $ 17,121 $219,537 $ 37,459 $4,409,292 $3,243
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Aggressive
Growth $810,749 $1,264,440 $1,260,968 $308,986,39 $361,679
Fund/VA
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Capital
Appreciation $506,443 $805,08 $1,229,872 $499,225,91 $695,842
Fund/VA
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Small Cap
Growth -- $ 829 $ 4,819 $359,409 $1,054
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Global
Securities $2,114,52 $2,900,162 $3,026,315 $773,222,45 $1,847,998
Fund/VA
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Multiple
Strategies $500,783 $ 430,211 $269,657 $53,879,024 $ 104,269
Fund/VA
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Main Street
Growth $209,630 $ 458,120 $1,278,160 $140,243,57 $223,423
& Income
Fund/VA
- ----------------------------------------------------------------------
1. The amount of transactions directed to brokers for research services and the
amount of the commissions paid to brokers for those services are shown in these
columns.
Distribution and Service Plans (Service Shares Only)
Under its General Distributor's Agreements with the Funds,
OppenheimerFunds Distributor, Inc. will only act as the principal underwriter
of the Funds' Service shares.
Each Fund has adopted a Distribution and Service Plan (the "Plan") for its
Service shares under Rule 12b-1 of the Investment Company Act, pursuant to which
each Fund will make payments to the Distributor in connection with the
distribution and/or servicing of Service shares. The Distributor will pay
insurance company separate account sponsors and other entities that offer and/or
provide services to Service shares, as described in the Prospectus. Each 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. Prior to May 1, 2000, no Service shares have been
issued and therefore no payments have been made prior to that date.
Under the Plans, no payment will be made to any insurance company separate
account sponsor or affiliate thereof under a Fund's Plan (each is referred to as
a "Recipient") in any quarter if the aggregate net assets of a Fund's Service
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 0.15% 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 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 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 Service shares. For
purposes of voting with respect to the Plans, Account owners are considered to
be shareholders of a Fund's shares. No 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 Service 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 and the
purpose of the payment made pursuant to each Plan. These reports are subject to
the review and approval of the Independent Trustees.
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 following the instructions in the prospectus for your
insurance product, or 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).
No performance information is presented for any Fund's Service shares,
which were not offered prior to May 1, 2000. Because Service shares are subject
to an additional fee, the performance is expected to be lower for any given
period.
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. The sponsor for your
insurance product can provide performance information that reflects those
charges and inception dates.
|_| 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 12/31/99
- -----------------------------------------------------------------
Average Annual Total Return For:
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Five Ten Cumulative
Fiscal Year Year InceptiTotal
Year Period Period to Return
Fund Ended Ended Ended 12/31/9From
12/31/99 12/31/99 12/31/99 Inception1
to
12/31/99
- -----------------------------------------------------------------
- -----------------------------------------------------------------
High Income Fund/VA 4.29% 10.24% 12.65% 11.66% 229.17%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Bond Fund/VA - 7.10% 7.76% 8.96% 111.14%
1.52%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Aggressive Growth 83.60% 29.70% 20.43% 541.50%
Fund/VA 19.16%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Capital
Appreciation 41.66% 30.65% 18.46% 17.61% 444.08%
Fund/VA
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Multiple 11.80% 14.40% 10.83% 179.74%
Strategies Fund/VA 11.59%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Global Securities 58.48% 21.67% n/a 312.83%
Fund/VA 16.79%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Strategic Bond 2.83% 8.25% n/a 49.13%
Fund/VA 6.18%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Main Street Growth
& 21.71% n/a n/a 25.80% 180.20%
Income Fund/VA
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Small Cap Growth 46.56% n/a n/a
Fund/VA 22.74% 40.70%
- -----------------------------------------------------------------
- ---------------
(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 Fund./VA. For inception
dates of Service shares, call 1-888-470-0861.
|_| 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.
Because the Fixed Income Funds pay their annual dividend in March of each year,
dividend yield is shown for the 30 days ended March 31, 1999. The formula is
shown below:
Dividend Yield = dividends paid x 12/maximum offering price (payment date)
- ----------------------------------------------------------------------
Standardized Yield Dividend Yield for
for the 30-Day Period the 30-Day Period
Fund Ended 12/31/99 Ended
3/31/99
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
High Income Fund/VA 11.02% 11.32%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Bond Fund/VA 7.49% 8.64%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Strategic Bond Fund/VA 10.05% 8.76%
- ----------------------------------------------------------------------
|_| 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 styles. 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.
- -----------------
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.
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.
For any Fund that has two classes of shares outstanding, the methodology
for calculating the net asset value, dividends and distributions of the Fund's
share classes recognizes two types of expenses. General expenses that do not
pertain specifically to any one class are allocated pro rata to the shares of
all classes. The allocation is 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 are
allocated equally to each outstanding share within that class. Examples of such
expenses include 12b-1 distribution and service fees of Service 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.
- -----------------
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.
|_| 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) 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. Dividends on Service shares are expected to be
lower. That is because of the effect of the additional fee on Service 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>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Money Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppeneheimer Money Fund/VA (which is a series
of Oppenheimer Variable Account Funds) as of December 31, 1999, the related
statement of operations for the year then ended, the statements of changes in
net assets for the years ended December 31, 1999 and 1998 and the financial
highlights for the period January 1, 1995, to December 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
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, 1999, by correspondence with the custodian. 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/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Value
Amount Note 1
================================================================================================================================
<S> <C> <C>
Direct Bank Obligations--5.4%
- --------------------------------------------------------------------------------------------------------------------------------
Bank of America NA:
6.12%, 1/6/00 $2,000,000 $ 2,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Dresdner Bank AG:
6.09%, 1/5/00 4,000,000 4,000,004
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Bank NA Minneapolis:
5.96%, 3/22/00(1) 5,000,000 5,000,000
-----------
Total Direct Bank Obligations 11,000,004
================================================================================================================================
Letters of Credit--2.5%
- --------------------------------------------------------------------------------------------------------------------------------
Dresdner Bank AG, guaranteeing commercial paper of Louis Dreyfus Corp., Series DR2:
6.85%, 1/18/00 5,000,000 4,983,826
================================================================================================================================
Short-Term Notes--91.3%
- --------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--2.5%
British Aerospace North America, Inc.:
6.14%, 3/10/00(1) 5,000,000 4,941,158
- --------------------------------------------------------------------------------------------------------------------------------
Asset-Backed--22.3%
Asset Backed Capital Finance, Inc.:
6.05%, 1/18/00(1) 5,000,000 4,985,715
- --------------------------------------------------------------------------------------------------------------------------------
Asset-Securitization Cooperative:
5.82%, 2/24/00(1) 4,000,000 3,965,080
- --------------------------------------------------------------------------------------------------------------------------------
Beta Finance, Inc.:
5.73%, 2/10/00(1) 5,000,000 4,968,167
- --------------------------------------------------------------------------------------------------------------------------------
Breeds Hill Capital Co. LLC, Series A:
5.91%, 3/16/00(1) 4,418,000 4,363,603
- --------------------------------------------------------------------------------------------------------------------------------
Cooperative Assn. of Tractor Dealers, Inc., Series A:
5.85%, 3/17/00 2,500,000 2,469,125
- --------------------------------------------------------------------------------------------------------------------------------
Cooperative Assn. of Tractor Dealers, Inc., Series B:
6.17%, 3/15/00 2,100,000 2,073,366
- --------------------------------------------------------------------------------------------------------------------------------
Eureka Securitization, Inc.:
5.98%, 1/28/00(1) 3,700,000 3,683,295
- --------------------------------------------------------------------------------------------------------------------------------
Lexington Parker Capital Co. LLC:
5.92%, 3/17/00(1) 5,000,000 4,936,139
- --------------------------------------------------------------------------------------------------------------------------------
Moat Funding LLC:
6.35%, 1/14/00(1) 3,500,000 3,491,974
- --------------------------------------------------------------------------------------------------------------------------------
Preferred Receivables Funding Corp.:
5.88%, 2/29/00(1) 5,000,000 4,951,817
- --------------------------------------------------------------------------------------------------------------------------------
Sigma Finance, Inc.:
6.07%, 1/21/00(1) 5,000,000 4,983,139
-----------
44,871,420
- --------------------------------------------------------------------------------------------------------------------------------
Automotive--3.7%
BMW US Capital Corp.:
6.01%, 3/21/00 7,500,000 7,399,833
Oppenheimer Money Fund/VA 3
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Principal Value
Amount Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Banks--2.5%
First Chicago Financial Corp.:
5.79%, 1/20/00(1) $5,000,000 $ 4,984,721
- --------------------------------------------------------------------------------------------------------------------------------
Beverages--1.2%
Coca-Cola Enterprises, Inc.:
5.47%, 1/28/00(1) 2,500,000 2,489,744
- --------------------------------------------------------------------------------------------------------------------------------
Broker/Dealers--15.4%
Banc of America Securities LLC:
5.95%, 1/3/00(2) 5,000,000 5,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc.:
5.83%, 1/11/00 3,500,000 3,494,332
- --------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group LP:
5.60%, 1/27/00 3,000,000 2,987,867
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
5.85%, 2/7/00 3,000,000 2,981,963
6%, 1/31/00 2,600,000 2,586,827
- --------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter & Co.:
4.50%, 6/8/00(2) 3,500,000 3,500,000
5.79%, 2/28/00 4,400,000 4,358,955
- --------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc.:
5.44%, 1/26/00 6,000,000 5,975,875
-----------
30,885,819
- --------------------------------------------------------------------------------------------------------------------------------
Building Materials--2.4%
Compagnie de Saint-Gobain:
5.80%, 3/27/00(1) 5,000,000 4,930,722
- --------------------------------------------------------------------------------------------------------------------------------
Commercial Finance--5.9%
Caterpillar Financial Services Corp.:
6.10%, 4/3/00 6,000,000 5,905,450
- --------------------------------------------------------------------------------------------------------------------------------
Heller Financial, Inc., Series H:
6.33%, 6/1/00(2) 1,000,000 1,000,341
- --------------------------------------------------------------------------------------------------------------------------------
Homeside Lending, Inc.:
5.86%, 2/3/00 5,000,000 4,973,142
-----------
11,878,933
- --------------------------------------------------------------------------------------------------------------------------------
Consumer Services--3.7%
Prudential Funding Corp.:
5.79%, 1/26/00 4,500,000 4,481,906
6.07%, 1/10/00 3,000,000 2,995,448
-----------
7,477,354
- --------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--6.9%
Associates Corp. of North America:
4%, 1/3/00 6,000,000 5,998,667
- --------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.99%, 1/26/00 8,000,000 7,966,722
-----------
13,965,389
4 Oppenheimer Money Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Principal Value
Amount Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Insurance--12.2%
AIG Life Insurance Co.:
6.476%, 5/31/00(2)(3) $3,000,000 $ 3,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Marsh U.S.A., Inc.:
5.60%, 1/26/00(1) 6,000,000 5,976,667
- --------------------------------------------------------------------------------------------------------------------------------
Metropolitan Life Insurance Co.:
5.839%, 1/3/00(2) 3,500,000 3,500,000
- --------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Co.:
5.53%, 2/14/00(2)(3) 5,000,000 5,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Protective Life Insurance Co.:
5.658%, 6/1/00(2) 5,000,000 5,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Travelers Insurance Co.:
5.608%, 9/16/00(2)(3) 2,000,000 2,000,000
------------
24,476,667
- --------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.2%
Eaton Corp.:
5.95%, 1/31/00(1) 4,400,000 4,378,183
- --------------------------------------------------------------------------------------------------------------------------------
Nondurable Household Goods--4.5%
Newell Co.:
5%, 1/7/00(1) 9,000,000 8,992,500
- --------------------------------------------------------------------------------------------------------------------------------
Special Purpose Financial--3.9%
KZH-KMS Corp.:
5.83%, 3/29/00(1) 5,000,000 4,928,744
5.86%, 4/6/00(1) 3,000,000 2,953,120
------------
7,881,864
- --------------------------------------------------------------------------------------------------------------------------------
Telecommunications: Technology--2.0%
GTE Corp.:
6.155%, 6/12/00(2) 4,000,000 3,998,853
------------
Total Short-Term Notes 183,553,160
- --------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value 99.2% 199,536,990
- --------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.8 1,528,667
---------- ------------
Net Assets 100.0% $201,065,657
========== ============
</TABLE>
Short-term notes, direct bank obligations 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.
1. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $89,904,488, or 44.71% of the
Fund's net assets, and have been determined to be liquid pursuant to guidelines
adopted by the Board of Trustees.
2. Represents the current interest rate for a variable rate security.
3. Represents a restricted security which is considered illiquid, by virtue of
the absence of a readily available market or because of legal or contractual
restrictions on resale. Such securities amount to $10,000,000, or 4.97% of the
Fund's net assets. The Fund may not invest more than 10% of its net assets
(determined at the time of purchase) in illiquid securities.
See accompanying Notes to Financial Statements.
Oppenheimer Money Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
================================================================================================
Assets
Investments, at value--see accompanying statement $199,536,990
- ------------------------------------------------------------------------------------------------
Cash 1,523,358
- ------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 1,013,551
Interest 278,529
Other 3,889
------------
Total assets 202,356,317
================================================================================================
Liabilities
Payables and other liabilities:
Dividends 430,915
Shares of beneficial interest redeemed 826,738
Trustees' compensation 235
Transfer and shareholder servicing agent fees 187
Other 32,585
------------
Total liabilities 1,290,660
================================================================================================
Net Assets $201,065,657
============
================================================================================================
Composition of Net Assets
Paid-in capital $201,082,465
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (16,808)
------------
Net assets--applicable to 201,082,486 shares of beneficial interest outstanding $201,065,657
============
================================================================================================
Net Asset Value, Redemption Price and Offering Price Per Share $1.00
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Money Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=====================================================================
Investment Income
Interest $8,907,818
=====================================================================
Expenses
Management fees 749,665
- ---------------------------------------------------------------------
Custodian fees and expenses 9,011
- ---------------------------------------------------------------------
Trustees' compensation 2,226
- ---------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,110
- ---------------------------------------------------------------------
Other 32,014
----------
Total expenses 795,026
Less expenses paid indirectly (4,083)
----------
Net expenses 790,943
=====================================================================
Net Investment Income 8,116,875
=====================================================================
Net Realized Gain on Investments 1,540
=====================================================================
Net Increase in Net Assets Resulting from Operations $8,118,415
==========
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Money Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
==============================================================================================================
<S> <C> <C>
Operations
Net investment income $ 8,116,875 $ 7,050,032
- --------------------------------------------------------------------------------------------------------------
Net realized gain 1,540 9,101
------------ ------------
Net increase in net assets resulting from operations 8,118,415 7,059,133
==============================================================================================================
Dividends and/or Distributions to Shareholders (8,128,189) (7,050,032)
==============================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 49,276,631 25,007,317
==============================================================================================================
Net Assets
Total increase 49,266,857 25,016,418
- --------------------------------------------------------------------------------------------------------------
Beginning of period 151,798,800 126,782,382
------------ ------------
End of period (including undistributed net investment income
of $11,314 for the year ended December 31, 1998) $201,065,657 $151,798,800
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Money Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
====================================================================================================================
<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 .05 .06
Dividends and/or distributions to shareholders (.05) (.05) (.05) (.05) (.06)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
====================================================================================================================
Total Return(1) 4.96% 5.25% 5.31% 5.13% 5.62%
====================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $201,066 $151,799 $126,782 $129,719 $65,386
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $166,727 $137,633 $133,707 $ 99,263 $75,136
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 4.87% 5.12% 5.19% 5.01% 5.52%
Expenses 0.48% 0.50%(3) 0.48%(3) 0.49%(3) 0.51%(3)
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns reflect changes in net investment income only. Total returns are not
annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
Oppenheimer Money Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Money Fund/VA (the Fund) is a 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 Fund's investment objective is to seek the maximum current income
from investment in money market securities consistent with low capital risk and
the maintenance of liquidity. The Fund's investment advisor is OppenheimerFunds,
Inc. (the Manager). The following is a summary of significant accounting
policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date. Realized
gains and losses on investments are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
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.
10 Oppenheimer Money Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Beneficial Interest
The Fund has 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 December 31, 1999 Year Ended December 31, 1998
------------------------------- ------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 381,258,296 $ 381,258,296 318,160,993 $ 318,160,993
Dividends and/or distributions reinvested 7,983,593 7,983,593 7,008,382 7,008,382
Redeemed (339,965,258) (339,965,258) (300,162,058) (300,162,058)
------------ ------------- ------------ -------------
Net increase 49,276,631 $ 49,276,631 25,007,317 $ 25,007,317
============ ============= ============ =============
</TABLE>
================================================================================
3. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 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
in excess of $1.5 billion. The Fund's management fee for the year ended December
31, 1999, was 0.45% of average annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
<PAGE>
Oppenheimer Bond Fund/VA
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Bond Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Bond Fund/VA (which is a series of
Oppenheimer Variable Account Funds) as of December 31, 1999, the related
statement of operations for the year then ended, the statements of changes in
net assets for the years ended December 31, 1999 and 1998, and the financial
highlights for the period January 1, 1995 to December 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
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, 1999, by correspondence with the custodian. 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
Bond Fund/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
===================================================================================================================
Mortgage-Backed Obligations--33.2%
Government Agency--11.7%
- -------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--10.6%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates:
Series 151, Cl. F, 9%, 5/15/21 $ 528,711 $ 546,223
Series 1092, Cl. K, 8.50%, 6/15/21 1,988,407 2,031,278
Series 1541, Cl. H, 7%, 10/15/22 4,750,000 4,626,785
Series 1714, Cl. M, 7%, 8/15/23 2,000,000 1,945,000
- -------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg. Participation
Certificates, 7%, 4/1/26 3,071,879 2,980,676
- -------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 197, Cl. IO, 11.419%, 4/1/28(2) 13,692,632 4,483,267
Series 194, Cl. IO, 10.159%, 4/1/28(2) 15,300,874 5,115,035
Series 202, Cl. IO, 10.086%-10.125%, 4/1/29(2) 48,541,614 16,678,595
Series 2178, Cl. PI, 10.359%, 8/15/29(2) 25,675,000 6,137,930
- -------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 3/1/11 502,929 488,888
7%, 4/1/04-11/1/25 691,754 672,422
7.50%, 1/1/08-1/1/26 2,153,288 2,137,694
8%, 5/1/17 116,584 118,357
- -------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, 8.75%, 11/25/05 1,262,358 1,291,153
- -------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Trust 1989-17, Cl. E, 10.40%, 4/25/19 610,095 648,416
- -------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security,
Trust 294, Cl. 2, 10.581%-16.633%, 2/1/28(2) 41,634,511 13,693,852
-----------
63,595,571
- -------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--1.1%
Government National Mortgage Assn.:
7%, 1/15/09-5/15/09 388,328 384,321
8%, 1/15/28-9/15/28 6,372,802 6,436,535
-----------
6,820,856
- -------------------------------------------------------------------------------------------------------------------
Private--21.5%
- -------------------------------------------------------------------------------------------------------------------
Commercial--18.3%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D5, Cl. A6, 7.186%, 2/14/41(3) 3,000,000 2,427,187
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 5,400,000 3,459,375
Series 1998-MD6, Cl. A3, 7.227%, 3/17/28(3) 4,875,000 4,387,500
- -------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Interest-Only Stripped Mtg.-Backed Security,
Series 1997-D5, Cl. PS1, 9.108%, 2/14/41(2) 18,257,799 1,560,471
- -------------------------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only Stripped Mtg.-Backed Security,
Series 1997-CTL1, 10.29%, 6/22/24(2)(4) 30,606,042 1,209,895
- -------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Collateralized Mtg. Obligations,
Series 1996-C1, Cl. D, 7.367%, 12/25/20(3)(4) 2,500,000 2,414,844
- -------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Asset Trust, Series 1999-C1, Cl. C, 7.35%, 8/17/13 9,750,000 8,921,250
- -------------------------------------------------------------------------------------------------------------------
CRIIMI MAE Trust I, Collateralized Mtg. Obligations,
Series 1996-C1, Cl. A2, 7.56%, 8/30/05(5) 2,000,000 1,860,625
</TABLE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Commercial (continued)
CRIIMI MAE Trust I, Commercial Mtg. Trust, Series 1998-C1, Cl. A1, 7%, 11/2/06(4) $ 3,300,000 $ 2,919,469
- ---------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1998-C1, Cl. AX, 8.19%, 4/11/30(2) 24,745,453 1,531,125
- ---------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates,
Series 1997-C2, Cl. F, 6.85%, 12/17/07 3,250,000 3,055,000
- ---------------------------------------------------------------------------------------------------------------
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 1,447,500
Series 1994-C1, Cl. 2-E, 8.70%, 9/25/25 1,500,000 1,461,562
- ---------------------------------------------------------------------------------------------------------------
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 1,568,750
- ---------------------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust, Interest-Only Stripped
Mtg.-Backed Security, Series 1998-C2, 9.274%, 5/18/28(2) 29,447,557 1,074,951
- ---------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Collateralized Mtg. Obligations:
Series 1997-C2, Cl. D, 7.192%, 1/15/08 3,500,000 3,062,500
Series 1998-C1, Cl. E, 7.088%, 3/15/11(3) 3,500,000 3,109,531
- ---------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 1997-C1, Cl. X, 9.033%, 7/15/27(2) 18,165,432 1,368,084
Series 1997-C1, Cl. X, 8.553%, 7/15/27(2) 9,036,122 680,533
- ---------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates:
Series 1997-CL1, Cl. F, 7.155%, 7/13/30(3) 1,000,000 936,875
Series 1997-CL1, Cl. F, 7.625%, 7/13/30(3) 4,000,000 3,478,750
- ---------------------------------------------------------------------------------------------------------------
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only Stripped
Mtg.-Backed Security, Series 1998-C1, Cl. IO, 9.063%, 2/18/28(2)(4) 43,952,818 2,321,258
- ---------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. D, 7.42%, 4/25/28 2,000,000 1,900,937
Series 1997-C2, Cl. D, 7.004%, 12/10/29(3) 4,000,000 3,617,500
- ---------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. D1, 7.421%, 2/15/28(3)(4) 1,000,000 953,906
Series 1997-RR, Cl. D, 7.671%, 4/30/39(4) 4,300,231 3,020,241
Series 1997-XL1, Cl. F, 7.411%, 10/3/30(3) 2,500,000 2,246,875
- ---------------------------------------------------------------------------------------------------------------
NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates:
Series DMC, Cl. B, 8.562%, 8/12/11(4) 1,600,000 1,448,500
Series DMC, Cl. C, 8.921%, 8/12/11(4) 4,400,000 3,980,625
- ---------------------------------------------------------------------------------------------------------------
NC Finance Trust, Collateralized Mtg. Obligations,
Series 1999-I, Cl. ECFD, 8.75%, 12/25/28 15,829,568 15,379,415
- ---------------------------------------------------------------------------------------------------------------
Option One Mortgage Trust, Collateralized Mtg. Obligations:
Series 1999-1A, 10.06%, 3/1/29(4) 6,155,847 6,067,357
Series 1999-3, Cl. BB, 10.80%, 12/15/29 6,261,813 6,218,764
- ---------------------------------------------------------------------------------------------------------------
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through Certificates,
Series 1, Cl. C, 7.217%, 12/21/26(4) 250,000 235,000
- ---------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. C, 8%, 6/25/26 1,160,794 1,154,084
Series 1995-C1, Cl. D, 6.90%, 2/25/27 3,000,000 2,915,391
- ---------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through Certificates:
Series 1996-CFL, Cl. D, 7.034%, 2/25/28 1,800,000 1,769,062
Series 1999-1, 10%, 8/25/28 4,955,997 4,900,242
------------
110,064,934
</TABLE>
Oppenheimer Bond Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Multi-Family--0.2%
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-12, Cl. B1, 6.625%, 2/25/24 $ 946,747 $ 856,215
- ------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Trust, Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 43, Cl. E, 6.50%, 8/27/15 263,338 260,210
------------
1,116,425
- ------------------------------------------------------------------------------------------------------------------------
Other--0.0%
Salomon Brothers Mortgage Securities VI, Interest-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. B, 20.132%, 10/23/17(2) 57,595 15,676
- ------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Principal-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. A, 2.377%-16.21%, 10/23/17(6) 85,230 68,877
------------
84,553
- ------------------------------------------------------------------------------------------------------------------------
Residential--3.0%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates:
Series 1997-C1, Cl. E, 7.50%, 3/1/11(4) 5,006,000 4,076,761
Series 1999-C1, Cl. C, 7.682%, 9/15/09(3) 6,500,000 6,382,187
- ------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997-CHL1, Cl. C, 8.127%, 7/25/06(3)(4) 4,024,000 3,621,600
- ------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1997-HF1, Cl. E, 7.55%, 7/15/29(4) 1,500,000 1,365,938
- ------------------------------------------------------------------------------------------------------------------------
NationsBank Trust, Lease Pass-Through Certificates,
Series 1997A-1, 7.442%, 1/10/11(3) 2,500,000 2,389,063
- ------------------------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III, Sub. Bonds,
Series 1992-A, Cl. 1A, 8.259%, 3/29/30(3) 204,852 201,908
------------
18,037,457
------------
Total Mortgage-Backed Obligations (Cost $207,143,112) 199,719,796
========================================================================================================================
U.S. Government Obligations--6.1%
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 5.25%, 2/15/29 3,705,000 3,065,887
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.875%, 8/15/09(7)(8) 34,550,000 33,481,127
------------
Total U.S. Government Obligations (Cost $37,315,504) 36,547,014
========================================================================================================================
Foreign Government Obligations--1.5%
- ------------------------------------------------------------------------------------------------------------------------
Israel (State of) Bonds, 7.25%, 12/15/28 9,750,000 8,387,204
- ------------------------------------------------------------------------------------------------------------------------
Ontario, Canada (Province of) Bonds, 8%, 10/17/01 750,000 765,382
- ------------------------------------------------------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts., Zero Coupon, 3/17/99(4)(9)(10)IDR 1,000,000,000 39,356
------------
Total Foreign Government Obligations (Cost $10,234,242) 9,191,942
========================================================================================================================
Loan Participations--0.6%
- ------------------------------------------------------------------------------------------------------------------------
Ferrell Companies, Inc., 10.18% Sr. Sec. Nts., 7/17/06(3)(4) (Cost $3,270,429) 3,300,000 3,283,500
========================================================================================================================
Corporate Bonds and Notes--51.8%
- ------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.6%
Amtran, Inc., 9.625% Nts., 12/15/05 800,000 772,000
- ------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
8.01% Nts., 1/2/10 2,812,199 2,642,582
9.375% Sr. Unsec. Nts., 11/15/06 500,000 485,000
------------
3,899,582
</TABLE>
6 Oppenheimer Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Chemicals--1.0%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 $ 300,000 $ 76,500
- ---------------------------------------------------------------------------------------------------------
Equistar Chemicals LP, 7.55% Unsec. Debs., 2/15/06 3,250,000 2,641,236
- ---------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc, 10.125% Sr. Unsec. Sub. Nts., 7/1/09(5) 800,000 832,000
- ---------------------------------------------------------------------------------------------------------
Lyondell Chemical Co., 9.875% Sec. Nts., Series B, 5/1/07 1,000,000 1,025,000
- ---------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 12.375% Sr. Sec. Nts., Series B, 7/15/06 400,000 416,000
- ---------------------------------------------------------------------------------------------------------
ZSC Specialty Chemical plc, 11% Sr. Nts., 7/1/09(5) 800,000 834,000
-----------
5,824,736
- ---------------------------------------------------------------------------------------------------------
Consumer Non-Durables--0.2%
AKI Holdings, Inc., 10.50% Sr. Unsec. Nts., 7/1/08 300,000 268,500
- ---------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 210,000 211,050
- ---------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(10) 100,000 5,500
- ---------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06 500,000 377,500
- ---------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(4) 360,000 127,800
-----------
990,350
- ---------------------------------------------------------------------------------------------------------
Energy--1.8%
Colorado Interstate Gas Corp., 10% Sr. Debs., 6/15/05 500,000 552,649
- ---------------------------------------------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr. Nts., 12/1/06(5) 2,000,000 1,858,902
- ---------------------------------------------------------------------------------------------------------
Enron Corp., 9.875% Debs., 6/15/03 375,000 402,221
- ---------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(5) 300,000 256,500
- ---------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05 500,000 487,500
- ---------------------------------------------------------------------------------------------------------
HNG Internorth/Enron Corp., 9.625% Debs., 3/15/06 500,000 539,416
- ---------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 400,000 409,221
- ---------------------------------------------------------------------------------------------------------
Mitchell Energy & Development Corp., 9.25% Sr. Nts., 1/15/02 55,000 56,227
- ---------------------------------------------------------------------------------------------------------
Murphy Oil Corp., 7.05% Sr. Unsec. Nts., 5/1/29 5,190,000 4,667,912
- ---------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 400,000 334,000
- ---------------------------------------------------------------------------------------------------------
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06 455,000 486,850
- ---------------------------------------------------------------------------------------------------------
Texaco Capital, Inc., 8.875% Gtd. Debs., 9/1/21(11) 500,000 556,443
-----------
10,607,841
- ---------------------------------------------------------------------------------------------------------
Financial--26.1%
Aeltus CBO II Ltd./Aeltus CBO II Corp., 7.982% Sr. Sec. Sub. Bonds, 8/6/09(5) 5,000,000 4,632,350
- ---------------------------------------------------------------------------------------------------------
Astoria Capital Trust I, 9.75% Gtd. Nts., 11/1/29(5) 3,250,000 3,220,480
- ---------------------------------------------------------------------------------------------------------
BHP Finance USA Ltd., 7.25% Nts., 3/1/16 6,500,000 5,848,804
- ---------------------------------------------------------------------------------------------------------
Chase Manhattan Corp., 10.125% Sub. Nts., 11/1/00 750,000 770,051
- ---------------------------------------------------------------------------------------------------------
Conseco, Inc., 9% Unsec. Nts., 10/15/06 19,500,000 20,221,617
- ---------------------------------------------------------------------------------------------------------
Dresdner Funding Trust II, 8.151% Nts., 6/30/31(5) 13,080,000 12,348,135
- ---------------------------------------------------------------------------------------------------------
EOP Operating LP, 7.50% Sr. Nts., 4/19/29 7,800,000 6,846,598
- ---------------------------------------------------------------------------------------------------------
HVB Fund Trust III, 9% Bonds, 10/22/31(5) 6,500,000 6,524,323
- ---------------------------------------------------------------------------------------------------------
KBC Bank Fund Trust III, 9.86% Bonds, 11/29/49(3)(5) 13,000,000 13,477,711
- ---------------------------------------------------------------------------------------------------------
Keycorp Capital III, 7.75% Nts., 7/15/29 6,500,000 6,073,041
- ---------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc.:
7.875% Sr. Nts., 11/1/09 8,450,000 8,447,533
8.80% Sr. Nts., 3/1/15 3,250,000 3,413,946
- ---------------------------------------------------------------------------------------------------------
Liberty Financial Co., 7.625% Unsec. Debs., 11/15/28 6,500,000 5,950,002
- ---------------------------------------------------------------------------------------------------------
Liberty Mutual Insurance Co., 7.697% Unsec. Nts., 10/15/2097(5) 19,000,000 15,927,016
</TABLE>
Oppenheimer Bond Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Financial (continued)
Nordbanken AB, 8.95% Bonds, 11/29/49(3)(5) $ 16,250,000 $ 16,019,282
- --------------------------------------------------------------------------------------------------------
Rothmans Nederland Holdings BV, 6.875% Sr. Unsec. Unsub. Nts., 5/6/08 13,750,000 12,399,750
- --------------------------------------------------------------------------------------------------------
Safeco Capital Trust I, 8.072% Nts., 7/15/37(11) 7,429,000 6,554,503
- --------------------------------------------------------------------------------------------------------
Standard Chartered Nakornthon Bank, 6.734% Unsec. Sub. Nts., 6/11/06(3)(4) 7,500,000 7,200,000
- --------------------------------------------------------------------------------------------------------
U.S. Leasing International, Inc., 6.625% Sr. Nts., 5/15/03 750,000 732,715
------------
156,607,857
- --------------------------------------------------------------------------------------------------------
Food & Drug--0.0%
Pathmark Stores, Inc.:
10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03 1,095,000 136,875
12.625% Sub. Nts., 6/15/02 400,000 134,000
------------
270,875
- --------------------------------------------------------------------------------------------------------
Food/Tobacco--0.2%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 300,000 287,250
- --------------------------------------------------------------------------------------------------------
Canadaiqua Brands, Inc., 8.625% Sr. Unsec. Nts., 8/1/06 1,000,000 1,001,250
------------
1,288,500
- --------------------------------------------------------------------------------------------------------
Forest Products/Containers--0.3%
Boise Cascade Corp., 9.90% Nts., 3/15/00 750,000 753,437
- --------------------------------------------------------------------------------------------------------
Potlatch Corp., 9.46% Medium-Term Nts., 4/2/02 500,000 521,701
- --------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 450,000 465,750
------------
1,740,888
- --------------------------------------------------------------------------------------------------------
Gaming/Leisure--0.6%
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 300,000 279,000
- --------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 950,000 935,750
- --------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 700,000 647,500
- --------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
8.125% Sr. Nts., 1/1/06 400,000 390,000
8.75% Sr. Unsec. Sub. Nts., 1/1/09 300,000 297,000
- --------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(12) 300,000 208,500
9.75% Sr. Nts., 6/15/07 600,000 600,000
- --------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.75% Sr. Sub. Nts., 4/15/07 550,000 555,500
------------
3,913,250
- --------------------------------------------------------------------------------------------------------
Healthcare--0.3%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 600,000 555,000
- --------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(5) 400,000 384,000
- --------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Sub. Nts., 1/15/07 800,000 776,000
------------
1,715,000
- --------------------------------------------------------------------------------------------------------
Housing--1.7%
Building Materials Corp. of America, 8% Sr. Unsec. Nts., 12/1/08 800,000 728,000
- --------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 400,000 368,000
- --------------------------------------------------------------------------------------------------------
Kimco Realty Corp., 6.875% Sr. Unsec. Nts., 2/10/09 9,100,000 8,325,390
- --------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 200,000 194,500
9.25% Sr. Nts., Series B, 3/15/07 800,000 784,000
------------
10,399,890
</TABLE>
8 Oppenheimer Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Manufacturing--0.1%
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 $ 250,000 $ 101,250
- ------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 500,000 455,000
-----------
556,250
- ------------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--0.9%
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 2,500,000 2,531,250
9% Sr. Unsec. Sub. Nts., 10/1/08 2,200,000 2,299,000
- ------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 600,000 573,000
-----------
5,403,250
- ------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--3.1%
Adelphia Communications Corp., 8.375% Sr. Nts., Series B, 2/1/08 1,300,000 1,212,250
- ------------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter Communication Holdings Capital Corp.:
8.25% Sr. Unsec. Nts., 4/1/07 3,000,000 2,782,500
8.625% Sr. Unsec. Nts., 4/1/09 750,000 696,562
- ------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr. Unsec. Debs., 7/15/18 13,000,000 12,155,000
- ------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 1,200,000 1,212,000
- ------------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09(5) 500,000 518,750
-----------
18,577,062
- ------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--0.6%
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 300,000 267,000
- ------------------------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(5) 1,071,442 996,806
- ------------------------------------------------------------------------------------------------------------
Imax Corp., 7.875% Sr. Nts., 12/1/05 900,000 855,000
- ------------------------------------------------------------------------------------------------------------
Mail-Well Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08 535,000 510,925
- ------------------------------------------------------------------------------------------------------------
Reed Elsevier, Inc., 6.625% Nts., 10/15/23(5) 600,000 494,574
- ------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr. Unsec. Sub. Nts., 12/1/08 600,000 573,000
-----------
3,697,305
- ------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--1.6%
Intermedia Communications, Inc., 8.60% Sr. Unsec. Nts., Series B, 6/1/08 800,000 736,000
- ------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08 650,000 667,875
- ------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9.625% Sr. Nts., 10/1/07 2,200,000 2,156,000
10.75% Sr. Unsec. Nts., 11/15/08 200,000 207,000
- ------------------------------------------------------------------------------------------------------------
NTL Communications Corp., 11.50% Sr. Unsec. Nts., Series B, 10/1/08 1,000,000 1,090,000
- ------------------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05 600,000 596,250
11.50% Sr. Unsec. Nts., 11/1/08 1,000,000 1,050,000
- ------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 0%/8.29% Sr. Unsec. Disc. Nts.,
Series B, 2/1/08(12) 1,350,000 1,049,625
- ------------------------------------------------------------------------------------------------------------
Shaw Communications, Inc., 8.54% Debs., 9/30/27CAD 3,000,000 1,868,797
-----------
9,421,547
</TABLE>
Oppenheimer Bond Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--0.6%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 $ 200,000 $ 159,250
- ---------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 200,000 181,000
- ---------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(5) 650,000 702,000
11.625% Sr. Nts., Series A, 8/15/06 500,000 532,500
- ---------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts., Series B, 12/15/06 1,000,000 1,017,500
- ---------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(12) 700,000 416,500
- ---------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(12) 600,000 361,500
- ---------------------------------------------------------------------------------------------------------
Voicestream Wireless Corp., 10.375% Sr. Nts., 11/15/09(5) 500,000 517,500
-----------
3,887,750
- ---------------------------------------------------------------------------------------------------------
Metals/Minerals--1.1% AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 1,000,000 950,000
9.125% Sr. Nts., 12/15/06 3,250,000 3,323,125
- ---------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 750,000 716,250
- ---------------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 500,000 517,500
- ---------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 900,000 891,000
-----------
6,397,875
- ---------------------------------------------------------------------------------------------------------
Retail--3.6%
Cooper Tire & Rubber Co., 8% Sr. Nts., 12/15/19 13,000,000 12,494,716
- ---------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 250,000 176,250
- ---------------------------------------------------------------------------------------------------------
Sherwin-Williams Co., 7.45% Debs., 2/1/2097(11) 9,750,000 8,939,122
-----------
21,610,088
- ---------------------------------------------------------------------------------------------------------
Service--4.9%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09 965,000 857,644
10% Sr. Sub. Nts., 8/1/09(5) 450,000 405,000
- ---------------------------------------------------------------------------------------------------------
Arvin Industries, Inc., 6.75% Nts., 3/15/08 1,400,000 1,270,623
- ---------------------------------------------------------------------------------------------------------
Harcourt General, Inc., 7.30% Sr. Debs., 8/1/2097 10,025,000 8,289,091
- ---------------------------------------------------------------------------------------------------------
Philip Morris, Co., Inc., 7.75% Unsec. Debs., 1/15/27 6,500,000 5,884,522
- ---------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 7.375% Gtd. Sr. Unsec. Nts., 8/15/05 1,000,000 800,000
- ---------------------------------------------------------------------------------------------------------
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09 800,000 778,000
- ---------------------------------------------------------------------------------------------------------
Tyco International Group SA, 6.875% Unsec. Unsub. Nts., 1/15/29 13,000,000 11,104,340
-----------
29,389,220
- ---------------------------------------------------------------------------------------------------------
Transportation--0.4%
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 300,000 315,000
- ---------------------------------------------------------------------------------------------------------
Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 507,090
- ---------------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 742,621
- ---------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Sub. Nts., 10/15/09(5) 600,000 615,000
- ---------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 100,000 95,000
- ---------------------------------------------------------------------------------------------------------
Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 400,000 403,825
-----------
2,678,536
</TABLE>
10 Oppenheimer Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Utility--2.1%
Calpine Corp., 7.75% Sr. Nts., 4/15/09 $ 650,000 $ 617,500
- -----------------------------------------------------------------------------------------------------
Israel Electric Corp. Ltd., 7.70% Bonds, 7/15/18(5) 12,050,000 10,686,976
- -----------------------------------------------------------------------------------------------------
Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 750,000 760,288
- -----------------------------------------------------------------------------------------------------
South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 531,081
------------
12,595,845
------------
Total Corporate Bonds and Notes (Cost $329,284,286) 311,473,497
<CAPTION>
Shares
<S> <C> <C>
=====================================================================================================
Other Securities--4.2%
- -----------------------------------------------------------------------------------------------------
Allstate Financing I, 7.95% Cum. Quarterly Income Preferred Securities,
Series A, Non-Vtg. 120,000 2,677,500
- -----------------------------------------------------------------------------------------------------
EIX Trust I, 7.875% Quarterly Income Preferred Securities 520,000 11,212,500
- -----------------------------------------------------------------------------------------------------
ING Capital Fund Trust, 7.70% Non-Cum., Non-Vtg. 130,000 2,746,250
- -----------------------------------------------------------------------------------------------------
Westpac Capital Trust I, 8% Trust Originated Preferred Securities 390,000 8,433,750
------------
Total Other Securities (Cost $29,000,000) 25,070,000
<CAPTION>
Date Strike Contracts
<S> <C> <C> <C> <C>
=====================================================================================================
Options Purchased--0.1%
- -----------------------------------------------------------------------------------------------------
U.S. Long Bond Futures, 3/22/00 Put (Cost $258,944) 2/18/00 94% 195 670,313
<CAPTION>
Principal
Amount(1)
<S> <C> <C>
=====================================================================================================
Repurchase Agreements--1.2%
- -----------------------------------------------------------------------------------------------------
Repurchase agreement with Deutsche Bank Securities Inc., 3.20%, dated
12/31/99, to be repurchased at $7,101,893 on 1/3/00, collateralized by
U.S. Treasury Bonds, 6.375%, 8/15/27, with a value of $1,955,059 and
U.S. Treasury Nts., 6.125%, 12/31/01, with a value of $5,311,688
(Cost $7,100,000) $ 7,100,000 7,100,000
- -----------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $623,606,517) 98.7% 593,056,062
- -----------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.3 8,007,537
----------- ------------
Net Assets 100.0% $601,063,599
=========== ============
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
CAD--Canadian Dollar
IDR--Indonesian Rupiah
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. Represents the current interest rate for a variable or increasing rate
security.
4. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
5. 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 $93,111,930 or 15.49% of the Fund's net
assets as of December 31, 1999.
6. 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.
Oppenheimer Bond Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
Contracts Expiration Exercise Premium Market Value
Subject to Put Date Price Received Note 1
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
U.S.Treasury Nts. Futures, 10 yr. Put 325 2/18/00 98% $328,453 $782,031
</TABLE>
8. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
9. Non-income producing security.
10. Issuer is in default.
11. Securities with an aggregate market value of $1,541,589 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
12. 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.
12 Oppenheimer Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
==================================================================================================
Assets
Investments, at value (cost $623,606,517)--see accompanying statement $593,056,062
- --------------------------------------------------------------------------------------------------
Cash 505,935
- --------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 9,159,859
Shares of beneficial interest sold 45,586
Other 6,358
------------
Total assets 602,773,800
==================================================================================================
Liabilities
Unrealized depreciation on foreign currency contracts 36,676
- --------------------------------------------------------------------------------------------------
Options written, at value (premiums received $328,453)--see accompanying statement 782,031
- --------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 634,114
Daily variation on futures contracts 212,352
Trustees' compensation 1,274
Transfer and shareholder servicing agent fees 184
Other 43,570
------------
Total liabilities 1,710,201
==================================================================================================
Net Assets $601,063,599
============
==================================================================================================
Composition of Net Assets
Paid-in capital $604,669,053
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 45,409,363
- --------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (17,446,218)
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (31,568,599)
------------
Net assets--applicable to 52,166,643 shares of beneficial interest outstanding $601,063,599
============
==================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $11.52
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Bond Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
======================================================================================
Investment Income
Interest (net of foreign withholding taxes of $8,672) $ 48,592,479
- --------------------------------------------------------------------------------------
Dividends 1,690,940
------------
Total income 50,283,419
======================================================================================
Expenses
Management fees 4,539,138
- --------------------------------------------------------------------------------------
Custodian fees and expenses 53,239
- --------------------------------------------------------------------------------------
Trustees' compensation 6,651
- --------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,102
- --------------------------------------------------------------------------------------
Other 23,256
------------
Total expenses 4,624,386
Less expenses paid indirectly (27,033)
------------
Net expenses 4,597,353
======================================================================================
Net Investment Income 45,686,066
======================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (18,429,849)
Closing of futures contracts 1,187,215
Closing and expiration of option contracts written (86,721)
Foreign currency transactions (238,230)
------------
Net realized loss (17,567,585)
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (38,172,276)
Translation of assets and liabilities denominated in foreign currencies 265,182
------------
Net change (37,907,094)
------------
Net realized and unrealized loss (55,474,679)
======================================================================================
Net Decrease in Net Assets Resulting from Operations $ (9,788,613)
============
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
================================================================================================
Operations
Net investment income $ 45,686,066 $ 37,001,034
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) (17,567,585) 5,539,991
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (37,907,094) (5,203,148)
------------ ------------
Net increase (decrease) in net assets resulting from operations (9,788,613) 37,337,877
================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (30,081,522) (9,009,958)
- ------------------------------------------------------------------------------------------------
Distributions from net realized gain (2,888,886) (8,154,014)
================================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions (11,720,079) 115,290,766
================================================================================================
Net Assets
Total increase (decrease) (54,479,100) 135,464,671
- ------------------------------------------------------------------------------------------------
Beginning of period 655,542,699 520,078,028
------------ ------------
End of period (including undistributed net investment
income of $45,409,363 and $30,079,292, respectively) $601,063,599 $655,542,699
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Bond Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $12.32 $11.91 $11.63 $11.84 $10.78
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .88 .72 .76 .69 .72
Net realized and unrealized gain (loss) (1.06) .07 .28 (.15) 1.07
- ------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations (.18) .79 1.04 .54 1.79
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.57) (.20) (.72) (.74) (.73)
Distributions from net realized gain (.05) (.18) (.04) (.01) --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.62) (.38) (.76) (.75) (.73)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.52 $12.32 $11.91 $11.63 $11.84
====== ====== ====== ====== ======
==============================================================================================================================
Total Return, at Net Asset Value(1) (1.52)% 6.80% 9.25% 4.80% 17.00%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $601,064 $655,543 $520,078 $426,439 $211,232
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $633,059 $586,242 $449,760 $296,253 $170,929
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 7.22% 6.31% 6.72% 6.72% 6.91%
Expenses 0.73% 0.74%(3) 0.78%(3) 0.78%(3) 0.80%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 256% 76% 117% 82% 79%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $1,625,487,960 and $1,547,628,962, respectively.
See accompanying Notes to Financial Statements.
16 Oppenheimer Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Bond Fund/VA (the Fund) is a 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 Fund's
investment objective is to seek a high level of current income. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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.
- --------------------------------------------------------------------------------
Security Credit Risk. The Fund invests 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 Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of December 31, 1999, securities with an
aggregate market value of $44,856, representing 0.01% of the Fund's net assets,
were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. As of December 31,
1999, the Fund had available for federal income tax purposes an unused capital
loss carryover of approximately $14,340,000, which expires in 2007.
Oppenheimer Bond Fund/VA 17
<PAGE>
================================================================================
1. Significant Accounting Policies (continued)
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in paid-in capital of $17,573, a decrease in undistributed net
investment income of $274,473, and a decrease in accumulated net realized loss
on investments of $292,046.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Beneficial Interest
The Fund has 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 December 31, 1999 Year Ended December 31, 1998
----------------------------- -----------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 10,494,053 $ 123,504,590 24,245,723 $ 293,126,941
Dividends and/or distributions reinvested 2,820,394 32,970,408 1,463,254 17,163,972
Redeemed (14,357,807) (168,195,077) (16,150,244) (195,000,147)
----------- ------------- ----------- -------------
Net increase (decrease) (1,043,360) $ (11,720,079) 9,558,733 $ 115,290,766
=========== ============= =========== =============
</TABLE>
18 Oppenheimer Bond Fund/VA
<PAGE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized depreciation on securities and options
written of $31,004,033 was composed of gross appreciation of $6,069,024, and
gross depreciation of $37,073,057.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. 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, 0.60% of the
next $200 million and 0.50% of average annual net assets over $1 billion. The
Fund's management fee for the year ended December 31, 1999, was 0.72% of average
annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of December 31, 1999, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized
Contract Description Date Amounts(000s) December 31, 1999 Depreciation
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Contracts to Sell
- -----------------
Canadian Dollar (CAD) 6/1/00 3,000 CAD $2,080,272 $36,676
=======
</TABLE>
Oppenheimer Bond Fund/VA 19
<PAGE>
================================================================================
6. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund 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 Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund 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 Fund may recognize a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
As of December 31, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Date Contracts December 31, 1999 (Depreciation)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
U.S. Treasury Bonds, 30 yr. 3/22/00 67 $ 6,092,813 $ (17,781)
U.S. Treasury Nts., 5 yr. 3/22/00 639 62,631,984 (167,970)
U.S. Treasury Nts., 10 yr. 3/22/00 238 22,814,531 (351,422)
---------
(537,173)
---------
Contracts to Sell
- -----------------
Federal Funds Interest Rate 1/31/00 322 126,871,441 (73,798)
U.S. Treasury Bonds, 30 yr. 3/22/00 130 11,821,875 60,938
U.S. Treasury Nts., 5 yr. 3/22/00 123 12,055,922 21,453
---------
8,593
---------
$(528,580)
=========
</TABLE>
20 Oppenheimer Bond Fund/VA
<PAGE>
================================================================================
7. Option Activity
The Fund 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 Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes 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 Fund 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.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives 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 Fund 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 Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
Put Options
------------------------------
Number of Amount of
Options Premiums
<S> <C> <C>
- ----------------------------------------------------------------------------------
Options outstanding as of December 31, 1998 -- $ --
Options written 1,170 969,017
Options closed or expired (845) (640,564)
----- ---------
- ----------------------------------------------------------------------------------
Options outstanding as of December 31, 1999 325 $ 328,453
===== =========
</TABLE>
================================================================================
8. Illiquid or Restricted Securities
As of December 31, 1999, 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 also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of December 31, 1999, was $44,286,050,
which represents 7.37% of the Fund's net assets.
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Capital
Appreciation Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Capital Appreciation Fund/VA (which
is a series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998 and the
financial highlights for the period January 1, 1995 to December 31, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's 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, 1999, 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
Capital Appreciation Fund/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
=========================================================================================================
Common Stocks--92.1%
- ---------------------------------------------------------------------------------------------------------
Basic Materials--1.2%
- ---------------------------------------------------------------------------------------------------------
Chemicals--1.0%
Lafarge Corp. 115,000 $ 3,176,875
- ---------------------------------------------------------------------------------------------------------
PPG Industries, Inc. 110,000 6,881,875
- ---------------------------------------------------------------------------------------------------------
Union Carbide Corp. 55,000 3,671,250
-----------
13,730,000
- ---------------------------------------------------------------------------------------------------------
Paper--0.2%
Boise Cascade Corp. 40,000 1,620,000
- ---------------------------------------------------------------------------------------------------------
Rayonier, Inc. 27,000 1,304,437
-----------
2,924,437
- ---------------------------------------------------------------------------------------------------------
Capital Goods--4.8%
- ---------------------------------------------------------------------------------------------------------
Electrical Equipment--1.9%
Etec Systems, Inc.(1) 10,300 462,212
- ---------------------------------------------------------------------------------------------------------
Sanmina Corp.(1) 181,000 18,077,375
- ---------------------------------------------------------------------------------------------------------
Vishay Intertechnology, Inc.(1) 260,000 8,222,500
-----------
26,762,087
- ---------------------------------------------------------------------------------------------------------
Industrial Services--0.7%
Coflexip SA, Sponsored ADR 49,200 1,869,600
- ---------------------------------------------------------------------------------------------------------
Republic Services, Inc.(1) 150,000 2,156,250
- ---------------------------------------------------------------------------------------------------------
Waste Management, Inc. 330,000 5,671,875
-----------
9,697,725
- ---------------------------------------------------------------------------------------------------------
Manufacturing--2.2%
Corning, Inc. 70,000 9,025,625
- ---------------------------------------------------------------------------------------------------------
Honeywell International, Inc. 160,000 9,230,000
- ---------------------------------------------------------------------------------------------------------
Pentair, Inc. 100,000 3,850,000
- ---------------------------------------------------------------------------------------------------------
Tyco International Ltd. 224,044 8,709,710
-----------
30,815,335
- ---------------------------------------------------------------------------------------------------------
Communication Services--3.5%
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--2.8%
Intermedia Communications, Inc.(1) 90,000 3,493,125
- ---------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(1) 262,200 13,912,987
- ---------------------------------------------------------------------------------------------------------
Nortel Networks Corp. 220,000 22,220,000
-----------
39,626,112
- ---------------------------------------------------------------------------------------------------------
Telephone Utilities--0.7%
CenturyTel, Inc. 110,000 5,211,250
- ---------------------------------------------------------------------------------------------------------
SBC Communications, Inc. 92,120 4,490,850
-----------
9,702,100
</TABLE>
Oppenheimer Capital Appreciation Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Consumer Cyclicals--13.5%
- ---------------------------------------------------------------------------------------------------------
Autos & Housing--3.3%
Centex Corp. 170,000 $ 4,196,875
- ---------------------------------------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 121,050 3,881,166
- ---------------------------------------------------------------------------------------------------------
Ford Motor Co. 270,000 14,428,125
- ---------------------------------------------------------------------------------------------------------
Gentex Corp.(1) 230,000 6,382,500
- ---------------------------------------------------------------------------------------------------------
Southdown, Inc. 145,000 7,485,625
- ---------------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 130,000 2,421,250
- ---------------------------------------------------------------------------------------------------------
USG Corp. 170,000 8,011,250
-----------
46,806,791
- ---------------------------------------------------------------------------------------------------------
Consumer Services--2.3%
Budget Group, Inc., Cl. A(1) 260,000 2,356,250
- ---------------------------------------------------------------------------------------------------------
Hertz Corp., Cl. A 53,000 2,656,625
- ---------------------------------------------------------------------------------------------------------
Omnicom Group, Inc. 180,000 18,000,000
- ---------------------------------------------------------------------------------------------------------
Young & Rubicam, Inc. 144,500 10,223,375
-----------
33,236,250
- ---------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.3%
Callaway Golf Co. 210,000 3,714,375
- ---------------------------------------------------------------------------------------------------------
Carnival Corp. 395,000 18,885,937
- ---------------------------------------------------------------------------------------------------------
Harley-Davidson, Inc. 75,000 4,804,687
- ---------------------------------------------------------------------------------------------------------
Mandalay Resort Group(1) 285,000 5,735,625
-----------
33,140,624
- ---------------------------------------------------------------------------------------------------------
Media--1.8%
News Corp. Ltd. (The), Sponsored ADR 250,000 9,562,500
- ---------------------------------------------------------------------------------------------------------
Time Warner, Inc. 220,000 15,936,250
-----------
25,498,750
- ---------------------------------------------------------------------------------------------------------
Retail: General--0.3%
Dayton Hudson Corp. 70,000 5,140,625
- ---------------------------------------------------------------------------------------------------------
Retail: Specialty--2.7%
Abercrombie & Fitch Co., Cl. A(1) 300,000 8,006,250
- ---------------------------------------------------------------------------------------------------------
CSK Auto Corp.(1) 49,000 857,500
- ---------------------------------------------------------------------------------------------------------
Gap, Inc. 300,000 13,800,000
- ---------------------------------------------------------------------------------------------------------
TJX Cos., Inc. 250,000 5,109,375
- ---------------------------------------------------------------------------------------------------------
Too, Inc.(1) 181,000 3,122,250
- ---------------------------------------------------------------------------------------------------------
Zale Corp.(1) 170,000 8,223,750
-----------
39,119,125
- ---------------------------------------------------------------------------------------------------------
Textile/Apparel & Home Furnishings--0.8%
Jones Apparel Group, Inc.(1) 185,000 5,018,125
- ---------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(1) 260,000 6,061,250
-----------
11,079,375
</TABLE>
6 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Consumer Staples--10.6%
- ---------------------------------------------------------------------------------------------------------
Beverages--1.4%
Adolph Coors Co., Cl. B 110,000 $ 5,775,000
- ---------------------------------------------------------------------------------------------------------
Seagram Co. Ltd. (The) 320,000 14,380,000
-----------
20,155,000
- ---------------------------------------------------------------------------------------------------------
Broadcasting--4.5%
AMFM, Inc.(1) 150,000 11,737,500
- ---------------------------------------------------------------------------------------------------------
CBS Corp.(1) 220,000 14,066,250
- ---------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special 365,000 18,455,312
- ---------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., Cl. A(1) 350,000 12,665,625
- ---------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., Cl. B(1) 276,300 6,739,024
-----------
63,663,711
- ---------------------------------------------------------------------------------------------------------
Entertainment--1.6%
Outback Steakhouse, Inc.(1) 140,000 3,631,250
- ---------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 380,000 18,738,750
- ---------------------------------------------------------------------------------------------------------
Wendy's International, Inc. 15,000 309,375
-----------
22,679,375
- ---------------------------------------------------------------------------------------------------------
Food--0.7%
IBP, Inc. 190,000 3,420,000
- ---------------------------------------------------------------------------------------------------------
Keebler Foods Co.(1) 140,000 3,937,500
- ---------------------------------------------------------------------------------------------------------
Nabisco Holdings Corp., Cl. A 80,000 2,530,000
-----------
9,887,500
- ---------------------------------------------------------------------------------------------------------
Food & Drug Retailers--1.7%
CVS Corp. 310,000 12,380,625
- ---------------------------------------------------------------------------------------------------------
Safeway, Inc.(1) 350,000 12,446,875
-----------
24,827,500
- ---------------------------------------------------------------------------------------------------------
Household Goods--0.7%
Avon Products, Inc. 310,000 10,230,000
- ---------------------------------------------------------------------------------------------------------
Energy--5.0%
- ---------------------------------------------------------------------------------------------------------
Energy Services--1.9%
Coastal Corp. 220,000 7,796,250
- ---------------------------------------------------------------------------------------------------------
ENSCO International, Inc. 50,000 1,143,750
- ---------------------------------------------------------------------------------------------------------
Halliburton Co. 200,000 8,050,000
- ---------------------------------------------------------------------------------------------------------
Nabors Industries, Inc.(1) 150,000 4,640,625
- ---------------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc. 95,000 3,200,313
- ---------------------------------------------------------------------------------------------------------
Varco International, Inc.(1) 240,000 2,445,000
-----------
27,275,938
- ---------------------------------------------------------------------------------------------------------
Oil: Domestic--2.5%
Amerada Hess Corp. 155,000 8,796,250
- ---------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 230,000 18,529,375
- ---------------------------------------------------------------------------------------------------------
Forest Oil Corp.(1) 170,000 2,241,875
- ---------------------------------------------------------------------------------------------------------
Texaco, Inc. 50,000 2,715,625
- ---------------------------------------------------------------------------------------------------------
Tosco Corp. 140,000 3,806,250
-----------
36,089,375
</TABLE>
Oppenheimer Capital Appreciation Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Oil: International--0.6%
Total Fina SA, Sponsored ADR 120,000 $ 8,310,000
- ---------------------------------------------------------------------------------------------------------
Financial--8.8%
- ---------------------------------------------------------------------------------------------------------
Banks--2.2%
Bank of America Corp. 150,000 7,528,125
- ---------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 180,000 13,983,750
- ---------------------------------------------------------------------------------------------------------
FleetBoston Financial Corp. 272,908 9,500,610
-----------
31,012,485
- ---------------------------------------------------------------------------------------------------------
Diversified Financial--4.9%
C.I.T. Group, Inc., Cl. A 150,000 3,168,750
- ---------------------------------------------------------------------------------------------------------
Citigroup, Inc. 377,748 20,988,623
- ---------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 95,000 8,947,813
- ---------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 105,000 8,767,500
- ---------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 135,000 19,271,250
- ---------------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 70,000 2,585,625
- ---------------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. 155,000 5,948,125
-----------
69,677,686
- ---------------------------------------------------------------------------------------------------------
Insurance--1.2%
American International Group, Inc. 27,500 2,973,438
- ---------------------------------------------------------------------------------------------------------
AXA Financial, Inc. 250,000 8,468,750
- ---------------------------------------------------------------------------------------------------------
Progressive Corp. 80,000 5,850,000
-----------
17,292,188
- ---------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--0.5%
Boston Properties, Inc. 245,000 7,625,625
- ---------------------------------------------------------------------------------------------------------
Healthcare--4.9%
- ---------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.4%
Amgen, Inc.(1) 400,000 24,025,000
- ---------------------------------------------------------------------------------------------------------
Elan Corp. plc, ADR(1) 400,000 11,800,000
- ---------------------------------------------------------------------------------------------------------
IDEC Pharmaceuticals Corp. 108,400 10,650,300
- ---------------------------------------------------------------------------------------------------------
Pfizer, Inc. 90,000 2,919,375
- ---------------------------------------------------------------------------------------------------------
Schering-Plough Corp. 120,000 5,062,500
- ---------------------------------------------------------------------------------------------------------
Warner Lambert Co. 100,000 8,193,750
-----------
62,650,925
- ---------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.5%
Baxter International, Inc. 90,000 5,653,125
- ---------------------------------------------------------------------------------------------------------
Medtronic, Inc. 60,000 2,186,250
-----------
7,839,375
</TABLE>
8 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Technology--38.0%
- ---------------------------------------------------------------------------------------------------------
Computer Hardware--2.0%
Compaq Computer Corp. 65,000 $ 1,759,063
- ---------------------------------------------------------------------------------------------------------
EMC Corp.(1) 15,000 1,638,750
- ---------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 65,000 7,405,938
- ---------------------------------------------------------------------------------------------------------
MMC Networks, Inc.(1) 60,000 2,062,500
- ---------------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 350,000 16,296,875
------------
29,163,126
- ---------------------------------------------------------------------------------------------------------
Computer Services--0.9%
Applied Micro Circuits Corp.(1) 75,500 9,607,375
- ---------------------------------------------------------------------------------------------------------
CGI Group, Inc.(1) 70,700 3,016,462
------------
12,623,837
- ---------------------------------------------------------------------------------------------------------
Computer Software--13.8%
BEA Systems, Inc.(1) 112,400 7,860,975
- ---------------------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 300,000 23,981,250
- ---------------------------------------------------------------------------------------------------------
I2 Technologies, Inc.(1) 120,000 23,400,000
- ---------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 530,000 61,877,500
- ---------------------------------------------------------------------------------------------------------
Novell, Inc.(1) 650,000 25,959,375
- ---------------------------------------------------------------------------------------------------------
Oracle Corp.(1) 230,000 25,774,375
- ---------------------------------------------------------------------------------------------------------
Sybase, Inc.(1) 180,000 3,060,000
- ---------------------------------------------------------------------------------------------------------
Veritas Software Corp.(1) 170,000 24,331,250
------------
196,244,725
- ---------------------------------------------------------------------------------------------------------
Communications Equipment--11.4%
Antec Corp.(1) 50,000 1,825,000
- ---------------------------------------------------------------------------------------------------------
CIENA Corp.(1) 150,000 8,625,000
- ---------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 450,000 48,206,250
- ---------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc. 130,000 9,725,625
- ---------------------------------------------------------------------------------------------------------
Nokia Corp., A Shares, Sponsored ADR(1) 335,000 63,650,000
- ---------------------------------------------------------------------------------------------------------
QUALCOMM, Inc.(1) 84,000 14,794,500
- ---------------------------------------------------------------------------------------------------------
Tellabs, Inc.(1) 150,000 9,628,125
- ---------------------------------------------------------------------------------------------------------
Williams Communications Group, Inc.(1) 190,000 5,498,125
------------
161,952,625
</TABLE>
Oppenheimer Capital Appreciation Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Electronics--9.9%
Analog Devices, Inc.(1) 80,000 $ 7,440,000
- ---------------------------------------------------------------------------------------------------------
Atmel Corp.(1) 320,000 9,460,000
- ---------------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 230,000 7,446,250
- ---------------------------------------------------------------------------------------------------------
Flextronics International Ltd.(1) 260,000 11,960,000
- ---------------------------------------------------------------------------------------------------------
LSI Logic Corp.(1) 115,000 7,762,500
- ---------------------------------------------------------------------------------------------------------
Micron Technology, Inc.(1) 180,000 13,995,000
- ---------------------------------------------------------------------------------------------------------
National Semiconductor Corp.(1) 310,000 13,271,875
- ---------------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 60,000 7,351,875
- ---------------------------------------------------------------------------------------------------------
PMC-Sierra, Inc.(1) 7,000 1,122,188
- ---------------------------------------------------------------------------------------------------------
RF Micro Devices, Inc.(1) 170,000 11,634,375
- ---------------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 150,000 14,531,250
- ---------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 510,000 26,743,125
- ---------------------------------------------------------------------------------------------------------
Waters Corp.(1) 160,000 8,480,000
--------------
141,198,438
- ---------------------------------------------------------------------------------------------------------
Transportation--1.1%
- ---------------------------------------------------------------------------------------------------------
Railroads & Truckers--1.1%
Canadian Pacific Ltd. 180,000 3,881,250
- ---------------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc. 160,000 11,940,000
--------------
15,821,250
- ---------------------------------------------------------------------------------------------------------
Utilities--0.7%
- ---------------------------------------------------------------------------------------------------------
Electric Utilities--0.3%
Potomac Electric Power Co. 180,000 4,128,750
- ---------------------------------------------------------------------------------------------------------
Gas Utilities--0.4%
Williams Cos., Inc. (The) 180,000 5,501,250
--------------
Total Common Stocks (Cost $846,317,127) 1,313,130,020
Principal
Amount
=========================================================================================================
Repurchase Agreements--8.0%
- ---------------------------------------------------------------------------------------------------------
Repurchase agreement with Deutsche Bank Securities Inc., 3.20%, dated
12/31/99, to be repurchased at $114,130,427 on 1/3/00, collateralized
by U.S. Treasury Bonds, 6.375%, 8/15/27, with a value of $31,418,622
and U.S. Treasury Nts., 6.125%, 12/31/01, with a value of $85,361,063
(Cost $114,100,000) $114,100,000 114,100,000
- ---------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $960,417,127) 100.1% 1,427,230,020
- ---------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.1) (2,032,604)
------------ --------------
Net Assets 100.0% $1,425,197,416
============ ==============
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements
10 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
=======================================================================================================
<S> <C>
Assets
Investments, at value (cost $960,417,127)--see accompanying statement $1,427,230,020
- -------------------------------------------------------------------------------------------------------
Cash 735,078
- -------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 2,665,747
Shares of beneficial interest sold 1,431,324
Interest and dividends 540,095
Other 10,113
--------------
Total assets 1,432,612,377
=======================================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 6,076,984
Shares of beneficial interest redeemed 1,213,744
Trustees' compensation 484
Transfer and shareholder servicing agent fees 186
Other 123,563
--------------
Total liabilities 7,414,961
=======================================================================================================
Net Assets $1,425,197,416
==============
=======================================================================================================
Composition of Net Assets
Paid-in capital $ 847,994,816
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income 2,056,707
- -------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 108,335,322
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 466,810,571
--------------
Net assets--applicable to 28,592,995 shares of beneficial interest outstanding $1,425,197,416
==============
=======================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $49.84
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Capital Appreciation Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
=======================================================================================================
<S> <C>
Investment Income
Dividends $ 5,736,352
- -------------------------------------------------------------------------------------------------------
Interest 3,289,528
------------
Total income 9,025,880
=======================================================================================================
Expenses
Management fees 6,845,473
- -------------------------------------------------------------------------------------------------------
Custodian fees and expenses 17,921
- -------------------------------------------------------------------------------------------------------
Trustees' compensation 4,059
- -------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,107
- -------------------------------------------------------------------------------------------------------
Other 105,419
------------
Total expenses 6,974,979
Less expenses paid indirectly (10,397)
------------
Net expenses 6,964,582
=======================================================================================================
Net Investment Income 2,061,298
=======================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 109,110,788
Foreign currency transactions (385,246)
------------
Net realized gain 108,725,542
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 275,400,704
Translation of assets and liabilities denominated in foreign currencies 226,469
------------
Net change 275,627,173
------------
Net realized and unrealized gain 384,352,715
=======================================================================================================
Net Increase in Net Assets Resulting from Operations $386,414,013
============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 2,061,298 $ 3,036,249
- ----------------------------------------------------------------------------------------------------------------
Net realized gain 108,725,542 32,507,950
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 275,627,173 99,933,565
-------------- ------------
Net increase in net assets resulting from operations 386,414,013 135,477,764
================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (2,974,252) (3,939,379)
- ----------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (32,671,363) (47,530,889)
================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 305,879,322 190,636,226
================================================================================================================
Net Assets
Total increase 656,647,720 274,643,722
- ----------------------------------------------------------------------------------------------------------------
Beginning of period 768,549,696 493,905,974
-------------- ------------
End of period (including undistributed net investment
income of $2,056,707 and $2,959,139, respectively) $1,425,197,416 $768,549,696
============== ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Capital Appreciation Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
=========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $36.67 $32.44 $27.24 $23.55 $17.68
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .06 .13 .25 .15 .25
Net realized and unrealized gain 14.68 7.28 6.62 5.46 6.10
- -------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 14.74 7.41 6.87 5.61 6.35
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.13) (.24) (.15) (.25) (.22)
Distributions from net realized gain (1.44) (2.94) (1.52) (1.67) (.26)
- -------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.57) (3.18) (1.67) (1.92) (.48)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $49.84 $36.67 $32.44 $27.24 $23.55
====== ====== ====== ====== ======
=========================================================================================================================
Total Return, at Net Asset Value(1) 41.66% 24.00% 26.68% 25.20% 36.65%
=========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,425 $769 $494 $286 $118
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,003 $609 $390 $152 $ 89
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.21% 0.50% 1.02% 1.08% 1.46%
Expenses 0.70% 0.75%(3) 0.75%(3) 0.81%(3)(4) 0.79%(3)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 56% 56% 66% 65% 58%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. The expense ratio was 0.79% net of the voluntary reimbursement by
the Manager.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $751,087,611 and $525,369,517, respectively.
See accompanying Notes to Financial Statements.
14 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Capital Appreciation Fund/VA (the Fund), formerly known as
Oppenheimer Growth Fund, is a 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 Fund's
investment objective is to seek capital appreciation by investing in securities
of well-known established companies. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The following is a summary of significant
accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
Oppenheimer Capital Appreciation Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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 the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect an
increase in undistributed net investment income of $10,522. Accumulated net
realized gain on investments was decreased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. 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.
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 Fund has 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 December 31, 1999 Year Ended December 31, 1998
--------------------------------- --------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Sold 13,631,886 $ 546,735,927 8,866,513 $293,095,063
Dividends and/or distributions reinvested 958,989 35,645,615 1,565,397 51,470,268
Redeemed (6,954,081) (276,502,220) (4,699,071) (153,929,105)
---------- ------------- ---------- ------------
Net increase 7,636,794 $ 305,879,322 5,732,839 $190,636,226
========== ============= ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities of
$466,812,893 was composed of gross appreciation of $520,306,180, and gross
depreciation of $53,493,287.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund, which provides for a fee of 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 the year ended December 31, 1999 was 0.68% of average annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
16 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer High Income Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer High Income Fund/VA (which is a
series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998 and the
financial highlights for the period January 1, 1995, to December 31, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's 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, 1999, 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
High Income Fund/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
================================================================================================================================
Mortgage-Backed Obligations--1.9%
AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 131,750
- --------------------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(3) 167,000 119,092
Series 1997-D4, Cl. B2, 7.525%, 4/14/29(3) 167,000 115,856
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(3) 166,000 104,580
- --------------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. E, 6.72%, 12/25/03(2)(3) 250,000 214,922
Series 1993-C1, Cl. F, 6.72%, 12/25/03(2)(3) 700,000 584,500
- --------------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates:
Series 1997, Cl. D, 8.126%, 5/25/08(2)(3) 300,000 234,000
Series 1997, Cl. E, 8.126%, 2/25/11(2)(3) 1,500,000 1,005,000
- --------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. E, 7.421%, 3/15/06(2)(3) 835,342 684,850
- --------------------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2) 254,890 192,840
- --------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. E, 8%, 6/25/26 619,807 595,742
Series 1994-C2, Cl. G, 8%, 4/25/25 672,810 639,591
Series 1995-C1, Cl. F, 6.90%, 2/25/27 458,833 412,735
- --------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 6.581%, 4/25/26(2) 1,420,875 937,334
- --------------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1996-C3, Cl. E, 8.256%, 6/25/30(4) 650,000 645,937
----------
Total Mortgage-Backed Obligations (Cost $7,051,518) 6,618,729
================================================================================================================================
Foreign Government Obligations--0.8%
- --------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 2.868%, 4/1/07(3)ARP 1,417,740 992,552
- --------------------------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Interest Arrears Bonds, 6.50%, 7/28/11(3) 1,450,000 1,147,312
- --------------------------------------------------------------------------------------------------------------------------------
Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(3) 275,000 215,875
- --------------------------------------------------------------------------------------------------------------------------------
Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4.25%, 3/7/17(3) 400,000 277,000
- --------------------------------------------------------------------------------------------------------------------------------
PT Hutama Karya Promissory Nts., Zero Coupon, 2/10/98(2)(5)(8)IDR 1,000,000,000 39,356
----------
Total Foreign Government Obligations (Cost $2,588,032) 2,672,095
================================================================================================================================
Loan Participations--1.8%
- --------------------------------------------------------------------------------------------------------------------------------
Central Bank of Indonesia Gtd. Nts., Series 2 yr., 8.906%, 8/25/00(2)(3) 1,000,000 970,000
- --------------------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 7.955%, 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 5,266,377
----------
Total Loan Participations (Cost $6,313,570) 6,236,377
</TABLE>
Oppenheimer High Income Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
================================================================================================================================
Corporate Bonds and Notes--83.1%
- --------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--2.6%
Amtran, Inc.:
9.625% Nts., 12/15/05 $ 800,000 $ 772,000
10.50% Sr. Nts., 8/1/04 700,000 703,500
10.75% Sr. Nts., 8/1/05 700,000 717,500
- --------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 1,325,000 1,272,000
9.375% Sr. Unsec. Nts., 11/15/06 1,000,000 970,000
- --------------------------------------------------------------------------------------------------------------------------------
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 900,000 850,500
- --------------------------------------------------------------------------------------------------------------------------------
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 1/1/01(2) 800,000 744,000
- --------------------------------------------------------------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts.,
Series B, 9/30/08 1,750,000 1,618,750
- --------------------------------------------------------------------------------------------------------------------------------
Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 1,000,000 853,750
- --------------------------------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(2) 288,566 294,886
----------
8,796,886
- --------------------------------------------------------------------------------------------------------------------------------
Chemicals--2.7%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 500,000 127,500
- --------------------------------------------------------------------------------------------------------------------------------
Georgia Gulf Corp., 10.375% Sr. Sub. Nts., 11/1/07(4) 300,000 314,625
- --------------------------------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09(4) 800,000 832,000
10.125% Sr. Unsec. Sub. Nts., 7/1/09EUR 500,000 534,650
Zero Coupon Sr. Disc. Nts., 13.09%, 12/31/09(4)(6) 1,500,000 459,375
- --------------------------------------------------------------------------------------------------------------------------------
Lyondell Chemical Co.:
9.875% Sec. Nts., Series B, 5/1/07 500,000 512,500
10.875% Sr. Sub. Nts., 5/1/09 100,000 103,500
- --------------------------------------------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 500,000 387,500
- --------------------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 400,000 318,000
- --------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc.:
8.75% Sr. Sub. Nts., 3/1/08 1,500,000 1,447,500
9% Sr. Sub. Nts., 7/1/07 250,000 243,750
- --------------------------------------------------------------------------------------------------------------------------------
Royster-Clark, Inc., 10.25% First Mtg. Nts., 4/1/09(4) 650,000 591,500
- --------------------------------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts., Series B, 8/1/07 795,000 802,950
- --------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08(7) 650,000 167,375
- --------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 250,000 185,000
11.75% Sr. Unsec. Sub. Nts., 8/15/06 750,000 566,250
12.375% Sr. Sec. Nts., Series B, 7/15/06 600,000 624,000
- --------------------------------------------------------------------------------------------------------------------------------
ZSC Specialty Chemical plc, 11% Sr. Nts., 7/1/09(4) 800,000 834,000
----------
9,051,975
- --------------------------------------------------------------------------------------------------------------------------------
Consumer Durables--0.2%
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 425,000 312,375
- --------------------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 350,000 383,803
----------
696,178
</TABLE>
6 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--1.8%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs., 7/1/09(7) $1,080,000 $ 515,700
10.50% Sr. Unsec. Nts., 7/1/08 1,000,000 895,000
- --------------------------------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 1,100,000 1,105,500
- --------------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(8) 600,000 33,000
- --------------------------------------------------------------------------------------------------------------------------------
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 900,000 436,500
- --------------------------------------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 620,000 579,700
- --------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 250,000 126,250
9% Sr. Nts., 11/1/06 1,185,000 894,675
- --------------------------------------------------------------------------------------------------------------------------------
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 1,200,000 1,233,000
- --------------------------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(2) 600,000 213,000
- --------------------------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 235,000 212,675
-----------
6,245,000
- --------------------------------------------------------------------------------------------------------------------------------
Energy--4.5%
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 1,000,000 917,500
9.625% Sr. Unsec. Nts., Series B, 5/1/05 1,000,000 947,500
- --------------------------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 1,040,000 546,000
- --------------------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 275,000 111,375
- --------------------------------------------------------------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 800,000 732,000
- --------------------------------------------------------------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(2) 1,000,000 470,933
- --------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., Series B, 2/15/07(5)(8) 700,000 573,125
- --------------------------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 400,000 396,000
- --------------------------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 2,000,000 1,710,000
- --------------------------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 1,025,000 650,875
- --------------------------------------------------------------------------------------------------------------------------------
Leviathan Gas Pipeline Partners, LP/Leviathan Finance Corp.,
10.375% Sr. Unsec. Sub. Nts., Series B, 6/1/09 500,000 517,500
- --------------------------------------------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(5)(8) 810,000 425,250
- --------------------------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 1,420,000 1,185,700
- --------------------------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 800,000 764,000
- --------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06 1,000,000 1,095,000
- --------------------------------------------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 1,060,000 492,900
- --------------------------------------------------------------------------------------------------------------------------------
RBF Finance Co.:
11% Sr. Sec. Nts., 3/15/06 1,000,000 1,070,000
11.375% Sr. Sec. Nts., 3/15/09 500,000 537,500
- --------------------------------------------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada), Inc., 11.75% First Mtg. Nts.,
Series B, 11/15/03 225,000 230,344
- --------------------------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 735,000 720,300
- --------------------------------------------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc.:
0%/9.875% Sr. Disc. Nts., 2/15/08(7) 1,325,000 828,125
0%/11.375% Sr. Disc. Nts., 2/15/09(7) 720,000 385,200
-----------
15,307,127
</TABLE>
Oppenheimer High Income Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Financial--1.7%
AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 $ 700,000 $ 444,500
- --------------------------------------------------------------------------------------------------------------------------------
ASAT Finance LLC, Units (each unit consists of $1,000 principal amount of 12.50%
sr. nts., 11/1/06 and one warrant to purchase shares of common stock)(4)(9) 500,000 540,000
- --------------------------------------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts., 3/26/98(2)(5)(8)IDR 1,000,000,000 21,467
- --------------------------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 517,000 411,015
- --------------------------------------------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(4) 800,000 836,000
- --------------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27(2) 450,000 290,250
- --------------------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 24% Nts., 6/19/03(5)(8)IDR 657,200,000 12,227
- --------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 2,165,000 1,989,094
- --------------------------------------------------------------------------------------------------------------------------------
Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(5)(8) 240,000 114,000
- --------------------------------------------------------------------------------------------------------------------------------
Sovereign Bankcorp, 10.50% Sr. Unsec. Nts., 11/15/06 600,000 615,000
- --------------------------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts., 1/1/28 550,000 413,875
----------
5,687,428
- --------------------------------------------------------------------------------------------------------------------------------
Food & Drug--0.7%
Family Restaurants, Inc.:
9.75% Sr. Nts., 2/1/02 1,300,000 617,500
10.875% Sr. Sub. Disc. Nts., 2/1/04 100,000 45,500
- --------------------------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 1,135,000 1,030,012
- --------------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc.:
10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03 2,710,000 338,750
12.625% Sub. Nts., 6/15/02 900,000 301,500
----------
2,333,262
- --------------------------------------------------------------------------------------------------------------------------------
Food/Tobacco--1.8%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 520,000 497,900
- --------------------------------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(7) 501,000 388,275
- --------------------------------------------------------------------------------------------------------------------------------
New World Pasta Co., 9.25% Sr. Nts., 2/15/09 1,200,000 1,086,000
- --------------------------------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 1,600,000 1,472,000
- --------------------------------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(8) 400,000 102,000
- --------------------------------------------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 837,125
- --------------------------------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 1,175,000 957,625
- --------------------------------------------------------------------------------------------------------------------------------
Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09(4) 750,000 731,250
----------
6,072,175
</TABLE>
8 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--2.3%
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05(8) $ 400,000 $ 46,000
- --------------------------------------------------------------------------------------------------------------------------------
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 700,000 686,000
8.25% Sr. Unsec. Sub. Nts., 8/1/08 800,000 772,000
- --------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 500,000 473,750
- --------------------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 750,000 769,687
- --------------------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc.:
9% First Priority Sr. Sec. Nts., 6/1/04 250,000 246,250
10.625% Second Priority Sr. Sec. Nts., 4/15/05 700,000 654,500
- --------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 1,130,000 1,169,550
10.875% Sr. Sub. Nts., 4/1/08 750,000 742,500
- --------------------------------------------------------------------------------------------------------------------------------
SD Warren Co., 14% Unsec. Nts., 12/15/06(10) 1,158,749 1,303,593
- --------------------------------------------------------------------------------------------------------------------------------
Tembec Industries, Inc., 8.625% Sr. Nts., 6/30/09 800,000 802,000
-----------
7,665,830
- --------------------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--5.0%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(7) 450,000 182,250
- --------------------------------------------------------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 940,000 662,700
- --------------------------------------------------------------------------------------------------------------------------------
Aztar Corp., 8.875% Sr. Unsec. Sub. Nts., 5/15/07 550,000 530,750
- --------------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(5) 9,500 ---
- --------------------------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 840,000 778,050
- --------------------------------------------------------------------------------------------------------------------------------
Coast Hotel & Casinos, Inc., 9.50% Sr. Unsec. Sub. Nts., 4/1/09 500,000 480,000
- --------------------------------------------------------------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 500,000 507,500
- --------------------------------------------------------------------------------------------------------------------------------
Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 800,000 780,000
- --------------------------------------------------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 700,000 500,500
- --------------------------------------------------------------------------------------------------------------------------------
Harveys Casino Resorts, 10.625% Sr. Unsec. Sub. Nts., 6/1/06 120,000 124,500
- --------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 500,000 525,000
- --------------------------------------------------------------------------------------------------------------------------------
Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 1,000,000 996,250
- --------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,300,000 1,300,000
- --------------------------------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 1,500,000 1,477,500
- --------------------------------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., 8.75% Sr. Unsec. Nts., 4/15/09 1,200,000 1,110,000
- --------------------------------------------------------------------------------------------------------------------------------
Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06 1,000,000 960,000
- --------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 1,500,000 1,485,000
- --------------------------------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(7) 1,200,000 834,000
9.25% Sr. Nts., 4/1/06 600,000 592,500
9.75% Sr. Nts., 6/15/07 750,000 750,000
- --------------------------------------------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 1,000,000 981,250
- --------------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07 800,000 808,000
10.125% Sr. Sub. Nts., 3/15/06 800,000 820,000
-----------
17,185,750
</TABLE>
Oppenheimer High Income Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Healthcare--2.5%
Charles River Labs ONC, Units (each unit consists of $1,000 principal amount of 13.50%
sr. sub. nts., 10/1/09 and one warrant to purchase 3.942 shares of common stock)(4)(9) $1,100,000 $1,149,500
- --------------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 2,525,000 2,335,625
- --------------------------------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(4) 1,365,000 1,310,400
- --------------------------------------------------------------------------------------------------------------------------------
King Pharmaceuticals, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/15/09 1,250,000 1,331,250
- --------------------------------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 1,000,000 815,000
- --------------------------------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 450,000 434,250
- --------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08 250,000 233,750
8.625% Sr. Sub. Nts., 1/15/07 300,000 291,000
- --------------------------------------------------------------------------------------------------------------------------------
Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09(4) 450,000 468,000
----------
8,368,775
- --------------------------------------------------------------------------------------------------------------------------------
Housing--2.1%
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 900,000 805,500
- --------------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 500,000 460,000
- --------------------------------------------------------------------------------------------------------------------------------
Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 600,000 586,500
- --------------------------------------------------------------------------------------------------------------------------------
Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08 1,300,000 1,176,500
- --------------------------------------------------------------------------------------------------------------------------------
Formica Corp., 10.875% Sr. Unsec. Sub. Nts., Series B, 3/1/09 1,000,000 925,000
- --------------------------------------------------------------------------------------------------------------------------------
Nortek, Inc.:
8.875% Sr. Unsec. Nts., Series B, 8/1/08 250,000 238,750
9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,361,500
9.25% Sr. Nts., Series B, 3/15/07 625,000 612,500
- --------------------------------------------------------------------------------------------------------------------------------
Panolam Industries International, Inc., 11.50% Sr. Sub. Nts., 2/15/09(4) 1,000,000 1,022,500
----------
7,188,750
- --------------------------------------------------------------------------------------------------------------------------------
Information Technology--1.8%
Amkor Technologies, Inc.:
9.25% Sr. Nts., 5/1/06(4) 800,000 784,000
10.50% Sr. Sub. Nts., 5/1/09(4) 500,000 500,000
- --------------------------------------------------------------------------------------------------------------------------------
Cherokee International LLC, 10.50% Sr. Sub. Nts., 5/1/09 1,000,000 885,000
- --------------------------------------------------------------------------------------------------------------------------------
Chippac International Ltd., 12.75% Sr. Sub. Nts., 8/1/09(4) 250,000 262,500
- --------------------------------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 500,000 462,500
- --------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 552,344
- --------------------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07 850,000 877,625
- --------------------------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08 1,115,000 1,074,581
- --------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 275,000 301,812
- --------------------------------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 500,000 413,125
----------
6,113,487
</TABLE>
10 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.2%
American Standard Cos., Inc., 7.625% Sr. Nts., 2/15/10 $1,500,000 $1,376,250
- --------------------------------------------------------------------------------------------------------------------------------
Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 350,000 344,312
- --------------------------------------------------------------------------------------------------------------------------------
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 420,000 386,925
- --------------------------------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(4) 800,000 848,000
- --------------------------------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 400,000 166,000
- --------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 743,750
- --------------------------------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 800,000 228,000
- --------------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 250,000 215,625
- --------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 765,000 757,350
- --------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 518,750
- --------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 700,000 703,500
- --------------------------------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 560,000 226,800
- --------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 560,000 509,600
- --------------------------------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08 630,000 598,500
----------
7,623,362
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--2.1%
AMFM Operating, Inc., 12.625% Debs., 10/31/06(10) 148,500 169,290
- --------------------------------------------------------------------------------------------------------------------------------
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 975,000 987,187
9% Sr. Unsec. Sub. Nts., 10/1/08 1,700,000 1,776,500
10.50% Sr. Sub. Nts., Series B, 1/15/07 450,000 490,500
- --------------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 1,500,000 1,432,500
- --------------------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(3) 400,000 428,000
- --------------------------------------------------------------------------------------------------------------------------------
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 1,250,000 1,250,000
- --------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., 9.625% Sr. Sub. Nts., 11/1/09 600,000 606,000
----------
7,139,977
</TABLE>
Oppenheimer High Income Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--4.9%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 $ 360,000 $ 324,900
8.125% Sr. Nts., Series B, 7/15/03 1,000,000 965,000
8.375% Sr. Nts., Series B, 2/1/08 1,000,000 932,500
9.25% Sr. Nts., 10/1/02 390,000 390,000
9.875% Sr. Nts., Series B, 3/1/07 140,000 142,800
10.50% Sr. Unsec. Nts., Series B, 7/15/04 340,000 354,450
- --------------------------------------------------------------------------------------------------------------------------------
Bresnan Communications, Inc.:
0%/9.25% Sr. Disc. Nts., 2/1/09(7) 810,000 562,950
8% Sr. Nts., 2/1/09 250,000 252,812
- --------------------------------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter Communication Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(7) 2,200,000 1,300,750
8.25% Sr. Unsec. Nts., 4/1/07 350,000 324,625
8.625% Sr. Unsec. Nts., 4/1/09 250,000 232,187
- --------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 957,500
9.875% Sr. Sub. Nts., 5/15/06 350,000 371,000
10.50% Sr. Sub. Debs., 5/15/16 250,000 278,750
- --------------------------------------------------------------------------------------------------------------------------------
Diva Systems Corp., 0%/12.625% Sr. Disc. Nts., Series B, 3/1/08(7) 500,000 197,500
- --------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 3,500,000 3,535,000
- --------------------------------------------------------------------------------------------------------------------------------
Falcon Holding Group LP:
0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(7) 1,300,000 979,875
8.375% Sr. Unsec. Debs., Series B, 4/15/10 2,200,000 2,230,250
- --------------------------------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09(4) 700,000 726,250
- --------------------------------------------------------------------------------------------------------------------------------
NTL Communications Corp., 9.875% Sr. Nts., 11/15/09(4)EUR 600,000 608,369
- --------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07CAD 500,000 348,062
- --------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(7) 1,040,000 670,800
-----------
16,686,330
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--3.1%
Ackerley Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 1/15/09 1,250,000 1,225,000
- --------------------------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 1,100,000 979,000
- --------------------------------------------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(4) 446,433 415,335
- --------------------------------------------------------------------------------------------------------------------------------
IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(7)GBP 1,200,000 751,208
- --------------------------------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 815,000 835,375
- --------------------------------------------------------------------------------------------------------------------------------
Metromedia International Group, Inc., 0%/10.50% Sr. Unsec. Disc. Nts., 9/30/07(2)(7) 214,074 101,685
- --------------------------------------------------------------------------------------------------------------------------------
Premier Graphics, Inc., 11.50% Sr. Unsec. Nts., 12/1/05 700,000 493,500
- --------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10 750,000 532,500
9.50% Sr. Unsec. Sub. Nts., 6/1/08 800,000 608,000
</TABLE>
12 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media (continued)
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 $ 900,000 $ 859,500
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 1,800,000 1,705,500
- --------------------------------------------------------------------------------------------------------------------------------
TV Guide, Inc., 8.125% Sr. Unsec. Sub. Nts., 3/1/09 250,000 250,625
- --------------------------------------------------------------------------------------------------------------------------------
World Color Press, Inc., 7.75% Sr. Unsec. Sub. Nts., 2/15/09 1,000,000 955,000
- --------------------------------------------------------------------------------------------------------------------------------
WRC Media Corp., Units (each unit consists of $1,000 principal amount of 12.75%
sr. sub. nts., 11/15/09 and one warrant to purchase 1.353 shares of common stock)(4)(9) 1,000,000 997,500
-----------
10,709,728
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--20.1%
Adelphia Business Solutions, Inc., 12% Sr. Sub. Nts., 11/1/07 1,200,000 1,284,000
- --------------------------------------------------------------------------------------------------------------------------------
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(7) 3,200,000 2,048,000
- --------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(7) 225,000 194,625
7.625% Bonds, 7/31/08DEM 1,925,000 991,774
8.875% Sr. Nts., 11/30/07DEM 250,000 134,430
10.125% Sr. Nts., 11/30/07GBP 400,000 678,510
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)(7)(9) 1,775,000 1,801,625
- --------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 800,000 846,000
- --------------------------------------------------------------------------------------------------------------------------------
Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 200,000 141,500
- --------------------------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(7) 1,500,000 952,500
- --------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(7) 2,350,000 2,232,500
- --------------------------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 400,000 398,000
- --------------------------------------------------------------------------------------------------------------------------------
Equinix, Inc., Units (each unit consists of $1,000 principal amount of 13% sr. nts.,
12/1/07 and one warrant to purchase 11.255 shares of common stock)(4)(9) 1,000,000 1,025,000
- --------------------------------------------------------------------------------------------------------------------------------
ESAT Telecom Group plc, 11.875% Sr. Unsec. Unsub. Nts., 11/1/09EUR 500,000 568,264
- --------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
10.75% Sr. Nts., 12/15/09(4) 250,000 255,625
10.75% Sr. Nts., 12/15/09(4)EUR 1,000,000 1,025,270
11.25% Sr. Nts., 7/1/08 1,900,000 1,971,250
- --------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(7) 500,000 277,500
- --------------------------------------------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(7) 500,000 327,500
- --------------------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 950,000 954,750
- --------------------------------------------------------------------------------------------------------------------------------
Global Telesystems Group, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(4)EUR 350,000 356,643
- --------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc.:
0%/12.75% Sr. Sub. Nts., 11/15/07(7) 1,250,000 1,192,187
0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(4)(7) 178,000 199,360
- --------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(7) 115,000 86,537
- --------------------------------------------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(7) 1,220,000 649,650
- --------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(7) 800,000 481,000
8.50% Sr. Nts., Series B, 1/15/08 660,000 607,200
8.60% Sr. Unsec. Nts., Series B, 6/1/08 300,000 276,000
8.875% Sr. Nts., 11/1/07 460,000 430,100
</TABLE>
Oppenheimer High Income Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08 $1,000,000 $ 962,500
11% Sr. Nts., 6/1/07 750,000 795,000
- --------------------------------------------------------------------------------------------------------------------------------
Jazztel plc, 13.25% Sr. Nts., 12/15/09(4)EUR 2,000,000 2,026,637
- --------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(7) 1,250,000 718,750
13.50% Sr. Nts., 5/15/09(4) 200,000 201,000
- --------------------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(7) 900,000 549,000
9.125% Sr. Unsec. Nts., 5/1/08 700,000 663,250
- --------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 8.125% Sr. Unsec. Nts., 2/15/09 300,000 281,250
- --------------------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 750,000 772,500
10% Sr. Nts., 12/15/09EUR 500,000 525,215
10% Sr. Unsec. Nts., Series B, 11/15/08 1,600,000 1,644,000
- --------------------------------------------------------------------------------------------------------------------------------
Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(7)DEM 700,000 235,928
- --------------------------------------------------------------------------------------------------------------------------------
Netia Holdings II BV, 13.125% Sr. Nts., 6/15/09 1,350,000 1,360,125
- --------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 800,000 756,000
9.625% Sr. Nts., 10/1/07 1,210,000 1,185,800
10.75% Sr. Unsec. Nts., 6/1/09 200,000 206,500
10.75% Sr. Unsec. Nts., 11/15/08 1,200,000 1,242,000
- --------------------------------------------------------------------------------------------------------------------------------
NTL Communications Corp.:
0%/9.78% Sr. Nts., 11/15/09(4)(7)EUR 500,000 296,259
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(7) 1,000,000 712,500
11.50% Sr. Unsec. Nts., Series B, 10/1/08 1,600,000 1,744,000
- --------------------------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(7) 350,000 243,250
0%/9.75% Sr. Nts., Series B, 4/15/09(7)GBP 3,225,000 3,012,026
7% Cv. Unsec. Sub. Nts., 12/15/08 550,000 1,454,750
10% Sr. Nts., Series B, 2/15/07 1,055,000 1,089,287
- --------------------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(8) 1,000,000 745,000
- --------------------------------------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05 750,000 745,312
10.50% Sr. Nts., 12/1/06(4)EUR 1,250,000 1,273,725
- --------------------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts., 10/15/07(7) 1,000,000 815,000
- --------------------------------------------------------------------------------------------------------------------------------
RSL Communications plc:
9.125% Sr. Unsec. Nts., 3/1/08 500,000 440,000
10.50% Gtd. Sr. Nts., 11/15/08 1,450,000 1,370,250
- --------------------------------------------------------------------------------------------------------------------------------
Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09(4)EUR 1,200,000 1,218,247
- --------------------------------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/9.25% Sr. Nts., 4/15/09(4)(7) 1,500,000 952,500
0%/9.875% Sr. Nts., 4/15/09(4)(7)GBP 1,300,000 1,333,596
0%/11% Sr. Disc. Debs., 10/1/07(7) 990,000 928,125
11.25% Sr. Nts., 11/1/08 1,990,000 2,169,100
- --------------------------------------------------------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 400,000 388,000
- --------------------------------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 700,000 724,500
</TABLE>
14 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
United Pan-Europe Communications NV:
0%/13.375% Sr. Disc. Nts., 11/1/09(4)(7) $1,000,000 $ 565,000
0%/13.375% Sr. Disc. Nts., 11/1/09(4)(7)EUR 500,000 288,711
10.875% Sr. Nts., 8/1/09EUR 250,000 255,059
10.875% Sr. Nts., 8/1/09 2,500,000 2,543,750
11.25% Sr. Nts., 11/1/09(4)EUR 500,000 514,522
- --------------------------------------------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 1,480,000 1,517,000
10.625% Sr. Nts., 11/15/09(4) 500,000 515,000
11.25% Sr. Unsec. Nts., 12/1/08 700,000 738,500
13.50% Sr. Unsec. Nts., 6/15/04 385,000 424,463
- --------------------------------------------------------------------------------------------------------------------------------
Versatel Telecom International BV:
11.875% Sr. Nts., 7/15/09 800,000 816,000
11.875% Sr. Nts., 7/15/09EUR 150,000 160,772
- --------------------------------------------------------------------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 830,000 827,925
- --------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(7) 1,750,000 1,023,750
- --------------------------------------------------------------------------------------------------------------------------------
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(4) 200,000 207,000
-----------
68,565,634
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--8.7%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 200,000 159,250
- --------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(7) 1,834,000 199,448
- --------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.75% Sr. Sub. Nts., 12/15/08 800,000 860,000
- --------------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(7) 700,000 441,000
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(7) 940,000 710,875
9% Sr. Nts., 5/15/11 750,000 735,938
- --------------------------------------------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(7) 1,000,000 577,500
- --------------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 240,000 272,400
- --------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts., Series B, 7/15/05(5)(7)(8) 226,000 91,530
- --------------------------------------------------------------------------------------------------------------------------------
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)(9) 700,000 325,500
- --------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 700,000 633,500
- --------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/12% Sr. Unsec. Disc. Nts., 6/1/09(7) 1,000,000 648,750
0%/14% Sr. Disc. Nts., Series B, 6/1/06(7) 700,000 621,250
- --------------------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(7) 300,000 241,500
- --------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts., 10/31/07(7) 250,000 180,000
0%/10.65% Sr. Disc. Nts., 9/15/07(7) 1,000,000 750,000
9.375% Sr. Nts., 11/15/09(4) 1,000,000 985,000
- --------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(4) 2,200,000 2,376,000
11.625% Sr. Nts., 8/15/06 1,000,000 1,065,000
11.625% Sr. Nts., Series A, 8/15/06 1,900,000 2,023,500
- --------------------------------------------------------------------------------------------------------------------------------
Orange plc, 8% Sr. Nts., 8/1/08 2,600,000 2,635,750
</TABLE>
Oppenheimer High Income Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications (continued)
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 $ 600,000 $ 435,000
- --------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(7) 1,150,000 534,750
- --------------------------------------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(7) 2,400,000 1,584,000
- --------------------------------------------------------------------------------------------------------------------------------
Polska Telefoniz Cyfrowa International Financial II SA, 11.25% Sr. Sub. Nts., 12/1/09(4)EUR 400,000 407,592
- --------------------------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., Series B, 12/15/06 800,000 814,000
11.75% Sr. Sub. Nts., 7/15/07 425,000 465,375
- --------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 11% Disc. Nts., 5/31/09(4)(10) 394,554 379,419
- --------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,900,000 1,952,250
- --------------------------------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(7) 2,720,000 1,618,400
- --------------------------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc.:
0%/11.25% Sr. Unsec. Disc. Nts., 4/15/09(7) 675,000 362,813
0%/12% Sr. Disc. Nts., 7/15/08(7) 1,640,000 988,100
- --------------------------------------------------------------------------------------------------------------------------------
Voicestream Wireless Corp., 10.375% Sr. Nts., 11/15/09(4) 3,500,000 3,622,500
-----------
29,697,890
- --------------------------------------------------------------------------------------------------------------------------------
Metals/Minerals--2.3%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(4) 750,000 489,375
- --------------------------------------------------------------------------------------------------------------------------------
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 500,000 475,000
9.125% Sr. Nts., 12/15/06 1,200,000 1,227,000
- --------------------------------------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 500,000 482,500
- --------------------------------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 1,500,000 1,432,500
- --------------------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 400,000 338,000
- --------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 410,000 412,050
- --------------------------------------------------------------------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(7) 2,000,000 650,000
- --------------------------------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 540,000 488,700
- --------------------------------------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 600,000 621,000
- --------------------------------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 800,000 792,000
- --------------------------------------------------------------------------------------------------------------------------------
Republic Technologies International Holdings LLC/RTI Capital Corp., Units (each unit
consists of $1,000 principal amount of 13.75% sr. nts., 7/15/09 and one warrant to
purchase Cl. D common stock at $0.01 per share)(9) 800,000 532,000
-----------
7,940,125
- --------------------------------------------------------------------------------------------------------------------------------
Retail--1.5%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 752,000 718,160
- --------------------------------------------------------------------------------------------------------------------------------
Dura Operating Corp., 9% Sr. Sub. Nts., Series B, 5/1/09 1,300,000 1,231,750
- --------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 1,100,000 775,500
- --------------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 900,000 823,500
- --------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 558,000
- --------------------------------------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 700,000 602,000
- --------------------------------------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 316,875
-----------
5,025,785
</TABLE>
16 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Service--3.3%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09 $1,000,000 $ 888,750
10% Sr. Sub. Nts., 8/1/09(4) 1,300,000 1,170,000
- --------------------------------------------------------------------------------------------------------------------------------
American Plumbing & Mechanical, Inc., 11.625% Gtd. Sr. Sub. Nts., 10/15/08(4) 500,000 478,750
- --------------------------------------------------------------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 750,000 463,125
- --------------------------------------------------------------------------------------------------------------------------------
Dura Operating Corp., 9% Sr. Sub. Nts., Series B, 5/1/09EUR 300,000 284,560
- --------------------------------------------------------------------------------------------------------------------------------
Integrated Electric Services, Inc., 9.375% Sr. Sub. Nts., Series B, 2/1/09 600,000 591,750
- --------------------------------------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 650,000 633,750
- --------------------------------------------------------------------------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(2) 1,500,000 1,177,500
- --------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
6.75% Cv. Sr. Sub. Nts., 9/15/03 950,000 456,000
7.375% Gtd. Sr. Unsec. Nts., 8/15/05 1,800,000 1,440,000
- --------------------------------------------------------------------------------------------------------------------------------
Stericycle, Inc., 12.375% Sr. Sub. Nts., 11/15/09(4) 700,000 720,125
- --------------------------------------------------------------------------------------------------------------------------------
United Rentals, Inc.:
9% Sr. Unsec. Sub. Nts., Series B, 4/1/09 350,000 332,500
9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 1,700,000 1,640,500
- --------------------------------------------------------------------------------------------------------------------------------
US Unwired, Inc., 0%/13.375% Sr. Disc. Nts., 11/1/09(4)(7) 1,750,000 1,032,500
-----------
11,309,810
- --------------------------------------------------------------------------------------------------------------------------------
Transportation--4.6%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 1,000,000 976,250
- --------------------------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(4) 500,000 502,500
- --------------------------------------------------------------------------------------------------------------------------------
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 600,000 561,000
- --------------------------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 915,000 960,750
- --------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 600,000 630,000
- --------------------------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05 950,000 869,250
- --------------------------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 25,000 9,625
- --------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal amount of 11.63%
first priority ship mtg. sr. sec. nts., 7/15/05 and one warrant to purchase five shares of
common stock)(2)(3)(9) 700,000 402,500
- --------------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 1,175,000 546,375
Units (each unit consists of $1,000 principal amount of 12% second priority ship mtg. nts.,
6/30/07 and 7.66 warrants)(4)(9) 500,000 37,500
- --------------------------------------------------------------------------------------------------------------------------------
Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08 1,500,000 787,500
- --------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07(2) 2,125,000 2,008,125
- --------------------------------------------------------------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship Mtg. Nts., 5/30/08(8) 700,000 269,500
- --------------------------------------------------------------------------------------------------------------------------------
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 1,301,250
- --------------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Sub. Nts., 10/15/09(4) 1,000,000 1,025,000
- --------------------------------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 400,000 380,000
- --------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(2) 818,437 736,594
- --------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,700,000 1,102,875
- --------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts., Series B, 12/15/03 2,600,000 2,665,000
-----------
15,771,594
</TABLE>
Oppenheimer High Income Fund/VA 17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Utility--0.6%
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 $ 545,000 $ 549,088
10.50% Sr. Nts., 5/15/06 25,000 26,500
- --------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(11) 555,000 594,266
- --------------------------------------------------------------------------------------------------------------------------------
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 1,000,000 894,694
------------
2,064,548
------------
Total Corporate Bonds and Notes (Cost $308,366,702) 283,247,406
<CAPTION>
Shares
================================================================================================================================
<S> <C> <C>
Preferred Stocks--5.1%
- --------------------------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(10) 16,509 301,289
- --------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A(2)(10) 76,590 1,914,750
- --------------------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Sr. Exchangeable, Non-Vtg.(10) 480 130,800
- --------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable, Series B, Non-Vtg.(10) 607 602,447
- --------------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(10) 1,272 1,281,540
13% Sr. Exchangeable, Non-Vtg.(10) 1,065 1,163,512
- --------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(10) 425 86,062
- --------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(2)(5) 8,000 370,000
- --------------------------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale California, l2% Non-Cum. Exchangeable Perpetual, Series A(2) 20 300
- --------------------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 10.50% Sr. Exchangeable(10) 7,500 755,625
- --------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(10) 307 280,138
- --------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 13.50% Exchangeable, Series B(10) 905 889,163
- --------------------------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable Preferred Stock, Non-Vtg.(10) 7,274 81,833
- --------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(10) 1,285 1,288,213
- --------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(10) 32,136 1,727,310
- --------------------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 12.375%(5)(10) 2,116 232,231
- --------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(10) 48 492,000
- --------------------------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg. 10,000 872,500
9.20% Exchangeable, Series F, Non-Vtg. 2,500 229,375
- --------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 13.875% Cum., Non-Vtg.(10) 1,288 1,362,060
- --------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(10) 1,182 1,214,505
- --------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(10) 196 984,900
13.75% Exchangeable(4) 46 231,150
- --------------------------------------------------------------------------------------------------------------------------------
Star Gas Partners, LP 517 6,850
- --------------------------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
9.16% Cv., Series B, Non-Vtg. 30,000 723,750
9.20% Sr. 8,950 139,284
------------
Total Preferred Stocks (Cost $20,061,434) 17,361,587
</TABLE>
18 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
================================================================================================================================
Common Stocks--0.3%
- --------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(4)(5) 121,950 $198,169
- --------------------------------------------------------------------------------------------------------------------------------
ECM Fund, LPI(2) 150 131,438
- --------------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(2)(5) 3,723 3,723
- --------------------------------------------------------------------------------------------------------------------------------
Gulfstream Holding, Inc.(5) 56 --
- --------------------------------------------------------------------------------------------------------------------------------
Horizon Group Properties, Inc.(5) 851 2,872
- --------------------------------------------------------------------------------------------------------------------------------
Optel, Inc.(5) 945 9
- --------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. 15,000 417,199
- --------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(5) 7,252 73
- --------------------------------------------------------------------------------------------------------------------------------
Weatherford International, Inc. 5,000 199,687
--------
Total Common Stocks (Cost $501,343) 953,170
<CAPTION>
Units
================================================================================================================================
<S> <C> <C>
Rights, Warrants and Certificates--0.7%
- --------------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust Wts., Exp. 1/31/00(2) 39,658 397
- --------------------------------------------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/15/00(2) 125 1
- --------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(4) 1,434 5,557
- --------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07(2) 62,000 18,600
- --------------------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/15/05 660 14,824
- --------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07(2) 750 198,844
- --------------------------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08 2,000 24,500
- --------------------------------------------------------------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 1,750 --
- --------------------------------------------------------------------------------------------------------------------------------
Diva Systems Corp. Wts., Exp. 3/1/08(2) 1,500 12,000
- --------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/1/05 475 2,583
- --------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(2) 500 75,062
- --------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/15/05(2) 52,500 525
- --------------------------------------------------------------------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/1/05 1,800 432,000
- --------------------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/1/01 15,626 13,673
- --------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/23/03 8,351 --
Exp. 1/23/03(2) 4,766 48
Exp. 9/1/04(2) 14,000 14,882
- --------------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 5,940 73,300
- --------------------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02 950 --
- --------------------------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07(2) 765 --
- --------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(2) 2,455 7,520
- --------------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08(2) 800 400
- --------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(2) 800 9,700
- --------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(2) 3,200 213,424
- --------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(2) 1,500 1,687
- --------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/29/00(2) 7,500 904,687
</TABLE>
Oppenheimer High Income Fund/VA 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Units Note 1
<S> <C> <C>
================================================================================================================================
Rights, Warrants and Certificates (continued)
PLD Telekom, Inc., 9% Cv. Sub. Nts. Wts., Exp. 3/31/03(2) 170 $ 8
- --------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc. Wts.:
Exp. 11/1/03(2) 28,000 49,000
Exp. 6/30/05(2) 1,600 160
- --------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp. Wts., Exp. 5/1/09(2) 1,200 300,000
- --------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co. Wts., Exp. 5/31/04(2) 121,440 1,214
- --------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/1/05(4) 5,250 117,469
------------
Total Rights, Warrants and Certificates (Cost $198,136) 2,492,065
<CAPTION>
Principal
Amount(1)
================================================================================================================================
<S> <C> <C>
Structured Instruments--0.5%
- --------------------------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, Lehman High Yield Index Linked Nts.,
8.75%, 5/5/00 (Cost $1,500,000) $ 1,500,000 1,514,867
================================================================================================================================
Repurchase Agreements--3.7%
- --------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%,
dated 12/31/99, to be repurchased at $12,702,910 on 1/3/00, collateralized
by U.S. Treasury Bonds, 5.25%-12%, 2/15/01-11/15/28, with a value
of $4,984,619 and U.S. Treasury Nts., 5%-7.50%, 12/31/00-2/15/07,
with a value of $7,976,752 (Cost $12,700,000) 12,700,000 12,700,000
- --------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $359,280,735) 97.9% 333,796,296
- --------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 2.1 7,032,302
----------- ------------
Net Assets 100.0% $340,828,598
=========== ============
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP -- Argentine Peso EUR -- Euro
CAD -- Canadian Dollar GBP -- British Pound Sterling
DEM -- German Mark IDR -- Indonesian Rupiah
2. Identifies issues considered to be illiquid or restricted--See Note 7 of
Notes to Financial Statements.
3. Represents the current interest rate for a variable or increasing 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 $43,166,117 or 12.67% of the Fund's net
assets as of December 31, 1999.
5. Non-income producing security.
6. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
7. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
8. Issuer is in default.
9. 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.
10. Interest or dividend is paid in kind.
11. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
20 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
==================================================================================================
Assets
Investments, at value (cost $359,280,735)--see accompanying statement $333,796,296
- --------------------------------------------------------------------------------------------------
Cash 1,071,946
- --------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 6,544,568
Shares of beneficial interest sold 178,609
Other 5,047
------------
Total assets 341,596,466
==================================================================================================
Liabilities
Unrealized depreciation on foreign currency contracts 85,050
- --------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 604,732
Investments purchased 38,914
Trustees' compensation 210
Transfer and shareholder servicing agent fees 184
Other 38,778
------------
Total liabilities 767,868
==================================================================================================
Net Assets $340,828,598
============
==================================================================================================
Composition of Net Assets
Paid-in capital $344,149,980
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 32,932,864
- --------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (10,681,554)
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (25,572,692)
------------
Net assets--applicable to 31,781,566 shares of beneficial interest outstanding $340,828,598
============
==================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $10.72
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer High Income Fund/VA 21
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
==================================================================================================
Investment Income
Interest $ 33,187,927
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $61) 2,090,889
------------
Total income 35,278,816
==================================================================================================
Expenses
Management fees 2,511,521
- --------------------------------------------------------------------------------------------------
Custodian fees and expenses 8,866
- --------------------------------------------------------------------------------------------------
Trustees' compensation 3,792
- --------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,104
- --------------------------------------------------------------------------------------------------
Other 26,642
------------
Total expenses 2,552,925
Less expenses paid indirectly (12,847)
------------
Net expenses 2,540,078
==================================================================================================
Net Investment Income 32,738,738
==================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (6,397,480)
Closing of futures contracts 138,192
Foreign currency transactions 262,847
------------
Net realized loss (5,996,441)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (11,265,255)
Translation of assets and liabilities denominated in foreign currencies (840,842)
------------
Net change (12,106,097)
------------
Net realized and unrealized loss (18,102,538)
==================================================================================================
Net Increase in Net Assets Resulting from Operations $ 14,636,200
============
</TABLE>
See accompanying Notes to Financial Statements.
22 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
==================================================================================================================
<S> <C> <C>
Operations
Net investment income $ 32,738,738 $ 27,929,383
- ------------------------------------------------------------------------------------------------------------------
Net realized loss (5,996,441) (2,889,367)
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (12,106,097) (24,125,468)
------------ ------------
Net increase in net assets resulting from operations 14,636,200 914,548
==================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (23,246,834) (6,694,100)
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (8,113,249)
==================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 20,876,575 51,132,667
==================================================================================================================
Net Assets
Total increase 12,265,941 37,239,866
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 328,562,657 291,322,791
------------ ------------
End of period (including undistributed net investment
income of $32,932,864 and $23,046,774, respectively) $340,828,598 $328,562,657
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer High Income Fund/VA 23
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $11.02 $11.52 $11.13 $10.63 $ 9.79
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.01 .95 .94 .97 .98
Net realized and unrealized gain (loss) (.55) (.90) .37 .58 .94
- ---------------------------------------------------------------------------------------------------------------------------
Total income from investment operations .46 .05 1.31 1.55 1.92
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.76) (.25) (.91) (1.05) (1.08)
Distributions from net realized gain -- (.30) (.01) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.76) (.55) (.92) (1.05) (1.08)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.72 $11.02 $11.52 $11.13 $10.63
====== ====== ====== ====== ======
===========================================================================================================================
Total Return, at Net Asset Value(1) 4.29% 0.31% 12.21% 15.26% 20.37%
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $340,829 $328,563 $291,323 $191,293 $133,451
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $340,519 $322,748 $223,617 $157,203 $115,600
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.61% 8.65% 8.88% 9.18% 9.81%
Expenses 0.75% 0.78%(3) 0.82%(3) 0.81%(3) 0.81%(3)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 33% 161% 168% 125% 107%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $147,560,583 and $101,280,643, respectively.
See accompanying Notes to Financial Statements.
24 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer High Income Fund/VA (the Fund) is a 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 Fund's investment objective is to seek a high level of current
income from investment in high yield fixed income securities. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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 Fund invests in foreign currency-linked structured notes
whose market value and redemption price are linked to foreign currency exchange
rates. The structured notes may be leveraged, which increases the notes'
volatility relative to the face of the security. Fluctuations in value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of December 31, 1999, the market value of these
securities comprised 1.99% of the Fund's net assets and resulted in realized and
unrealized losses of $1,583,690. The Fund also hedges a portion of the foreign
currency exposure generated by these securities, as discussed in Note 5.
- --------------------------------------------------------------------------------
Security Credit Risk. The Fund invests 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 Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of December 31, 1999, securities with an
aggregate market value of $2,797,955, representing 0.82% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
Oppenheimer High Income Fund/VA 25
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. As of December 31,
1999, the Fund had available for federal income tax purposes an unused capital
loss carryover of approximately $8,335,000, which expires between 2006 and 2007.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect an
increase in undistributed net investment income of $394,186. Accumulated net
realized loss on investments was increased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Beneficial Interest
The Fund has 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 December 31, 1999 Year Ended December 31, 1998
----------------------------- ----------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 13,810,332 $ 149,141,858 15,303,847 $ 171,699,925
Dividends and/or distributions reinvested 2,201,405 23,246,834 1,300,031 14,807,349
Redeemed (14,037,090) (151,512,117) (12,094,532) (135,374,607)
----------- ------------- ----------- -------------
Net increase 1,974,647 $ 20,876,575 4,509,346 $ 51,132,667
=========== ============= =========== =============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized depreciation on securities of
$25,484,439 was composed of gross appreciation of $8,906,207, and gross
depreciation of $34,390,646.
26 Oppenheimer High Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management Fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. 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, 0.60% of the
next $200 million and 0.50% of average annual net assets over $1 billion. The
Fund's management fee for the year ended December 31, 1999, was 0.74% of average
annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of December 31, 1999, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized
Contract Description Date Amount (000s) December 31, 1999 Depreciation
- ------------------------------------------------------------------------------------------------------------
Contracts to Sell
- -----------------
<S> <C> <C> <C> <C>
British Pound Sterling (GBP) 6/2/00-6/5/00 3,545 GBP $5,725,037 $78,449
Canadian Dollar (CAD) 6/1/00 540 CAD 374,449 6,601
-------
Total Unrealized Depreciation $85,050
=======
</TABLE>
================================================================================
6. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund 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 Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund 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 Fund may recognize a realized gain or loss when the contract is
closed or expires.
Oppenheimer High Income Fund/VA 27
<PAGE>
- --------------------------------------------------------------------------------
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 Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
================================================================================
7. Illiquid or Restricted Securities
As of December 31, 1999, 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 also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of December 31, 1999, was $21,334,042,
which represents 6.26% of the Fund's net assets, of which $4,091,086 is
considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Per Unit as of
Security Date Unit December 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Bonds
- -----
<S> <C> <C> <C>
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95-8/13/96 100.00%-105.75% 109.66%
- ---------------------------------------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08 3/19/98 101.00 90.00
Stocks and Warrants
- -------------------
CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 $ -- $ 0.30
- ---------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred Stock, Series A 6/17/98-12/29/98 24.97-25.03 25.00
- ---------------------------------------------------------------------------------------------------------------------------
ECM Fund, LPI 4/14/92 1,000.00 876.25
- ---------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/29/00 11/29/95 -- 120.63
- ---------------------------------------------------------------------------------------------------------------------------
Real Time Data Wts., Exp. 5/31/04 6/30/99 0.01 0.01
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Aggressive Growth
Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Aggressive Growth Fund/VA (which is
a series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998 and the
financial highlights for the period January 1, 1995, to December 31, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's 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, 1999, 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
Aggressive Growth Fund/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
===============================================================================================================
Common Stocks--88.9%
- ---------------------------------------------------------------------------------------------------------------
Capital Goods--5.4%
- ---------------------------------------------------------------------------------------------------------------
Electrical Equipment--3.4%
E-Tek Dynamics, Inc.(1) 537,400 $ 72,347,475
- ---------------------------------------------------------------------------------------------------------------
Manufacturing--2.0%
Tyco International Ltd. 1,095,000 42,568,125
- ---------------------------------------------------------------------------------------------------------------
Communication Services--2.5%
- ---------------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--2.5%
Copper Mountain Networks, Inc.(1) 17,400 848,250
- ---------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.(1) 250,000 22,203,125
- ---------------------------------------------------------------------------------------------------------------
Global Crossing Ltd.(1) 593,899 29,694,950
------------
52,746,325
- ---------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--9.9%
- ---------------------------------------------------------------------------------------------------------------
Consumer Services--1.2%
Young & Rubicam, Inc. 351,300 24,854,475
- ---------------------------------------------------------------------------------------------------------------
Retail: General--1.2%
Kohl's Corp.(1) 360,000 25,987,500
- ---------------------------------------------------------------------------------------------------------------
Retail: Specialty--7.5%
Abercrombie & Fitch Co., Cl. A(1) 480,000 12,810,000
- ---------------------------------------------------------------------------------------------------------------
Best Buy Co., Inc.(1) 630,000 31,618,125
- ---------------------------------------------------------------------------------------------------------------
Linens 'N Things, Inc.(1) 669,000 19,819,125
- ---------------------------------------------------------------------------------------------------------------
Tandy Corp. 915,000 45,006,562
- ---------------------------------------------------------------------------------------------------------------
Tiffany & Co. 519,300 46,347,525
- ---------------------------------------------------------------------------------------------------------------
Williams-Sonoma, Inc.(1) 25,000 1,150,000
------------
156,751,337
- ---------------------------------------------------------------------------------------------------------------
Consumer Staples--4.0%
- ---------------------------------------------------------------------------------------------------------------
Broadcasting--2.0%
Charter Communications, Inc., Cl. A(1) 983,500 21,514,062
- ---------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., Cl. A(1) 280,600 11,294,150
- ---------------------------------------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A(1) 96,900 9,901,969
------------
42,710,181
- ---------------------------------------------------------------------------------------------------------------
Entertainment--1.6%
Royal Caribbean Cruises Ltd. 674,000 33,236,625
- ---------------------------------------------------------------------------------------------------------------
Household Goods--0.4%
Dial Corp. (The) 325,000 7,901,563
- ---------------------------------------------------------------------------------------------------------------
Financial--1.4%
- ---------------------------------------------------------------------------------------------------------------
Diversified Financial--1.4%
Schwab (Charles) Corp. 770,000 29,548,750
</TABLE>
4 Oppenheimer Aggressive Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Healthcare--4.6%
- ---------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.6%
Biogen, Inc.(1) 636,600 $ 53,792,700
- ---------------------------------------------------------------------------------------------------------------
Genentech, Inc.(1) 72,200 9,710,900
- ---------------------------------------------------------------------------------------------------------------
Immunex Corp.(1) 300,000 32,850,000
------------
96,353,600
- ---------------------------------------------------------------------------------------------------------------
Technology--60.7%
- ---------------------------------------------------------------------------------------------------------------
Computer Hardware--7.1%
Dell Computer Corp.(1) 250,000 12,750,000
- ---------------------------------------------------------------------------------------------------------------
EMC Corp.(1) 603,000 65,877,750
- ---------------------------------------------------------------------------------------------------------------
Gateway, Inc.(1) 350,000 25,221,875
- ---------------------------------------------------------------------------------------------------------------
Juniper Networks, Inc. 28,000 9,520,000
- ---------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 400,000 36,200,000
------------
149,569,625
- ---------------------------------------------------------------------------------------------------------------
Computer Services--0.5%
Finisar Corp(1) 39,800 3,577,025
- ---------------------------------------------------------------------------------------------------------------
Foundry Networks, Inc.(1) 18,200 5,490,713
- ---------------------------------------------------------------------------------------------------------------
High Speed Access Corp.(1) 114,800 2,023,350
------------
11,091,088
- ---------------------------------------------------------------------------------------------------------------
Computer Software--11.6%
Citrix Systems, Inc.(1) 693,000 85,239,000
- ---------------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 550,000 64,212,500
- ---------------------------------------------------------------------------------------------------------------
VeriSign, Inc.(1) 50,000 9,546,875
- ---------------------------------------------------------------------------------------------------------------
Veritas Software Corp.(1) 600,000 85,875,000
------------
244,873,375
- ---------------------------------------------------------------------------------------------------------------
Communications Equipment--14.2%
Antec Corp.(1) 392,800 14,337,200
- ---------------------------------------------------------------------------------------------------------------
Audiocodes Ltd.(1) 237,100 21,813,200
- ---------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 450,000 48,206,250
- ---------------------------------------------------------------------------------------------------------------
Harmonic, Inc(1) 1,000,000 94,937,500
- ---------------------------------------------------------------------------------------------------------------
Optical Coating Laboratory, Inc. 335,000 99,160,000
- ---------------------------------------------------------------------------------------------------------------
Scientific-Atlanta, Inc. 375,000 20,859,375
------------
299,313,525
- ---------------------------------------------------------------------------------------------------------------
Electronics--27.3%
Gemstar International Group Ltd.(1) 200,000 14,250,000
- ---------------------------------------------------------------------------------------------------------------
GlobeSpan, Inc.(1) 6,300 410,288
- ---------------------------------------------------------------------------------------------------------------
Intel Corp. 372,000 30,620,250
- ---------------------------------------------------------------------------------------------------------------
JDS Uniphase Corp.(1) 1,561,332 251,862,367
- ---------------------------------------------------------------------------------------------------------------
LSI Logic Corp.(1) 545,700 36,834,750
- ---------------------------------------------------------------------------------------------------------------
QLogic Corp.(1) 450,000 71,943,750
- ---------------------------------------------------------------------------------------------------------------
SDL, Inc.(1) 350,000 76,300,000
- ---------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 1,040,000 54,535,000
- ---------------------------------------------------------------------------------------------------------------
Waters Corp.(1) 690,000 36,570,000
------------
573,326,405
</TABLE>
Oppenheimer Aggressive Growth Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Utilities--0.4%
- ---------------------------------------------------------------------------------------------------------------
Electric Utilities--0.4%
Calpine Corp.(1) 126,800 $ 8,115,200
--------------
Total Common Stocks (Cost $771,289,353) 1,871,295,174
Principal
Amount
===============================================================================================================
Repurchase Agreements--10.7%
- ---------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%, dated
12/31/99, to be repurchased at $225,151,585 on 1/3/00, collateralized
by U.S. Treasury Bonds, 5.25%-12%, 2/15/01-11/15/28, with a value
of $88,349,431 and U.S. Treasury Nts., 5%-7.50%, 12/31/00-2/15/07,
with a value of $141,383,210 (Cost $225,100,000) $225,100,000 225,100,000
- ---------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $996,389,353) 99.6% 2,096,395,174
- ---------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.4 7,732,586
------------ --------------
Net Assets 100.0% $2,104,127,760
============ ==============
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
6 Oppenheimer Aggressive Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===============================================================================================================
Assets
Investments, at value (including repurchase agreement of $225,100,000)
(cost $996,389,353)--see accompanying statement $2,096,395,174
- ---------------------------------------------------------------------------------------------------------------
Cash 1,032,385
- ---------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 7,087,097
Shares of beneficial interest sold 3,244,267
Interest and dividends 138,944
Other 11,681
--------------
Total assets 2,107,909,548
===============================================================================================================
Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed 3,716,257
Trustees' compensation 1,697
Transfer and shareholder servicing agent fees 201
Other 63,633
--------------
Total liabilities 3,781,788
===============================================================================================================
Net Assets $2,104,127,760
==============
===============================================================================================================
Composition of Net Assets
Paid-in capital $ 904,071,695
- ---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 100,050,244
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 1,100,005,821
--------------
Net assets--applicable to 25,564,825 shares of beneficial interest outstanding $2,104,127,760
==============
===============================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $82.31
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Aggressive Growth Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
===============================================================================================================
<S> <C>
Investment Income
Interest $ 4,468,423
- ---------------------------------------------------------------------------------------------------------------
Dividends 2,049,968
------------
Total income 6,518,391
===============================================================================================================
Expenses
Management fees 8,700,904
- ---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 24,681
- ---------------------------------------------------------------------------------------------------------------
Trustees' compensation 10,056
- ---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,127
- ---------------------------------------------------------------------------------------------------------------
Other 24,249
------------
Total expenses 8,762,017
Less expenses paid indirectly (11,539)
------------
Net expenses 8,750,478
===============================================================================================================
Net Investment Loss (2,232,087)
===============================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments (including premiums on options exercised) 169,730,345
Closing and expiration of option contracts written 428,019
Foreign currency transactions 130,388
------------
Net realized gain 170,288,752
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 750,572,210
Translation of assets and liabilities denominated in foreign currencies (791,294)
------------
Net change 749,780,916
------------
Net realized and unrealized gain 920,069,668
===============================================================================================================
Net Increase in Net Assets Resulting from Operations $917,837,581
============
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Aggressive Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
================================================================================================================================
Operations
Net investment loss $ (2,232,087) $ (1,162,585)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 170,288,752 (67,125,014)
- --------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 749,780,916 183,484,620
-------------- --------------
Net increase in net assets resulting from operations 917,837,581 115,197,021
================================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income -- (2,267,793)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain -- (23,288,487)
================================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions 108,330,019 110,511,946
================================================================================================================================
Net Assets
Total increase 1,026,167,600 200,152,687
- --------------------------------------------------------------------------------------------------------------------------------
Beginning of period 1,077,960,160 877,807,473
-------------- --------------
End of period $2,104,127,760 $1,077,960,160
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Aggressive Growth Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
=============================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $44.83 $40.96 $38.71 $34.21 $25.95
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.09) (.05) .10 .09 .11
Net realized and unrealized gain 37.57 5.09 4.01 6.59 8.29
- -----------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 37.48 5.04 4.11 6.68 8.40
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.10) (.09) (.11) (.09)
Distributions from net realized gain -- (1.07) (1.77) (2.07) (.05)
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (1.17) (1.86) (2.18) (.14)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $82.31 $44.83 $40.96 $38.71 $34.21
====== ====== ====== ====== ======
=============================================================================================================================
Total Return, at Net Asset Value(1) 83.60% 12.36% 11.67% 20.22% 32.52%
=============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $2,104 $1,078 $878 $617 $325
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,314 $ 955 $754 $467 $241
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income (loss) (0.17)% (0.12)% 0.31% 0.32% 0.47%
Expenses 0.67% 0.71%(3) 0.73%(3) 0.75%(3) 0.78%(3)
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 66% 80% 88% 100% 126%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $821,119,876 and $835,938,199, respectively.
See accompanying Notes to Financial Statements.
10 Oppenheimer Aggressive Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Aggressive Growth Fund/VA (the Fund) is a 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 Fund's investment objective is to achieve capital
appreciation by investing in "growth-type" companies. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of
significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
Oppenheimer Aggressive Growth Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Stateaments (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
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 the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in paid-in capital of $2,255,042, a decrease in accumulated net
investment loss of $2,232,087, and an increase in accumulated net realized gain
on investments of $22,955.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Realized gains and losses on
investments and options written and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
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 Fund has 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 December 31, 1999 Year Ended December 31, 1998
-------------------------------- ------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Sold 9,866,210 $ 549,485,112 13,376,589 $556,408,810
Dividends and/or distributions reinvested -- -- 580,166 25,556,280
Redeemed (8,345,187) (441,155,093) (11,344,620) (471,453,144)
---------- ------------- ----------- ------------
Net increase 1,521,023 $ 108,330,019 2,612,135 $110,511,946
========== ============= =========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities of
$1,100,005,821 was composed of gross appreciation of $1,116,099,786, and gross
depreciation of $16,093,965.
12 Oppenheimer Aggressive Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. 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, 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 the year ended December 31, 1999, was 0.66% of average
annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
5. Option Activity
The Fund 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 Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes 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 Fund 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.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives 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 Fund 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 Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
Call Options
---------------------------
Number of Amount of
Options Premiums
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1998 138 $ 34,764
Options written 2,500 640,611
Options closed or expired (1,700) (428,019)
Options exercised (938) (247,356)
------ ---------
Options outstanding as of December 31, 1999 -- $ --
====== =========
</TABLE>
<PAGE>
Oppenheimer Multiple Strategies Fund/VA 23
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Multiple
Strategies Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Multiple Strategies Fund/VA (which
is a series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998, and the
financial highlights for the period January 1, 1995, to December 31, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's 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, 1999, 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
Multiple Strategies Fund/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
=========================================================================================================
Common Stocks--50.3%
- ---------------------------------------------------------------------------------------------------------
Basic Materials--1.8%
- ---------------------------------------------------------------------------------------------------------
Chemicals--0.8%
Bayer AG, Sponsored ADR 34,000 $1,601,682
- ---------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co.(1) 7,672 505,393
- ---------------------------------------------------------------------------------------------------------
Potash Corp. of Saskatchewan, Inc. 29,500 1,421,531
- ---------------------------------------------------------------------------------------------------------
Praxair, Inc.(1) 23,000 1,157,187
----------
4,685,793
- ---------------------------------------------------------------------------------------------------------
Metals--0.3%
De Beers Consolidated Mines Ltd., ADR 68,000 1,967,750
- ---------------------------------------------------------------------------------------------------------
Paper--0.7%
Pactiv Corp.(2) 50,000 531,250
- ---------------------------------------------------------------------------------------------------------
Sonoco Products Co. 9,500 216,125
- ---------------------------------------------------------------------------------------------------------
Wausau-Mosinee Paper Corp. 76,400 892,925
- ---------------------------------------------------------------------------------------------------------
Weyerhaeuser Co. 36,647 2,631,713
----------
4,272,013
- ---------------------------------------------------------------------------------------------------------
Capital Goods--1.5%
- ---------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.4%
Goodrich (B.F.) Co. 80,000 2,200,000
- ---------------------------------------------------------------------------------------------------------
Industrial Services--0.1%
Service Corp. International 125,000 867,187
- ---------------------------------------------------------------------------------------------------------
Manufacturing--1.0%
Hexcel Corp.(2) 140,000 778,750
- ---------------------------------------------------------------------------------------------------------
Honeywell International, Inc. 19,687 1,135,694
- ---------------------------------------------------------------------------------------------------------
Pall Corp. 115,000 2,479,687
- ---------------------------------------------------------------------------------------------------------
Tyco International Ltd. 37,500 1,457,812
----------
5,851,943
- ---------------------------------------------------------------------------------------------------------
Communication Services--1.8%
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--1.0%
Intermedia Communications, Inc.(2) 3,812 147,953
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(2)(3) 201 6,241
- ---------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(2) 108,750 5,770,547
----------
5,924,741
- ---------------------------------------------------------------------------------------------------------
Telephone Utilities--0.7%
GTE Corp. 17,500 1,234,844
- ---------------------------------------------------------------------------------------------------------
SBC Communications, Inc. 44,000 2,145,000
- ---------------------------------------------------------------------------------------------------------
Tele Norte Leste Participacoes SA (Telemar) 26,250,000 472,253
- ---------------------------------------------------------------------------------------------------------
Telesp Tele de Sao Paulo 19,200,000 265,813
----------
4,117,910
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Wireless--0.1%
Telesp Celular Participacoes SA 49,150,000 465,245
</TABLE>
4 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Consumer Cyclicals--7.0%
- ---------------------------------------------------------------------------------------------------------
Autos & Housing--1.7%
Dana Corp. 75,000 $ 2,245,312
- ---------------------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 292,230 946,920
- ---------------------------------------------------------------------------------------------------------
Lear Corp.(2) 55,000 1,760,000
- ---------------------------------------------------------------------------------------------------------
Owens Corning 140,000 2,703,750
- ---------------------------------------------------------------------------------------------------------
Southdown, Inc. 17,500 903,437
- ---------------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(2) 61,000 1,136,125
-----------
9,695,544
- ---------------------------------------------------------------------------------------------------------
Consumer Services--0.2%
Alterra Healthcare Corp.(2) 115,000 955,937
- ---------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.3%
Berjaya Sports Toto Berhad 200,000 431,579
- ---------------------------------------------------------------------------------------------------------
Brunswick Corp. 56,000 1,246,000
- ---------------------------------------------------------------------------------------------------------
Callaway Golf Co. 140,000 2,476,250
- ---------------------------------------------------------------------------------------------------------
Host Marriott Corp. 130,000 1,072,500
- ---------------------------------------------------------------------------------------------------------
International Game Technology 192,500 3,910,156
- ---------------------------------------------------------------------------------------------------------
Mattel, Inc. 115,000 1,509,378
- ---------------------------------------------------------------------------------------------------------
Mirage Resorts, Inc.(2) 62,000 949,375
- ---------------------------------------------------------------------------------------------------------
Shimano, Inc. 100,000 1,760,736
-----------
13,355,974
- ---------------------------------------------------------------------------------------------------------
Media--0.7%
South China Morning Post Holdings Ltd. 1,694,000 1,460,063
- ---------------------------------------------------------------------------------------------------------
Time Warner, Inc.(1) 32,000 2,318,000
-----------
3,778,063
- ---------------------------------------------------------------------------------------------------------
Retail: General--0.8%
Federated Department Stores, Inc.(2) 42,500 2,148,906
- ---------------------------------------------------------------------------------------------------------
Neiman Marcus Group, Inc. (The), Cl. A(2) 40,000 1,117,500
- ---------------------------------------------------------------------------------------------------------
Saks, Inc.(2) 93,000 1,447,312
-----------
4,713,718
- ---------------------------------------------------------------------------------------------------------
Retail: Specialty--0.7%
- ---------------------------------------------------------------------------------------------------------
Abercrombie & Fitch Co., Cl. A(2) 35,000 934,063
- ---------------------------------------------------------------------------------------------------------
AutoZone, Inc.(2) 43,000 1,389,438
- ---------------------------------------------------------------------------------------------------------
Borders Group, Inc.(2) 70,000 1,124,375
- ---------------------------------------------------------------------------------------------------------
Gap, Inc.(1) 14,500 667,000
-----------
4,114,876
- ---------------------------------------------------------------------------------------------------------
Textile/Apparel & Home Furnishings--0.6%
Jones Apparel Group, Inc.(2) 77,000 2,088,625
- ---------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(2) 48,500 1,130,656
-----------
3,219,281
- ---------------------------------------------------------------------------------------------------------
Consumer Staples--4.8%
- ---------------------------------------------------------------------------------------------------------
Beverages--0.3%
Coca-Cola Enterprises, Inc. 41,800 841,225
- ---------------------------------------------------------------------------------------------------------
Diageo plc 125,800 1,012,086
-----------
1,853,311
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Broadcasting--1.8%
CBS Corp.(1)(2) 110,000 $ 7,033,125
- ---------------------------------------------------------------------------------------------------------
MediaOne Group, Inc.(1)(2) 35,000 2,688,438
- ---------------------------------------------------------------------------------------------------------
RCN Corp.(2) 12,500 606,250
-----------
10,327,813
- ---------------------------------------------------------------------------------------------------------
Entertainment--0.9%
Brinker International, Inc.(2) 35,000 840,000
- ---------------------------------------------------------------------------------------------------------
Disney (Walt) Co. 32,500 950,625
- ---------------------------------------------------------------------------------------------------------
Luby's, Inc. 90,000 1,023,750
- ---------------------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 14,400 2,391,783
-----------
5,206,158
- ---------------------------------------------------------------------------------------------------------
Food--0.4%
Groupe Danone 7,500 1,766,231
- ---------------------------------------------------------------------------------------------------------
Nestle SA, Sponsored ADR 6,000 546,688
-----------
2,312,919
- ---------------------------------------------------------------------------------------------------------
Food & Drug Retailers--0.1%
Cia Brasileira de Distribuicao Grupo Pao de Acucar, Sponsored ADR 14,000 452,375
- ---------------------------------------------------------------------------------------------------------
Household Goods--0.9%
- ---------------------------------------------------------------------------------------------------------
Avon Products, Inc.(1) 45,000 1,485,000
- ---------------------------------------------------------------------------------------------------------
Fort James Corp. 45,000 1,231,875
- ---------------------------------------------------------------------------------------------------------
Rexall Sundown, Inc.(2) 125,000 1,289,063
- ---------------------------------------------------------------------------------------------------------
Wella AG 55,900 1,147,658
- ---------------------------------------------------------------------------------------------------------
Wella AG, Preference 5,200 114,085
-----------
5,267,681
- ---------------------------------------------------------------------------------------------------------
Tobacco--0.4%
Philip Morris Cos., Inc. 100,000 2,318,750
- ---------------------------------------------------------------------------------------------------------
Energy--3.1%
- ---------------------------------------------------------------------------------------------------------
Energy Services--1.0%
Input/Output, Inc.(2) 193,000 977,063
- ---------------------------------------------------------------------------------------------------------
Santa Fe International Corp. 87,000 2,251,125
- ---------------------------------------------------------------------------------------------------------
Schlumberger Ltd. 22,500 1,265,625
- ---------------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc. 43,356 1,460,555
-----------
5,954,368
- ---------------------------------------------------------------------------------------------------------
Oil: Domestic--1.3%
Comstock Resources, Inc.(2) 175,000 492,188
- ---------------------------------------------------------------------------------------------------------
Conoco, Inc., Cl. B 24,567 611,104
- ---------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 28,501 2,296,112
- ---------------------------------------------------------------------------------------------------------
Kerr-McGee Corp. 35,000 2,170,000
- ---------------------------------------------------------------------------------------------------------
Unocal Corp. 65,000 2,181,563
-----------
7,750,967
- ---------------------------------------------------------------------------------------------------------
Oil: International--0.8%
Petroleo Brasileiro SA, Preference 3,330,000 847,938
- ---------------------------------------------------------------------------------------------------------
Talisman Energy, Inc.(2) 105,510 2,690,057
- ---------------------------------------------------------------------------------------------------------
Total Fina SA, Sponsored ADR 16,000 1,108,000
-----------
4,645,995
</TABLE>
6 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Financial--9.7%
- ---------------------------------------------------------------------------------------------------------
Banks--5.7%
ABN Amro Holding NV 62,700 $ 1,564,911
- ---------------------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 95,000 750,575
- ---------------------------------------------------------------------------------------------------------
Bank of America Corp.(1) 160,000 8,030,000
- ---------------------------------------------------------------------------------------------------------
Bank One Corp. 50,000 1,603,125
- ---------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 133,000 10,332,438
- ---------------------------------------------------------------------------------------------------------
Societe Generale 20,000 4,649,567
- ---------------------------------------------------------------------------------------------------------
UBS AG 4,175 1,128,875
- ---------------------------------------------------------------------------------------------------------
UniCredito Italiano SpA 414,000 2,033,249
- ---------------------------------------------------------------------------------------------------------
Wells Fargo Co. 70,000 2,830,625
-----------
32,923,365
- ---------------------------------------------------------------------------------------------------------
Diversified Financial--0.9%
Finova Group, Inc. 26,000 923,000
- ---------------------------------------------------------------------------------------------------------
ICICI Ltd., Sponsored ADR(2) 35,500 523,625
- ---------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 16,000 1,336,000
- ---------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 12,500 1,784,375
- ---------------------------------------------------------------------------------------------------------
Simon Property Group, Inc. 37,500 860,156
-----------
5,427,156
- ---------------------------------------------------------------------------------------------------------
Insurance--1.0%
ACE Ltd. 140,000 2,336,250
- ---------------------------------------------------------------------------------------------------------
Skandia Forsakrings AB 115,000 3,472,769
-----------
5,809,019
- ---------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--2.1%
Archstone Communities Trust 52,000 1,066,000
- ---------------------------------------------------------------------------------------------------------
Avalonbay Communities, Inc. 30,732 1,054,492
- ---------------------------------------------------------------------------------------------------------
Brandywine Realty Trust 56,000 917,000
- ---------------------------------------------------------------------------------------------------------
Camden Property Trust 40,000 1,095,000
- ---------------------------------------------------------------------------------------------------------
CarrAmerica Realty Corp. 48,000 1,014,000
- ---------------------------------------------------------------------------------------------------------
Chastain Capital Corp.(2) 134,000 58,625
- ---------------------------------------------------------------------------------------------------------
Chelsea GCA Realty, Inc. 32,000 952,000
- ---------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 68,000 994,500
- ---------------------------------------------------------------------------------------------------------
Developers Diversified Realty Corp. 62,000 798,250
- ---------------------------------------------------------------------------------------------------------
JDN Realty Corp. 60,000 967,500
- ---------------------------------------------------------------------------------------------------------
Manufactured Home Communities, Inc. 44,000 1,069,750
- ---------------------------------------------------------------------------------------------------------
Post Properties, Inc. 28,000 1,071,000
- ---------------------------------------------------------------------------------------------------------
Shurgard Storage Centers, Inc. 44,000 1,020,250
-----------
12,078,367
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Healthcare--4.7%
- ---------------------------------------------------------------------------------------------------------
Healthcare/Drugs--3.4%
Abbott Laboratories 38,000 $ 1,379,875
- ---------------------------------------------------------------------------------------------------------
American Home Products Corp. 48,500 1,912,719
- ---------------------------------------------------------------------------------------------------------
AstraZeneca Group plc 60,540 2,560,884
- ---------------------------------------------------------------------------------------------------------
Elan Corp. plc, ADR(2) 32,000 944,000
- ---------------------------------------------------------------------------------------------------------
Johnson & Johnson(1) 33,867 3,153,864
- ---------------------------------------------------------------------------------------------------------
Merck & Co., Inc. 30,000 2,011,875
- ---------------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 110,000 2,770,625
- ---------------------------------------------------------------------------------------------------------
Novartis AG 1,700 2,499,277
- ---------------------------------------------------------------------------------------------------------
Pliva d.d., Sponsored GDR(4) 20,000 261,000
- ---------------------------------------------------------------------------------------------------------
SmithKline Beecham plc, Cl. A, Sponsored ADR 30,000 1,933,125
-----------
19,427,244
- ---------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.3%
Acuson Corp.(2) 180,000 2,261,250
- ---------------------------------------------------------------------------------------------------------
Innovasive Devices, Inc.(2) 110,000 880,000
- ---------------------------------------------------------------------------------------------------------
Manor Care, Inc.(2) 75,000 1,200,000
- ---------------------------------------------------------------------------------------------------------
McKesson HBOC, Inc. 20,000 451,250
- ---------------------------------------------------------------------------------------------------------
St. Jude Medical, Inc.(2) 30,000 920,625
- ---------------------------------------------------------------------------------------------------------
United Healthcare Corp. 32,800 1,742,500
-----------
7,455,625
- ---------------------------------------------------------------------------------------------------------
Technology--14.5%
- ---------------------------------------------------------------------------------------------------------
Computer Hardware--2.8%
Canon, Inc. 50,000 1,985,718
- ---------------------------------------------------------------------------------------------------------
Hewlett-Packard Co.(1) 10,000 1,139,375
- ---------------------------------------------------------------------------------------------------------
International Business Machines Corp.(1) 120,000 12,960,000
-----------
16,085,093
- ---------------------------------------------------------------------------------------------------------
Computer Services--0.1%
barnesandnoble.com, inc.(2) 36,100 512,169
- ---------------------------------------------------------------------------------------------------------
Computer Software--2.4%
Computer Associates International, Inc.(1) 48,599 3,398,928
- ---------------------------------------------------------------------------------------------------------
Compuware Corp.(1)(2) 49,100 1,828,975
- ---------------------------------------------------------------------------------------------------------
Novell, Inc.(2) 126,000 5,032,125
- ---------------------------------------------------------------------------------------------------------
Oracle Corp.(1)(2) 12,500 1,400,781
- ---------------------------------------------------------------------------------------------------------
Rational Software Corp.(1)(2) 7,700 378,263
- ---------------------------------------------------------------------------------------------------------
Sabre Holdings Corp.(2) 34,500 1,768,125
- ---------------------------------------------------------------------------------------------------------
Structural Dynamics Research Corp.(2) 167 2,129
-----------
13,809,326
- ---------------------------------------------------------------------------------------------------------
Communications Equipment--1.7%
Cisco Systems, Inc.(1)(2) 41,000 4,392,125
- ---------------------------------------------------------------------------------------------------------
Optical Coating Laboratory, Inc.(1) 18,000 5,328,000
-----------
9,720,125
</TABLE>
8 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Electronics--6.9%
Analog Devices, Inc.(1)(2) 67,200 $ 6,249,600
- ---------------------------------------------------------------------------------------------------------
ASM Lithography Holding NV 13,400 1,524,250
- ---------------------------------------------------------------------------------------------------------
Cognex Corp.(2) 50,000 1,950,000
- ---------------------------------------------------------------------------------------------------------
Coherent, Inc.(1)(2) 70,000 1,872,500
- ---------------------------------------------------------------------------------------------------------
General Motors Corp., Cl. H(1)(2) 30,200 2,899,200
- ---------------------------------------------------------------------------------------------------------
Grainger (W.W.), Inc. 21,000 1,004,063
- ---------------------------------------------------------------------------------------------------------
Intel Corp. 156,000 12,840,750
- ---------------------------------------------------------------------------------------------------------
Keyence Corp. 8,000 3,247,579
- ---------------------------------------------------------------------------------------------------------
Methode Electronics, Inc., Cl. A(1) 104,000 3,341,000
- ---------------------------------------------------------------------------------------------------------
STMicroelectronics NV, NY Registered Shares(1) 22,400 3,392,200
- ---------------------------------------------------------------------------------------------------------
Teradyne, Inc.(1)(2) 28,000 1,848,000
------------
40,169,142
- ---------------------------------------------------------------------------------------------------------
Photography--0.6%
Eastman Kodak Co. 26,500 1,755,625
- ---------------------------------------------------------------------------------------------------------
Xerox Corp.(1) 67,500 1,531,406
------------
3,287,031
- ---------------------------------------------------------------------------------------------------------
Transportation--0.5%
- ---------------------------------------------------------------------------------------------------------
Air Transportation--0.2%
Alaska Air Group, Inc.(2) 29,500 1,036,188
- ---------------------------------------------------------------------------------------------------------
Railroads & Truckers--0.3%
Burlington Northern Santa Fe Corp. 67,000 1,624,750
- ---------------------------------------------------------------------------------------------------------
Shipping--0.0%
Stolt-Nielsen SA 20,000 285,000
- ---------------------------------------------------------------------------------------------------------
Utilities--0.9%
- ---------------------------------------------------------------------------------------------------------
Electric Utilities--0.9%
Allegheny Energy, Inc. 50,500 1,360,344
- ---------------------------------------------------------------------------------------------------------
Reliant Energy, Inc. 80,000 1,830,000
- ---------------------------------------------------------------------------------------------------------
Southern Co. 90,000 2,115,000
------------
5,305,344
------------
Total Common Stocks (Cost $201,240,567) 291,231,256
=========================================================================================================
Preferred Stocks--0.6%
- ---------------------------------------------------------------------------------------------------------
ICG Communications, Inc., 6.75% Cum. Cv., Non-Vtg. 45,000 2,041,875
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% Cv.(4) 5,000 134,375
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr., Series D, Non-Vtg. 30,000 1,522,500
------------
Total Preferred Stocks (Cost $4,472,031) 3,698,750
=========================================================================================================
Other Securities--1.0%
- ---------------------------------------------------------------------------------------------------------
Budget Group, Inc., 6.25% Cum. Cv. Term Income Deferred Equity
Securities, Non-Vtg.(4) 20,000 615,000
- ---------------------------------------------------------------------------------------------------------
Monsanto Co., 6.50% Cv. Adjustable Conversion-rate Equity Security 35,000 1,159,375
- ---------------------------------------------------------------------------------------------------------
Qwest Trends Trust, 5.75% Cv.(4) 55,000 3,884,375
------------
Total Other Securities (Cost $5,245,203) 5,658,750
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
=========================================================================================================
Rights, Warrants and Certificates--0.0%
- ---------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08 1,000 $ 12,250
- ---------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/1/02 9,232 60,008
- ---------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/00(3) 2,592 38,888
- ---------------------------------------------------------------------------------------------------------
PE Corp. Cl. G Wts., Exp. 9/11/03 249 12,699
- ---------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 5/15/02(3) 4,000 56,500
-----------
Total Rights, Warrants and Certificates (Cost $59,660) 180,345
Principal
Amount(5)
=========================================================================================================
Mortgage-Backed Obligations--2.0%
- ---------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg. Participation
Certificates, 7%, 5/1/29 $ 4,769,214 4,615,694
- ---------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50%, 11/1/27-12/1/27 4,205,093 3,971,206
- ---------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 8%, 7/15/22-4/15/23 2,084,740 2,112,922
- ---------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 635,799 620,104
-----------
Total Mortgage-Backed Obligations (Cost $11,602,003) 11,319,926
=========================================================================================================
U.S. Government Obligations--11.7%
- ---------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
8.875%, 8/15/17 2,900,000 3,505,375
STRIPS, 6.30%, 8/15/25(6) 12,900,000 2,438,332
STRIPS, 6.53%, 8/15/15(6) 7,100,000 2,450,210
STRIPS, 7.10%, 11/15/18(6) 16,000,000 4,449,696
STRIPS, 7.26%, 11/15/18(6) 10,000,000 2,786,070
STRIPS, 7.31%, 8/15/19(6) 18,000,000 4,766,058
- ---------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02 15,000,000 14,845,320
6.125%, 9/30/00 15,000,000 15,018,750
6.25%, 2/15/07 8,800,000 8,662,500
6.375%, 8/15/02 5,000,000 5,010,940
6.50%, 10/15/06 3,710,000 3,700,725
-----------
Total U.S. Government Obligations (Cost $68,185,746) 67,633,976
=========================================================================================================
Foreign Government Obligations--23.7%
- ---------------------------------------------------------------------------------------------------------
Argentina--6.4%
Argentina (Republic of) Bonds:
Series BT06, 11.25%, 5/24/04 1,178,000 1,169,165
Series L, 6.812%, 3/31/05(7) 8,096,000 7,387,600
- ---------------------------------------------------------------------------------------------------------
Argentina (Republic of) Nts., 14.25%, 11/30/02(7) 13,125,000 12,993,750
- ---------------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 6%, 3/31/23(7) 23,750,000 15,645,312
-----------
37,195,827
- ---------------------------------------------------------------------------------------------------------
Australia--0.6%
New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04AUD 3,160,000 2,076,929
- ---------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable Gtd. Nts., 10.50%, 5/15/03AUD 1,800,000 1,313,947
-----------
3,390,876
</TABLE>
10 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Brazil--5.2%
Brazil (Federal Republic of) Capitalization Bonds, 6.916%, 4/15/14 $21,716,459 $ 16,368,781
- ---------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Eligible Interest Bonds, 6.937%, 4/15/06(7) 15,463,000 13,646,097
------------
30,014,878
- ---------------------------------------------------------------------------------------------------------
Canada--2.9%
Canada (Government of) Bonds:
8.50%, 4/1/02CAD 1,500,000 1,090,721
8.75%, 12/1/05CAD 12,200,000 9,469,183
9.75%, 12/1/01-6/1/01CAD 5,000,000 3,672,397
Series WL43, 5.75%, 6/1/29CAD 3,670,000 2,389,240
------------
16,621,541
- ---------------------------------------------------------------------------------------------------------
Denmark--0.9%
Denmark (Kingdom of) Bonds, 8%, 3/15/06DKK 32,100,000 4,905,143
- ---------------------------------------------------------------------------------------------------------
Great Britain--1.2%
United Kingdom Treasury Bonds, 6.75%, 11/26/04GBP 2,680,000 4,446,440
- ---------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 13%, 7/14/00GBP 1,590,000 2,662,916
------------
7,109,356
- ---------------------------------------------------------------------------------------------------------
Ireland--0.3%
Ireland (Government of) Bonds, 9.25%, 7/11/03(3)EUR 1,409,409 1,628,357
- ---------------------------------------------------------------------------------------------------------
Mexico--0.6%
United Mexican States Collateralized Fixed Rate Par Bonds,
Series W-A, 6.25%, 12/31/19 4,450,000 3,515,500
- ---------------------------------------------------------------------------------------------------------
New Zealand--5.1%
New Zealand (Government of) Bonds:
8%, 2/15/01NZD 19,440,000 10,391,131
10%, 3/15/02NZD 16,800,000 9,395,771
- ---------------------------------------------------------------------------------------------------------
New Zealand (Government of) Nts., 6.50%, 2/15/00NZD 18,600,000 9,753,559
------------
29,540,461
- ---------------------------------------------------------------------------------------------------------
Philippines--0.2%
Philippines (Republic of) Bonds, 8.60%, 6/15/27 1,500,000 1,267,994
- ---------------------------------------------------------------------------------------------------------
South Africa--0.3%
Eskom Depositary Receipts, Series E168, 11%, 6/1/08ZAR 12,570,000 1,734,295
------------
Total Foreign Government Obligations (Cost $137,782,080) 136,924,228
=========================================================================================================
Non-Convertible Corporate Bonds and Notes--6.7%
- ---------------------------------------------------------------------------------------------------------
Basic Materials--1.3%
- ---------------------------------------------------------------------------------------------------------
Chemicals--0.5%
Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr. Disc. Nts.,
13.08%, 12/31/09(4)(6) 1,000,000 306,250
- ---------------------------------------------------------------------------------------------------------
Lyondell Chemical Co., 10.875% Sr. Sub. Nts., 5/1/09 500,000 517,500
- ---------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 85,000 88,400
- ---------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 500,000 487,500
- ---------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06 535,000 403,925
12.375% Sr. Sec. Nts., Series B, 7/15/06 250,000 260,000
- ---------------------------------------------------------------------------------------------------------
ZSC Specialty Chemical plc, 11% Sr. Nts., 7/1/09(4) 500,000 521,250
------------
2,584,825
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Metals--0.4%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 $1,015,000 $1,037,837
- ---------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 1,000,000 1,005,000
- ---------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 407,250
----------
2,450,087
- ---------------------------------------------------------------------------------------------------------
Paper--0.4%
Aracruz Celulose SA, 10.375% Debs., 1/31/02(4) 430,000 431,075
- ---------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 300,000 280,500
- ---------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 500,000 517,500
10.875% Sr. Sub. Nts., 4/1/08 250,000 247,500
- ---------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 750,000 785,625
----------
2,262,200
- ---------------------------------------------------------------------------------------------------------
Capital Goods--0.4%
- ---------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.1%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 502,500
- ---------------------------------------------------------------------------------------------------------
Industrial Services--0.1%
Allied Waste North America, Inc., 10% Sr. Sub. Nts., 8/1/09(4) 750,000 675,000
- ---------------------------------------------------------------------------------------------------------
Manufacturing--0.2%
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(4) 700,000 742,000
- ---------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 518,750
----------
1,260,750
- ---------------------------------------------------------------------------------------------------------
Communication Services--2.1%
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--1.3%
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08 500,000 518,750
- ---------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 750,000 753,750
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.50% Sr. Nts., Series B, 1/15/08 500,000 460,000
- ---------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 250,000 257,500
10% Sr. Unsec. Nts., Series B, 11/15/08 750,000 770,625
- ---------------------------------------------------------------------------------------------------------
NTL Communications Corp., 0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(8) 500,000 356,250
- ---------------------------------------------------------------------------------------------------------
NTL, Inc., 0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(8) 500,000 347,500
- ---------------------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 1,000,000 993,750
- ---------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(8) 1,000,000 937,500
9.625% Sr. Debs., 10/1/06 500,000 507,500
- ---------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV, 10.875% Sr. Nts., 8/1/09 400,000 407,000
- ---------------------------------------------------------------------------------------------------------
Verio, Inc., 11.25% Sr. Unsec. Nts., 12/1/08 600,000 633,000
- ---------------------------------------------------------------------------------------------------------
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(4) 400,000 414,000
----------
7,357,125
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Wireless--0.8%
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 200,000 181,000
- ---------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(8) 750,000 603,750
- ---------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(4) 250,000 270,000
11.625% Sr. Nts., 8/15/06 535,000 569,775
11.625% Sr. Nts., Series A, 8/15/06 590,000 628,350
</TABLE>
12 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Wireless (continued)
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 $ 200,000 $ 145,000
- ---------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 750,000 770,625
- ---------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 1,000,000 821,250
- ---------------------------------------------------------------------------------------------------------
Voicestream Wireless Corp., 10.375% Sr. Nts., 11/15/09(4) 400,000 414,000
----------
4,403,750
- ---------------------------------------------------------------------------------------------------------
Consumer Cyclicals--0.8%
- ---------------------------------------------------------------------------------------------------------
Autos & Housing--0.4%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 100,000 95,500
- ---------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 300,000 117,750
- ---------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 500,000 525,000
- ---------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 12% Unsec. Nts., 7/15/05(3) 270,840 148,962
- ---------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 400,000 378,000
- ---------------------------------------------------------------------------------------------------------
Nortek, Inc., 8.875% Sr. Unsec. Nts., Series B, 8/1/08 750,000 716,250
- ---------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Sub. Nts., 10/15/09(4) 400,000 410,000
----------
2,391,462
- ---------------------------------------------------------------------------------------------------------
Leisure & Entertainment--0.2%
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 250,000 178,750
- ---------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 500,000 462,500
- ---------------------------------------------------------------------------------------------------------
Premier Parks, Inc., 9.75% Sr. Nts., 6/15/07 500,000 500,000
----------
1,141,250
- ---------------------------------------------------------------------------------------------------------
Media--0.2%
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 150,000 153,750
- ---------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 500,000 589,339
- ---------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 500,000 549,601
----------
1,292,690
Consumer Staples--1.4%
- ---------------------------------------------------------------------------------------------------------
Beverages--0.1%
Canadaiqua Brands, Inc., 8.625% Sr. Unsec. Nts., 8/1/06 700,000 700,875
- ---------------------------------------------------------------------------------------------------------
Broadcasting--1.1%
Aldelphia Communications Corp., 9.375% Sr. Nts., 11/15/09 750,000 738,750
- ---------------------------------------------------------------------------------------------------------
Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 1,000,000 1,012,500
- ---------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter Communication Holdings
Capital Corp., 8.625% Sr. Unsec. Nts., 4/1/09 750,000 696,563
- ---------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 250,000 265,000
- ---------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 700,000 707,000
- ---------------------------------------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(8) 600,000 452,250
- ---------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 1,000,000 1,071,250
- ---------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 500,000 463,750
9% Sr. Unsec. Sub. Nts., 7/15/07 375,000 353,438
- ---------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07 900,000 857,250
----------
6,617,751
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Food & Drug Retailers--0.1%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B, 12/1/04 $ 300,000 $ 276,750
10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 508,200
------------
784,950
- ---------------------------------------------------------------------------------------------------------
Household Goods--0.1%
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 400,000 202,000
9% Sr. Nts., 11/1/06 70,000 52,850
------------
254,850
- ---------------------------------------------------------------------------------------------------------
Energy--0.1%
- ---------------------------------------------------------------------------------------------------------
Energy Services--0.1%
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 950,000 812,250
- ---------------------------------------------------------------------------------------------------------
Financial--0.1%
- ---------------------------------------------------------------------------------------------------------
Banks--0.1%
First Chicago Corp., 11.25% Sub. Nts., 2/20/01 250,000 261,387
- ---------------------------------------------------------------------------------------------------------
Healthcare--0.0%
- ---------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.0%
Sun Healthcare Group, Inc., 9.375% Sr. Sub. Nts., 5/1/08(2)(4)(9) 1,000,000 65,000
- ---------------------------------------------------------------------------------------------------------
Transportation--0.1%
- ---------------------------------------------------------------------------------------------------------
Air Transportation--0.1%
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,000,000 648,750
- ---------------------------------------------------------------------------------------------------------
Shipping--0.0%
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts.,
6/30/07(4) 500,000 232,500
- ---------------------------------------------------------------------------------------------------------
Utilities--0.4%
- ---------------------------------------------------------------------------------------------------------
Electric Utilities--0.2%
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 400,000 403,000
10.50% Sr. Nts., 5/15/06 800,000 848,000
------------
1,251,000
- ---------------------------------------------------------------------------------------------------------
Gas Utilities--0.2%
Beaver Valley II Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 989,000 987,764
------------
Total Non-Convertible Corporate Bonds and Notes (Cost $41,563,563) 38,938,716
=========================================================================================================
Repurchase Agreements--3.5%
- ---------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%,
dated 12/31/99, to be repurchased at $20,504,698 on 1/3/00,
collateralized by U.S. Treasury Bonds, 5.25%-12%, 2/15/01-11/15/28,
with a value of $8,046,039 and U.S. Treasury Nts., 5%-7.50%,
12/31/00-2/15/07, with a value of $12,875,859 (Cost $20,500,000) 20,500,000 20,500,000
- ---------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $490,650,853) 99.5% 576,085,947
- ---------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.5 2,696,887
----------- ------------
Net Assets 100.0% $578,782,834
=========== ============
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
1. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
<CAPTION>
Shares Expiration Exercise Premium Market Value
Subject to Call Date Price Received Note 1
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Analog Devices, Inc. 6,700 6/19/00 $ 95.00 $ 41,670 $ 102,175
Avon Products, Inc. 10,000 7/24/00 40.00 43,450 26,875
Bank of America Corp. 22,000 1/24/00 90.00 59,838 --
CBS Corp. 33,000 1/24/00 55.00 93,885 305,250
Cisco Systems, Inc. 6,000 1/24/00 67.50 38,819 237,750
Cisco Systems, Inc. 5,000 4/24/00 70.00 40,474 195,000
Coherent, Inc. 4,000 5/22/00 35.00 8,380 4,500
Computer Associates International, Inc. 10,000 1/24/00 65.00 37,199 62,500
Computer Associates International, Inc. 6,000 5/22/00 75.00 44,820 42,750
Compuware Corp. 8,000 1/24/00 35.00 40,759 34,000
Du Pont (E.I.) De Nemours & Co. 7,000 1/24/00 75.00 41,789 1,750
Gap, Inc. 14,500 6/19/00 60.00 28,564 33,531
General Motors Corp., Cl. H 4,500 3/20/00 95.00 29,115 41,625
Hewlett-Packard Co. 10,000 2/22/00 125.00 55,948 52,500
International Business Machines Corp. 5,000 1/24/00 150.00 46,098 313
International Business Machines Corp. 4,000 4/24/00 110.00 43,879 40,000
Johnson & Johnson 15,000 1/18/00 60.00 61,423 23,437
MediaOne Group, Inc. 7,000 4/24/00 90.00 14,228 5,250
Methode Electronics, Inc., Cl. A 15,000 4/24/00 35.00 40,799 45,000
Optical Coating Laboratory, Inc. 6,000 5/22/00 250.00 249,562 445,500
Oracle Corp. 1,800 3/20/00 100.00 9,171 40,050
Praxair, Inc. 4,000 1/24/00 55.00 13,597 250
Rational Software Corp. 7,700 1/24/00 40.00 39,458 74,113
STMicroelectronics NV 3,000 4/24/00 140.00 49,033 76,125
Teradyne, Inc. 4,000 1/24/00 37.50 26,689 113,500
Time Warner, Inc. 6,400 6/19/00 80.00 19,007 32,000
Xerox Corp. 9,600 1/24/00 70.00 34,511 600
---------- ----------
$1,252,165 $2,036,344
========== ==========
</TABLE>
2. Non-income producing security.
3. Identifies issues considered to be illiquid or restricted--See Note 6 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 $10,188,075 or 1.76% of the Fund's net
assets as of December 31, 1999.
5. Principal amount is reported in U.S. Dollars, except for those denoted in
the following currencies:
AUD -- Australian Dollar GBP -- British Pound Sterling
CAD -- Canadian Dollar NZD -- New Zealand Dollar
DKK -- Danish Krone ZAR -- South African Rand
EUR -- Euro
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 or increasing rate
security.
8. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
9. Issuer is in default.
See accompanying Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=========================================================================================================
Assets
Investments, at value (cost $490,650,853)--see accompanying statement $576,085,947
- ---------------------------------------------------------------------------------------------------------
Cash 1,043,942
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 5,069,984
Shares of beneficial interest sold 34,787
Other 6,374
------------
Total assets 582,241,034
=========================================================================================================
Liabilities
Options written, at value (premiums received $1,252,165)--see accompanying statement 2,036,344
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 734,934
Investments purchased 664,056
Transfer and shareholder servicing agent fees 184
Trustees' compensation 49
Other 22,633
------------
Total liabilities 3,458,200
=========================================================================================================
Net Assets $578,782,834
============
=========================================================================================================
Composition of Net Assets
Paid-in capital $432,093,512
- ---------------------------------------------------------------------------------------------------------
Undistributed net investment income 25,784,656
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 36,252,948
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 84,651,718
------------
Net assets--applicable to 33,148,390 shares of beneficial interest outstanding $578,782,834
============
=========================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $17.46
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=========================================================================================================
Investment Income
Interest $25,857,230
- ---------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $24,091) 4,941,295
-----------
Total income 30,798,525
=========================================================================================================
Expenses
Management fees 4,271,996
- ---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 60,945
- ---------------------------------------------------------------------------------------------------------
Trustees' compensation 6,600
- ---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,105
- ---------------------------------------------------------------------------------------------------------
Other 7,362
-----------
Total expenses 4,349,008
Less expenses paid indirectly (5,741)
-----------
Net expenses 4,343,267
=========================================================================================================
Net Investment Income 26,455,258
=========================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 36,754,035
Closing and expiration of option contracts written 853,989
Foreign currency transactions (1,215,313)
-----------
Net realized gain 36,392,711
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 3,765,208
Translation of assets and liabilities denominated in foreign currencies (624,794)
-----------
Net change 3,140,414
-----------
Net realized and unrealized gain 39,533,125
=========================================================================================================
Net Increase in Net Assets Resulting from Operations $65,988,383
===========
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Multiple Strategies Fund/VA 17
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
==============================================================================================================================
Operations
Net investment income $ 26,455,258 $ 25,911,095
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain 36,392,711 29,540,227
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 3,140,414 (15,895,873)
------------ ------------
Net increase in net assets resulting from operations 65,988,383 39,555,449
==============================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (20,765,472) (5,964,037)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (30,037,334) (34,591,414)
==============================================================================================================================
Beneficial Interest Transactions
Net decrease in net assets resulting from
beneficial interest transactions (58,736,044) (14,211,527)
==============================================================================================================================
Net Assets
Total decrease (43,550,467) (15,211,529)
- ------------------------------------------------------------------------------------------------------------------------------
Beginning of period 622,333,301 637,544,830
------------ ------------
End of period (including undistributed net investment
income of $25,784,656 and $20,748,181, respectively) $578,782,834 $622,333,301
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
================================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $17.05 $17.01 $15.63 $14.55 $12.91
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .82 .71 .62 .72 .66
Net realized and unrealized gain 1.04 .42 1.95 1.45 2.00
- --------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 1.86 1.13 2.57 2.17 2.66
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.59) (.16) (.61) (.74) (.65)
Distributions from net realized gain (.86) (.93) (.58) (.35) (.37)
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (1.45) (1.09) (1.19) (1.09) (1.02)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.46 $17.05 $17.01 $15.63 $14.55
====== ====== ====== ====== ======
================================================================================================================================
Total Return, at Net Asset Value(1) 11.80% 6.66% 17.22% 15.50% 21.36%
================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $578,783 $622,333 $637,545 $484,285 $381,263
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $593,151 $640,131 $564,369 $428,277 $344,745
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 4.46% 4.05% 3.86% 4.89% 4.81%
Expenses 0.73% 0.76%(3) 0.75%(3) 0.77%(3) 0.77%(3)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 17% 43% 42% 40% 39%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $94,111,384 and $130,260,786, respectively.
See accompanying Notes to Financial Statements.
Oppenheimer Multiple Strategies Fund/VA 19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Multiple Strategies Fund/VA (the Fund) is a 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 Fund's investment objective is to seek a total investment
return, which includes current income and capital appreciation in the value of
its shares. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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.
- --------------------------------------------------------------------------------
Security Credit Risk. The Fund invests 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 Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of December 31, 1999, securities with an
aggregate market value of $65,000, representing 0.01% of the Fund's net assets,
were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
20 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
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 the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $653,311. Accumulated net
realized gain on investments was increased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Realized gains and losses on
investments and options written and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
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 Fund has 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 December 31, 1999 Year Ended December 31, 1998
------------------------------ ------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Sold 1,494,012 $ 25,019,610 3,352,415 $ 56,547,384
Dividends and/or distributions reinvested 3,209,274 50,802,806 2,387,019 40,555,451
Redeemed (8,052,445) (134,558,460) (6,714,957) (111,314,362)
---------- ------------- ---------- -------------
Net decrease (3,349,159) $ (58,736,044) (975,523) $ (14,211,527)
========== ============= ========== =============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities and options
written of $84,650,915 was composed of gross appreciation of $121,520,407, and
gross depreciation of $36,869,492.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. 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. The Fund's management fee for the
year ended December 31, 1999, was 0.72% of average annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
Oppenheimer Multiple Strategies Fund/VA 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transaction. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
================================================================================
6. Option Activity
The Fund 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 Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes 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 Fund 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.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives 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 Fund 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 Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
Call Options
------------------------------
Number of Amount of
Options Premiums
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1998 5,871 $ 1,686,387
Options written 7,204 3,421,612
Options closed or expired (7,188) (2,544,448)
Options exercised (3,535) (1,311,386)
------ -----------
Options outstanding as of December 31, 1999 2,352 $ 1,252,165
====== ===========
</TABLE>
22 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
7. Illiquid or Restricted Securities
As of December 31, 1999, 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 also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of December 31, 1999, was $1,878,948,
which represents 0.32% of the Fund's net assets, of which $6,241 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Unit as of
Acquisition Cost Per December 31,
Security Date Unit 1999
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. 9/29/98 $21.69 $31.05
</TABLE>
16 Oppenheimer Global Securities Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Global Securities
Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Global Securities Fund/VA (which is
a series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998 and the
financial highlights for the period January 1, 1995 to December 31, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's 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, 1999, 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
Global Securities Fund/VA as of December 31, 1999, 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 24, 2000
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
=======================================================================================
Common Stocks--89.1%
Basic Materials--1.1%
- ---------------------------------------------------------------------------------------
Chemicals--1.1%
- ---------------------------------------------------------------------------------------
International Flavors & Fragrances, Inc. 501,200 $ 18,920,300
- ---------------------------------------------------------------------------------------
Capital Goods--7.8%
- ---------------------------------------------------------------------------------------
Electrical Equipment--1.5%
Toshiba Corp. 3,388,000 25,849,946
- ---------------------------------------------------------------------------------------
Industrial Services--3.8%
Manpower, Inc. 437,800 16,472,225
- ---------------------------------------------------------------------------------------
Rentokil Initial plc 3,216,300 11,729,826
- ---------------------------------------------------------------------------------------
WPP Group plc 2,459,500 38,978,317
------------
67,180,368
- ---------------------------------------------------------------------------------------
Manufacturing--2.5%
Bombardier, Inc., Cl. B 787,500 16,133,058
- ---------------------------------------------------------------------------------------
Sidel SA 123,700 12,760,393
- ---------------------------------------------------------------------------------------
Societe BIC SA 319,437 14,524,525
------------
43,417,976
- ---------------------------------------------------------------------------------------
Communication Services--6.8%
- ---------------------------------------------------------------------------------------
Telecommunications: Long Distance--0.6%
MCI WorldCom, Inc.(1) 200,700 10,649,644
- ---------------------------------------------------------------------------------------
Telephone Utilities--2.7%
DDI Corp.(1) 600 8,216,766
- ---------------------------------------------------------------------------------------
Hellenic Telecommunication Organization SA 182,118 4,327,815
- ---------------------------------------------------------------------------------------
Portugal Telecom SA 719,000 7,880,019
- ---------------------------------------------------------------------------------------
Tele Norte Leste Participacoes SA (Telemar), Preference 791,770,000 21,257,041
- ---------------------------------------------------------------------------------------
Telstra Corp. Ltd. 1,245,400 6,774,926
------------
48,456,567
- ---------------------------------------------------------------------------------------
Telecommunications: Wireless--3.5%
NTT Mobile Communications Network, Inc. 636 24,449,574
- ---------------------------------------------------------------------------------------
Telecel-Comunicacoes Pessoais, S.A. 501,400 8,734,778
- ---------------------------------------------------------------------------------------
Telecom Italia Mobile SpA 2,294,400 25,607,736
- ---------------------------------------------------------------------------------------
Telesp Celular Participacoes SA, ADR 79,100 3,351,862
------------
62,143,950
- ---------------------------------------------------------------------------------------
Consumer Cyclicals--9.9%
- ---------------------------------------------------------------------------------------
Autos & Housing--5.9%
Autoliv, Inc., SDR 301,600 8,824,205
- ---------------------------------------------------------------------------------------
General Motors Corp. 205,300 14,922,744
- ---------------------------------------------------------------------------------------
Hanson plc 1,608,400 13,485,550
- ---------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 1,816,959 5,887,536
- ---------------------------------------------------------------------------------------
Porsche AG, Preference 16,600 43,770,336
- ---------------------------------------------------------------------------------------
Volkswagen AG 295,500 16,585,502
------------
103,475,873
</TABLE>
Oppenheimer Global Securities Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Leisure & Entertainment--1.2%
Hasbro, Inc. 478,200 $ 9,115,687
- ---------------------------------------------------------------------------------------
International Game Technology 558,400 11,342,500
------------
20,458,187
- ---------------------------------------------------------------------------------------
Media--1.1%
Reed International plc 1,599,200 11,974,566
- ---------------------------------------------------------------------------------------
Singapore Press Holdings Ltd. 364,000 7,889,763
------------
19,864,329
- ---------------------------------------------------------------------------------------
Retail: Specialty--1.7%
Circuit City Stores-Circuit City Group 274,000 12,347,125
- ---------------------------------------------------------------------------------------
Dixons Group plc 739,194 17,781,172
------------
30,128,297
- ---------------------------------------------------------------------------------------
Consumer Staples--10.5%
- ---------------------------------------------------------------------------------------
Beverages--0.7%
Cadbury Schweppes plc 2,036,400 12,303,876
- ---------------------------------------------------------------------------------------
Broadcasting--7.4%
Canal Plus 282,404 41,068,533
- ---------------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored GDR(1) 424,300 28,958,475
- ---------------------------------------------------------------------------------------
ProSieben Media AG, Preference 235,948 13,416,377
- ---------------------------------------------------------------------------------------
Television Broadcasts Ltd. 1,569,000 10,697,498
- ---------------------------------------------------------------------------------------
Television Francaise 1 56,075 29,345,609
- ---------------------------------------------------------------------------------------
Telewest Communications plc(1) 1,291,058 6,888,043
------------
130,374,535
- ---------------------------------------------------------------------------------------
Entertainment--0.9%
Disney (Walt) Co. 219,700 6,426,225
- ---------------------------------------------------------------------------------------
Nintendo Co. Ltd. 54,000 8,969,187
------------
15,395,412
- ---------------------------------------------------------------------------------------
Food & Drug Retailers--0.4%
Dairy Farm International Holdings Ltd. 8,172,194 7,354,975
- ---------------------------------------------------------------------------------------
Household Goods--1.1%
Wella AG, Preference 910,700 19,980,315
- ---------------------------------------------------------------------------------------
Energy--0.4%
- ---------------------------------------------------------------------------------------
Oil: International--0.4%
BP Amoco plc, ADR 107,288 6,363,519
- ---------------------------------------------------------------------------------------
Financial--9.1%
- ---------------------------------------------------------------------------------------
Banks--1.5%
Australia & New Zealand Banking Group Ltd. 1,958,600 14,259,033
- ---------------------------------------------------------------------------------------
Royal Bank of Scotland Group (The) plc 340,000 6,009,018
- ---------------------------------------------------------------------------------------
UniCredito Italiano SpA 1,303,100 6,399,824
------------
26,667,875
</TABLE>
6 Oppenheimer Global Securities Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Diversified Financial--5.1%
American Express Co. 99,000 $ 16,458,750
- ---------------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 139,700 3,833,019
- ---------------------------------------------------------------------------------------
Citigroup, Inc. 295,700 16,429,831
- ---------------------------------------------------------------------------------------
Credit Saison Co. Ltd. 390,000 6,790,570
- ---------------------------------------------------------------------------------------
Fannie Mae 190,000 11,863,125
- ---------------------------------------------------------------------------------------
Housing Development Finance Corp. Ltd. 222,900 1,463,821
- ---------------------------------------------------------------------------------------
ICICI Ltd., Sponsored ADR(1) 1,008,700 14,615,825
- ---------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 226,000 19,139,375
------------
90,594,316
- ---------------------------------------------------------------------------------------
Insurance--2.5%
- ---------------------------------------------------------------------------------------
AEGON NV 143,400 13,840,069
- ---------------------------------------------------------------------------------------
Allied Zurich plc 1,048,600 12,357,835
- ---------------------------------------------------------------------------------------
American International Group, Inc. 56,937 6,156,313
- ---------------------------------------------------------------------------------------
AXA SA 87,300 12,159,643
------------
44,513,860
- ---------------------------------------------------------------------------------------
Healthcare--12.3%
- ---------------------------------------------------------------------------------------
Healthcare/Drugs--10.0%
ALZA Corp., Cl. A(1) 419,900 14,539,037
- ---------------------------------------------------------------------------------------
Amgen, Inc.(1) 294,200 17,670,387
- ---------------------------------------------------------------------------------------
Eisai Co. Ltd. 704,000 13,531,840
- ---------------------------------------------------------------------------------------
Elan Corp. plc, ADR(1) 614,800 18,136,600
- ---------------------------------------------------------------------------------------
Fresenius AG, Preference 142,419 26,086,140
- ---------------------------------------------------------------------------------------
Genset, Sponsored ADR(1) 938,600 17,892,062
- ---------------------------------------------------------------------------------------
Genzyme Corp. (General Division)(1) 177,400 7,983,000
- ---------------------------------------------------------------------------------------
Gilead Sciences, Inc.(1) 172,700 9,347,387
- ---------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 154,800 8,649,450
- ---------------------------------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(1) 207,800 25,351,600
- ---------------------------------------------------------------------------------------
Pliva d.d., Sponsored GDR(2) 810,300 10,574,415
- ---------------------------------------------------------------------------------------
Taisho Pharmaceutical Co. 210,000 6,162,575
------------
175,924,493
- ---------------------------------------------------------------------------------------
Healthcare/Supplies & Services--2.3%
Affymetrix, Inc.(1) 135,300 22,958,719
- ---------------------------------------------------------------------------------------
Bard (C.R.), Inc. 178,400 9,455,200
- ---------------------------------------------------------------------------------------
Quintiles Transnational Corp.(1) 458,900 8,575,694
------------
40,989,613
- ---------------------------------------------------------------------------------------
Technology--30.7%
- ---------------------------------------------------------------------------------------
Computer Hardware--2.9%
International Business Machines Corp. 145,800 15,746,400
- ---------------------------------------------------------------------------------------
Sun Microsystems, Inc.(1) 447,200 34,630,050
------------
50,376,450
</TABLE>
Oppenheimer Global Securities Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Computer Services--4.0%
Cap Gemini SA 115,600 $ 29,317,631
- ------------------------------------------------------------------------------------------------------------------------
Getronics NV 514,000 40,969,324
--------------
70,286,955
- ------------------------------------------------------------------------------------------------------------------------
Computer Software--5.8%
Cadence Design Systems, Inc.(1) 1,572,600 37,742,400
- ------------------------------------------------------------------------------------------------------------------------
Lernout & Hauspie Speech Products NV(1) 289,800 13,403,250
- ------------------------------------------------------------------------------------------------------------------------
Oracle Corp.(1) 339,000 37,989,187
- ------------------------------------------------------------------------------------------------------------------------
Sybase, Inc.(1) 345,900 5,880,300
- ------------------------------------------------------------------------------------------------------------------------
Synopsys, Inc.(1) 110,700 7,389,225
--------------
102,404,362
- ------------------------------------------------------------------------------------------------------------------------
Communications Equipment--11.1%
Alcatel 133,100 30,541,010
- ------------------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 161,350 17,284,619
- ------------------------------------------------------------------------------------------------------------------------
L.M. Ericsson Telephone Co., Cl. B, ADR 596,400 39,176,025
- ------------------------------------------------------------------------------------------------------------------------
Nokia Corp., A Shares, Sponsored ADR(1) 95,900 18,221,000
- ------------------------------------------------------------------------------------------------------------------------
QUALCOMM, Inc.(1) 385,100 67,825,737
- ------------------------------------------------------------------------------------------------------------------------
Scientific-Atlanta, Inc. 402,100 22,366,813
--------------
195,415,204
- ------------------------------------------------------------------------------------------------------------------------
Electronics--6.9%
Hoya Corp. 83,000 6,535,753
- ------------------------------------------------------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics NV 216,600 29,428,134
- ------------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp.(1) 1,167,400 49,979,313
- ------------------------------------------------------------------------------------------------------------------------
STMicroelectronics NV, NY Registered Shares 229,800 34,800,338
--------------
120,743,538
- ------------------------------------------------------------------------------------------------------------------------
Transportation--0.5%
- ------------------------------------------------------------------------------------------------------------------------
Shipping--0.5%
Peninsular & Oriental Steam Navigation Co. 575,100 9,597,341
- ------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,026,351,138) 1,569,832,076
<CAPTION>
Principal
Amount
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements--8.3%
- ------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%, dated 12/31/99,
to be repurchased at $145,933,435 on 1/3/00, collateralized by U.S. Treasury Bonds,
5.25%-12%, 2/15/01-11/15/28, with a value of $57,264,247 and U.S. Treasury Nts.,
5%-7.50%, 12/31/00-2/15/07, with a value of $91,638,429 (Cost $145,900,000) $ 145,900,000 145,900,000
- ------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,172,251,138) 97.4% 1,715,732,076
- ------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 2.6 46,634,376
-------------- --------------
Net Assets 100.0% $1,762,366,452
============== ==============
</TABLE>
8 Oppenheimer Global Securities Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distribution of investments representing geographic diversification, as a
percentage of total investments at value, is as follows:
<TABLE>
<CAPTION>
Geographic Diversification Market Value Percent
<S> <C> <C>
- ---------------------------------------------------------------------------------------
United States $ 736,854,433 42.8%
- ---------------------------------------------------------------------------------------
France 222,409,744 13.0
- ---------------------------------------------------------------------------------------
Great Britain 156,118,512 9.1
- ---------------------------------------------------------------------------------------
Germany 119,838,669 7.0
- ---------------------------------------------------------------------------------------
Japan 100,506,211 5.9
- ---------------------------------------------------------------------------------------
The Netherlands 84,237,526 4.9
- ---------------------------------------------------------------------------------------
Sweden 48,000,230 2.8
- ---------------------------------------------------------------------------------------
Italy 32,007,560 1.9
- ---------------------------------------------------------------------------------------
Mexico 28,958,475 1.7
- ---------------------------------------------------------------------------------------
Brazil 24,608,904 1.4
- ---------------------------------------------------------------------------------------
Australia 21,033,959 1.2
- ---------------------------------------------------------------------------------------
Finland 18,221,000 1.1
- ---------------------------------------------------------------------------------------
Ireland 18,136,600 1.1
- ---------------------------------------------------------------------------------------
Portugal 16,614,798 1.0
- ---------------------------------------------------------------------------------------
Canada 16,133,058 0.9
- ---------------------------------------------------------------------------------------
Singapore 15,244,737 0.9
- ---------------------------------------------------------------------------------------
Belgium 13,403,250 0.8
- ---------------------------------------------------------------------------------------
India 11,917,146 0.7
- ---------------------------------------------------------------------------------------
Hong Kong 10,697,498 0.6
- ---------------------------------------------------------------------------------------
Croatia 10,574,415 0.6
- ---------------------------------------------------------------------------------------
Argentina 5,887,536 0.3
- ---------------------------------------------------------------------------------------
Greece 4,327,815 0.3
-------------- -----
Total $1,715,732,076 100.0%
============== =====
</TABLE>
1. Non-income producing security.
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 $10,574,415 or 0.60% of the Fund's net
assets as of December 31, 1999.
See accompanying Notes to Financial Statements.
Oppenheimer Global Securities Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
================================================================================================
Assets
Investments, at value (cost $1,172,251,138)--see accompanying statement $1,715,732,076
- ------------------------------------------------------------------------------------------------
Cash 1,077,591
- ------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency exchange contracts 7,046
- ------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 53,869,505
Shares of beneficial interest sold 1,265,029
Interest, dividends 1,158,012
Other 11,481
--------------
Total assets 1,773,120,740
================================================================================================
Liabilities
Unrealized depreciation on foreign currency exchange contracts 7,821
- ------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 9,066,120
Shares of beneficial interest redeemed 1,537,479
Trustees' compensation 1,967
Transfer and shareholder servicing agent fees 184
Other 140,717
--------------
Total liabilities 10,754,288
================================================================================================
Net Assets $1,762,366,452
==============
================================================================================================
Composition of Net Assets
Paid-in capital $ 924,735,645
- ------------------------------------------------------------------------------------------------
Overdistributed net investment income (567,744)
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 294,753,467
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 543,445,084
--------------
Net assets--applicable to 52,745,360 shares of beneficial interest outstanding $1,762,366,452
==============
================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $33.41
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Global Securities Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------
Investment Income
Dividends (net of foreign withholding taxes of $712,662) $ 13,352,150
- ----------------------------------------------------------------------------------------------
Interest 2,466,093
------------
Total income 15,818,243
==============================================================================================
Expenses
Management fees 8,336,850
- ----------------------------------------------------------------------------------------------
Custodian fees and expenses 270,778
- ----------------------------------------------------------------------------------------------
Trustees' compensation 11,193
- ----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,104
- ----------------------------------------------------------------------------------------------
Other 43,962
------------
Total expenses 8,664,887
Less expenses paid indirectly (6,321)
------------
Net expenses 8,658,566
==============================================================================================
Net Investment Income 7,159,677
==============================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 320,164,650
Foreign currency transactions (29,286,569)
------------
Net realized gain 290,878,081
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 363,894,982
Translation of assets and liabilities denominated in foreign currencies (23,520,911)
------------
Net change 340,374,071
------------
Net realized and unrealized gain 631,252,152
==============================================================================================
Net Increase in Net Assets Resulting from Operations $638,411,829
============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Global Securities Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
===============================================================================================================
Operations
Net investment income $ 7,159,677 $ 12,887,134
- ---------------------------------------------------------------------------------------------------------------
Net realized gain 290,878,081 36,962,992
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 340,374,071 86,460,026
-------------- --------------
Net increase in net assets resulting from operations 638,411,829 136,310,152
===============================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (7,159,677) (21,307,082)
- ---------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income (6,137,505) --
- ---------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (37,262,160) (80,203,951)
===============================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 39,484,831 141,119,795
===============================================================================================================
Net Assets
Total increase 627,337,318 175,918,914
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 1,135,029,134 959,110,220
-------------- --------------
End of period [including undistributed (overdistributed) net investment
income of $(567,744) and $11,592,206, respectively] $1,762,366,452 $1,135,029,134
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Global Securities Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $22.07 $21.37 $17.67 $15.00 $15.09
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .14 .24 .25 .15 .12
Net realized and unrealized gain 12.21 2.64 3.68 2.52 .19
- ---------------------------------------------------------------------------------------------------------------------
Total income from investment operations 12.35 2.88 3.93 2.67 .31
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.14) (.46) (.23) -- --
Dividends in excess of net investment income (.13) -- -- -- --
Distributions from net realized gain (.74) (1.72) -- -- (.40)
- ---------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (1.01) (2.18) (.23) -- (.40)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.41 $22.07 $21.37 $17.67 $15.00
====== ====== ====== ====== ======
=====================================================================================================================
Total Return, at Net Asset Value(1) 58.48% 14.11% 22.42% 17.80% 2.24%
=====================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,762 $1,135 $959 $582 $361
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,251 $1,055 $802 $467 $332
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.57% 1.22% 1.51% 1.09% 0.86%
Expenses 0.69% 0.74%(3) 0.76%(3) 0.81%(3) 0.89%(3)
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 64% 81% 67% 90% 131%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $772,038,559 and $956,384,357, respectively.
See accompanying Notes to Financial Statements.
Oppenheimer Global Securities Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Global Securities Fund/VA (the Fund) is a 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 Fund's investment objective is to seek long-term capital
appreciation by investing a substantial portion of assets in securities of
foreign issuers, "growth-type" companies, cyclical industries and special
situations that are considered to have appreciation possibilities. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
14 Oppenheimer Global Securities Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in paid-in capital of $6,653, a decrease in undistributed net
investment income of $6,022,445, and an increase in accumulated net realized
gain on investments of $6,029,098.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. 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.
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 Fund has 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 December 31, 1999 Year Ended December 31, 1998
----------------------------- -----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Sold 14,212,563 $ 365,308,523 11,735,029 $ 248,354,528
Dividends and distributions reinvested 2,349,412 50,559,342 4,877,993 101,511,033
Redeemed (15,245,808) (376,383,034) (10,067,775) (208,745,766)
----------- ------------- ----------- -------------
Net increase 1,316,167 $ 39,484,831 6,545,247 $ 141,119,795
=========== ============= =========== =============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities of
$543,480,938 was composed of gross appreciation of $590,197,031, and gross
depreciation of $46,716,093.
Oppenheimer Global Securities Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 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 the year ended December 31, 1999 was 0.67% of average annual net assets.
================================================================================
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of December 31, 1999, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Contract Description Dates Amounts (000s) December 31, 1999 Appreciation Depreciation
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
British Pound Sterling (GBP) 1/3/00 164 GBP $ 264,200 $ 554 $ --
British Pound Sterling (GBP) 1/3/00 285 GBP 461,002 -- 860
Euro (EUR) 1/3/00 209 EUR 210,398 538 --
Japanese Yen (JPY) 1/3/00 163,044 JPY 1,596,537 3,186 --
Japanese Yen (JPY) 1/3/00 9,642 JPY 94,379 -- 202
------ ------
4,278 1,062
------ ------
Contracts to Sell
- -----------------
British Pound Sterling (GBP) 1/3/00 2,135 GBP 3,449,810 2,768 --
Euro (EUR) 1/3/00 2,933 EUR 2,959,230 -- 6,759
------ ------
2,768 6,759
------ ------
Total Unrealized Appreciation and Depreciation $7,046 $7,821
====== ======
</TABLE>
Oppenheimer Strategic Bond Fund/VA 35
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Strategic Bond Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Strategic Bond Fund/VA (which is a
series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998 and the
financial highlights for the period five years prior, to December 31, 1999.
These financial statements and financial highlights are the responsibility of
the Fund's 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, 1999, 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
Strategic Bond Fund/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
============================================================================================================
Mortgage-Backed Obligations--22.3%
- ------------------------------------------------------------------------------------------------------------
Government Agency--18.5%
- ------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--8.8%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 $ 793,067 $ 819,334
- ------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security,
Series 194, Cl. IO, 9.40%-9.462%, 4/1/28(2) 20,681,402 6,913,728
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 5/1/29 1,555,497 1,465,559
7%, 1/25/29(3) 6,200,000 5,994,656
7.50%, 1/25/28(3) 3,200,000 3,164,000
7.50%, 8/1/25 405,275 401,730
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1993-202, Cl. PH, 6.50%, 2/25/22 4,500,000 4,373,415
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 276, Cl. 2, 9.065%, 10/1/24(2) 2,834,208 875,948
Trust 294, Cl. 2, 11.826%, 2/1/28(2) 2,273,267 747,692
-----------
24,756,062
- ------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--9.7%
Government National Mortgage Assn.:
6.125%, 11/20/25 174,462 177,215
7%, 3/15/28-7/15/28 15,023,969 14,507,447
7.50%, 2/15/27 2,469,631 2,441,848
8%, 11/15/25-5/15/26 2,222,437 2,246,631
- ------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Gtd. Multiclass Mtg.
Participation Certificates, Series 1999-27, Cl. PQ, 7.50%, 8/16/28 8,220,125 8,044,163
-----------
27,417,304
- ------------------------------------------------------------------------------------------------------------
Private--3.8%
- ------------------------------------------------------------------------------------------------------------
Commercial--2.5%
AMMC, Collateralized Bond Obligations, Sub. Bonds,
Series I, Cl. D1, 13.602%, 1/15/12(4) 200,000 200,000
- ------------------------------------------------------------------------------------------------------------
AMRESCO Commercial Mortgage Funding I Corp.,
Multiclass Mtg. Pass-Through Certificates, Series 1997-C1, Cl. G, 7%, 6/17/29(5) 100,000 76,937
- ------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(6) 375,000 267,422
Series 1997-D5, Cl. B1, 6.93%, 2/14/41 300,000 198,984
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 1,250,000 800,781
- ------------------------------------------------------------------------------------------------------------
CRIIMI MAE Trust I, Collateralized Mtg. Obligations,
Series 1996-C1, Cl. A2, 7.56%, 8/30/05(4) 100,000 93,031
- ------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Series 1994-C1, Cl. 2-G, 8.70%, 9/25/25 153,594 147,546
- ------------------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust,
Commercial Mtg. Pass-Through Certificates, Series 1997-C2, Cl. F, 7.50%, 9/18/15 225,000 165,164
- ------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Collateralized Mtg. Obligations:
Series 1997-C1, Cl. G, 7.414%, 11/15/11 440,000 309,787
Series 1997-C2, Cl. F, 6.75%, 4/16/29 250,000 150,078
</TABLE>
4 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Commercial (continued)
General Motors Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security,
Series 1997-C1, Cl. X, 8.726%, 7/15/27(2) $4,005,708 $ 301,680
- ------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1995-C2, Cl. D, 7.681%, 6/15/21(6) 236,084 232,304
- ------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. F, 7.421%, 2/15/28(5)(6) 162,744 117,735
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(5) 150,000 114,844
Series 1997-RR, Cl. D, 7.671%, 4/30/39(5) 450,024 316,072
Series 1997-RR, Cl. E, 7.718%, 4/30/39(5)(6) 300,016 185,213
Series 1997-RR, Cl. F, 7.649%, 4/30/39(5) 600,032 306,204
Series 1997-XL1, Cl. G, 7.695%, 10/3/30(5) 390,000 315,656
- ------------------------------------------------------------------------------------------------------------
NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates,
Series DMC, Cl. C, 8.921%, 8/12/11(5) 200,000 180,938
- ------------------------------------------------------------------------------------------------------------
NC Finance Trust, Collateralized Mtg. Obligations, Series 1999-I,
Cl. ECFD, 8.75%, 12/25/28 407,527 395,938
- ------------------------------------------------------------------------------------------------------------
Nykredit AS, 7% Cv. Bonds, 10/1/29DKK 6,935,000 927,330
- ------------------------------------------------------------------------------------------------------------
Option One Mortgage Trust, Collateralized Mtg. Obligations,
Series 1999-1A, 10.06%, 3/1/29(5) 291,866 287,671
- ------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. D, 9.45%, 5/25/24 57,792 57,115
Series 1994-C2, Cl. E, 8%, 4/25/25 973,568 949,534
- ------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1995-C4, Cl. E, 8.703%, 6/25/26(5)(6) 46,290 44,048
-----------
7,142,012
- ------------------------------------------------------------------------------------------------------------
Multi-Family--0.5%
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through Certificates, Series 1997-MC1,
Cl. F, 7.452%, 5/20/07(5) 63,720 48,208
Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1,
Cl. G, 7.15%, 6/15/06(4) 800,000 617,500
- ------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-CL,
Cl. F, 9.078%, 1/20/06(6) 1,000,000 738,125
-----------
1,403,833
- ------------------------------------------------------------------------------------------------------------
Residential--0.8%
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997:
Cl. D, 8.126%, 5/25/08(5)(6) 350,000 273,000
Cl. E, 8.126%, 2/25/11(5)(6) 600,000 402,000
- ------------------------------------------------------------------------------------------------------------
Residential Asset Securitization Trust, Collateralized Mtg. Obligations,
Non-Accelerated Security, Series 1997-A2, Cl. A8, 7.75%, 4/25/27 1,000,000 986,250
- ------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-B,
Cl. 1, 6.581%, 4/25/26(5) 378,900 249,956
- ------------------------------------------------------------------------------------------------------------
Salomon, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1998-1A, 5%, 12/25/00(5) 189,699 182,823
-----------
2,094,029
-----------
Total Mortgage-Backed Obligations (Cost $65,313,699) 62,813,240
============================================================================================================
U.S. Government Obligations--15.8%
- ------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6.50%, 11/15/26(7)(8) 5,200,000 5,070,000
8.125%, 8/15/21 1,415,000 1,624,155
11.875%, 11/15/03 1,000,000 1,180,938
STRIPS, 5.76%, 2/15/19(9) 6,500,000 1,783,704
STRIPS, 5.33%, 5/15/17(9) 6,000,000 1,850,442
STRIPS, 6.24%, 2/15/20(9) 5,704,000 4,028,085
</TABLE>
Oppenheimer Strategic Bond Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
============================================================================================================
U.S. Government Obligations (continued)
- ------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.625%, 11/30/00 $ 9,705,000 $ 9,671,644
5.875%, 8/15/09 2,750,000 2,664,923
6.50%, 10/15/06 13,000,000 12,967,500
7%, 7/15/06 3,590,000 3,678,630
-----------
Total U.S. Government Obligations (Cost $47,265,561) 44,520,021
- ------------------------------------------------------------------------------------------------------------
Foreign Government Obligations--16.3%
- ------------------------------------------------------------------------------------------------------------
Argentina--1.7%
Argentina (Republic of) Bonds:
Bonos de Consolidacion de Deudas, Series I, 2.868%, 4/1/07(6)ARP 1,736,732 1,215,876
Series L, 6.812%, 3/31/05(6) 281,600 256,960
- ------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Global Unsec. Unsub. Bonds, Series BGL5,
11.375%, 1/30/17 789,000 787,027
- ------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Nts.:
11%, 12/4/05 1,015,000 1,002,312
Series REGS, 11.75%, 2/12/07ARP 390,000 355,911
- ------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Unsec. Unsub. Medium-Term Nts., 8.75%, 7/10/02ARP 970,000 875,513
- ------------------------------------------------------------------------------------------------------------
Banco Hipotecario Nacional (Argentina) Medium-Term Unsec. Nts.,
Series 3, 10.625%, 8/7/06(5) 314,000 313,215
- ------------------------------------------------------------------------------------------------------------
City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04ARP 160,000 133,613
-----------
4,940,427
- ------------------------------------------------------------------------------------------------------------
Australia--0.0%
Australia Postal Corp. Unsec. Unsub. Nts., 6%, 3/25/09AUD 180,000 107,551
- ------------------------------------------------------------------------------------------------------------
Brazil--1.8%
Brazil (Federal Republic of) Bonds:
10.125%, 5/15/27 236,000 199,125
11.625%, 4/15/04 675,000 676,687
- ------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, Series RG, 5.938%, 4/15/12(6) 1,000,000 747,500
- ------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Capitalization Bonds, 6.916%, 4/15/14 2,387,597 1,799,651
- ------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Debt Conversion Bonds, 7%, 4/15/12(6) 593,000 443,267
- ------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Eligible Interest Bonds, 6.937%, 4/15/06(6) 789,600 696,822
- ------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Gtd. Bonds, 7%, 4/15/09(6) 480,000 391,800
-----------
4,954,852
- ------------------------------------------------------------------------------------------------------------
Bulgaria--0.6%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.50%, 7/28/24(6) 908,000 727,535
- ------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds,
Tranche A, 3%, 7/28/12 (6) 1,359,000 981,877
-----------
1,709,412
- ------------------------------------------------------------------------------------------------------------
Canada--0.3%
Canada (Government of) Bonds, 7.25%, 6/1/03CAD 1,140,000 813,848
- ------------------------------------------------------------------------------------------------------------
Colombia--0.4%
Colombia (Republic of) Bonds, 9.75%, 4/23/09 1,000,000 958,750
- ------------------------------------------------------------------------------------------------------------
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 150,000 127,125
-----------
1,085,875
- ------------------------------------------------------------------------------------------------------------
Finland--0.2%
Finland (Republic of) Bonds, 9.50%, 3/15/04EUR 504,563 593,424
</TABLE>
6 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
France--0.2%
France (Government of) Bonds, Obligations Assimilables du Tresor,
5.50%, 10/25/07EUR 566,906 $ 574,528
- -----------------------------------------------------------------------------------------------------------
Germany--0.6%
Germany (Republic of) Bonds:
6.75%, 5/13/04EUR 690,000 743,997
Series 98, 5.25%, 1/4/08EUR 945,000 946,673
----------
1,690,670
- -----------------------------------------------------------------------------------------------------------
Great Britain--0.6%
United Kingdom Treasury Nts., 8%, 6/10/03GBP 1,070,000 1,813,287
- -----------------------------------------------------------------------------------------------------------
Greece--0.3%
Hellenic (Republic of) Bonds, 8.60%, 3/26/08GRD 207,200,000 713,012
- -----------------------------------------------------------------------------------------------------------
Hungary--0.3%
Hungary (Government of) Bonds, Series 01/H, 13.50%, 6/12/01HUF 213,220,000 859,615
- -----------------------------------------------------------------------------------------------------------
Italy--0.9%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
6%, 11/1/07EUR 455,000 472,382
8.50%, 1/1/04EUR 964,481 1,067,720
8.75%, 7/1/06EUR 766,330 913,142
10.50%, 4/1/05EUR 90,379 111,433
----------
2,564,677
- -----------------------------------------------------------------------------------------------------------
Ivory Coast--0.1%
Ivory Coast (Government of) Front Loaded Interest Reduction Bonds,
2%, 3/29/18(6) 524,000 96,940
Ivory Coast (Government of) Past Due Interest Bonds, 2%, 3/29/18(4)(6) 564,987 134,185
----------
231,125
- -----------------------------------------------------------------------------------------------------------
Japan--0.6%
Japan (Government of) Unsec. Bonds, Series 137, 6.50%, 3/20/01JPY 157,000,000 1,649,091
- -----------------------------------------------------------------------------------------------------------
Jordan--0.0%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5.50%, 12/23/23(6) 60,000 40,650
- -----------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Disc. Bonds, 7%, 12/23/23(6) 116,000 81,780
----------
122,430
- -----------------------------------------------------------------------------------------------------------
Mexico--1.7%
United Mexican States Bonds:
6.63%, 12/31/19FRF 7,500,000 980,959
11.375%, 9/15/16 1,070,000 1,213,487
11.50%, 5/15/26 175,000 209,125
- -----------------------------------------------------------------------------------------------------------
United Mexican States Collateralized Fixed Rate Par Bonds:
Series W-A, 6.25%, 12/31/19 950,000 750,500
Series W-B, 6.25%, 12/31/19 1,900,000 1,501,000
- -----------------------------------------------------------------------------------------------------------
United Mexican States Disc. Bonds, Series C, 6.836%, 12/31/19(6) 250,000 234,687
----------
4,889,758
- -----------------------------------------------------------------------------------------------------------
Nigeria--0.1%
Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 553,759 349,906
- -----------------------------------------------------------------------------------------------------------
Norway--0.8%
Norway (Government of) Bonds, 9.50%, 10/31/02NOK 17,040,000 2,313,165
- -----------------------------------------------------------------------------------------------------------
Panama--0.4%
Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(6) 843,000 661,755
- -----------------------------------------------------------------------------------------------------------
Panama (Republic of) Past Due Interest Debs., 5.819%, 7/17/16(6) 588,447 465,609
----------
1,127,364
</TABLE>
Oppenheimer Strategic Bond Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Peru--0.7%
Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4.50%, 3/7/17(6) $ 600,000 $ 415,500
- ------------------------------------------------------------------------------------------------------------
Peru (Republic of) Sr. Nts., Zero Coupon, 4.52%, 2/28/16(9) 3,168,653 1,500,991
-----------
1,916,491
- ------------------------------------------------------------------------------------------------------------
Poland--1.0%
Poland (Republic of) Bonds:
12%, 6/12/01PLZ 4,016,000 936,743
Series 1000, 13%, 10/12/00PLZ 4,111,000 968,844
Series 1003, 12%, 10/12/03PLZ 1,010,000 240,359
Series 2 yr., 14%, 2/12/00PLZ 1,000,000 239,952
- ------------------------------------------------------------------------------------------------------------
Poland (Republic of) Past Due Interest Bonds, 6%, 10/27/14(6) 370,000 328,375
-----------
2,714,273
- ------------------------------------------------------------------------------------------------------------
Russia--1.1%
Russia (Government of) Debs., 6.906%, 12/15/15(11)(15) 24,195 4,385
- ------------------------------------------------------------------------------------------------------------
Russia (Government of) Principal Loan Debs., Series 24 yr., 6.906%,
12/15/20(11)(15) 5,190,000 841,753
- ------------------------------------------------------------------------------------------------------------
Russia (Government of) Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03 849,000 623,750
- ------------------------------------------------------------------------------------------------------------
Russia (Government of) Unsec. Bonds, 11%, 7/24/18 593,000 357,283
- ------------------------------------------------------------------------------------------------------------
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05 1,180,000 734,550
12.75%, 6/24/28 670,000 450,274
-----------
3,011,995
- ------------------------------------------------------------------------------------------------------------
South Africa--0.5%
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10ZAR 8,242,000 1,290,887
- ------------------------------------------------------------------------------------------------------------
Spain--0.2%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado:
4.50%, 7/30/04EUR 390,786 385,917
6%, 1/31/08EUR 73,323 76,111
-----------
462,028
- ------------------------------------------------------------------------------------------------------------
Turkey--0.3%
Turkey (Republic of) Sr. Unsub. Bonds, 12.375%, 6/15/09 800,000 860,000
- ------------------------------------------------------------------------------------------------------------
Venezuela--0.9%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27 1,559,000 1,018,651
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Disc. Bonds, Series DL, 7%, 12/18/07(6) 1,481,142 1,170,103
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds,
Series B, 6.875%, 3/31/07(6) 42,857 33,643
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) New Money Bonds, Series A, 7.125%, 12/18/05(6) 352,941 276,618
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Unsec. Bonds, 13.625%, 8/15/18 150,000 135,375
-----------
2,634,390
- ------------------------------------------------------------------------------------------------------------
Vietnam--0.0%
Vietnam (Government of) Bonds, 3%, 3/12/28(5)(6) 54,000 18,225
-----------
Total Foreign Government Obligations (Cost $46,664,753) 46,012,306
============================================================================================================
Loan Participations--1.0%
- ------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.,
Tranche 1, 6.812%, 9/4/06(5)(6) 72,000 55,890
- ------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Trust III Nts., Tranche 3:
1.063%, 3/4/10(5)(6)JPY 76,905,000 387,421
6.812%, 3/4/10(5)(6) 457,000 328,469
- ------------------------------------------------------------------------------------------------------------
Central Bank of Indonesia Gtd. Nts., Series 4, 8.625%, 8/25/02(5)(6) 300,000 265,500
</TABLE>
8 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
==========================================================================================================
Loan Participations (continued)
- ----------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 2%, 1/1/09(5)(6) $ 539,523 $ 488,269
Tranche B, 6.844%, 1/1/09(5)(6) 160,000 153,200
- ----------------------------------------------------------------------------------------------------------
PT Bank Ekspor Impor Indonesia Nts., Series 4 yr., 9.406%, 8/25/02(5)(6) 300,000 265,500
- ----------------------------------------------------------------------------------------------------------
PT Lippo Bank Nts., 9.406%, 8/25/02(5)(6) 250,000 221,250
- ----------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 7.955%, 4/28/02 (representing a
basket of reference loans and a total return swap between
Chase Manhattan Bank and the Trust)(5)(6) 750,000 736,900
----------
Total Loan Participations (Cost $2,579,408) 2,902,399
==========================================================================================================
Corporate Bonds and Notes--39.0%
- ----------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.0%
Amtran, Inc.:
9.625% Nts., 12/15/05 100,000 96,500
10.50% Sr. Nts., 8/1/04 150,000 150,750
- ----------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 300,000 288,000
9.375% Sr. Unsec. Nts., 11/15/06 300,000 291,000
10.75% Sr. Nts., 8/1/05 125,000 128,125
- ----------------------------------------------------------------------------------------------------------
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 300,000 283,500
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 1/1/01(5) 175,000 162,750
- ----------------------------------------------------------------------------------------------------------
Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 750,000 640,312
- ----------------------------------------------------------------------------------------------------------
Greater Toronto Airports Authority, 5.40% Debs., 12/3/02CAD 240,000 161,911
- ----------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(5) 82,427 84,233
- ----------------------------------------------------------------------------------------------------------
Pentacon, Inc., 12.25% Sr. Unsec. Nts., Series B, 4/1/09 500,000 452,500
- ----------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07 200,000 189,000
----------
2,928,581
- ----------------------------------------------------------------------------------------------------------
Chemicals--1.4%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 150,000 38,250
- ----------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09(4) 600,000 624,000
10.125% Sr. Unsec. Sub. Nts., 7/1/09EUR 300,000 320,790
Zero Coupon Sr. Disc. Nts., 13.09%, 12/31/09(4)(9) 850,000 260,312
- ----------------------------------------------------------------------------------------------------------
Lyondell Chemical Co., 10.875% Sr. Sub. Nts., 5/1/09 1,000,000 1,035,000
- ----------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 140,000 145,600
- ----------------------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 175,000 135,625
- ----------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 150,000 119,250
- ----------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 100,000 97,500
- ----------------------------------------------------------------------------------------------------------
Polytama International Finance BV, 11.25% Sec. Nts., 6/15/07(5) 136,248 20,097
- ----------------------------------------------------------------------------------------------------------
Reliance Industries Ltd., 10.50% Bonds, 8/6/46 250,000 236,736
- ----------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 425,000 429,250
- ----------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 50,000 37,000
11.75% Sr. Unsec. Sub. Nts., 8/15/06 190,000 143,450
12.375% Sr. Sec. Nts., Series B, 7/15/06 400,000 416,000
----------
4,058,860
</TABLE>
Oppenheimer Strategic Bond Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Consumer Durables--0.1%
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 $200,000 $ 147,000
- ------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 12% Unsec. Nts., 7/15/05(5) 55,500 30,525
- ------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(5) 100,000 109,658
-----------
287,183
- ------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--0.5%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs., 7/1/09(10) 150,000 71,625
10.50% Sr. Unsec. Nts., 7/1/08 100,000 89,500
- ------------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 405,000 407,025
- ------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(11) 350,000 19,250
- ------------------------------------------------------------------------------------------------------------
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 315,000 152,775
- ------------------------------------------------------------------------------------------------------------
Indorayon International Finance Co. BV, 10% Gtd. Unsec. Unsub. Nts.,
3/29/01(5)(11)(15) 100,000 25,000
- ------------------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 200,000 187,000
- ------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 250,000 126,250
9% Sr. Nts., 11/1/06 135,000 101,925
- ------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(5) 70,000 24,850
- ------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 135,000 122,175
- ------------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 100,000 108,500
-----------
1,435,875
- ------------------------------------------------------------------------------------------------------------
Energy--1.8%
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 100,000 91,750
9.625% Sr. Unsec. Nts., Series B, 5/1/05 400,000 379,000
- ------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 245,000 128,625
- ------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 125,000 50,625
- ------------------------------------------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 400,000 366,000
- ------------------------------------------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(5) 100,000 47,093
- ------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 9.50% Sr. Sub. Nts., 11/1/06(11)(15) 100,000 81,875
- ------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 250,000 247,500
- ------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 0%/14.125% Sr. Disc. Nts., 5/1/06(10)(11) 275,000 96,250
- ------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 200,000 171,000
- ------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 560,000 355,600
- ------------------------------------------------------------------------------------------------------------
Leviathan Gas Pipeline Partners, LP/Leviathan Finance Corp., 10.375%
Sr. Unsec. Sub. Nts., Series B, 6/1/09 400,000 414,000
- ------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 250,000 208,750
- ------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 370,000 353,350
- ------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06 300,000 328,500
- ------------------------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 630,000 292,950
- ------------------------------------------------------------------------------------------------------------
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06 375,000 401,250
- ------------------------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 175,000 179,156
- ------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 270,000 264,600
</TABLE>
10 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Energy (continued)
Universal Compression Holdings, Inc.:
0%/9.875% Sr. Disc. Nts., 2/15/08(10) $ 500,000 $ 312,500
0%/11.375% Sr. Disc. Nts., 2/15/09(10) 400,000 214,000
----------
4,984,374
- -------------------------------------------------------------------------------------------------------------
Financial--3.2%
AB Spintab, 5.50% Bonds, Series 169, 9/17/03SEK 3,200,000 372,103
- -------------------------------------------------------------------------------------------------------------
Allgemeine Hypobk AG, 5% Sec. Nts., Series 501, 9/2/09EUR 1,600,000 1,521,193
- -------------------------------------------------------------------------------------------------------------
AMRESCO, Inc.:
9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 300,000 190,500
10% Sr. Sub. Nts., Series 97-A, 3/15/04 100,000 63,500
- -------------------------------------------------------------------------------------------------------------
ASAT Finance LLC, Units (each unit consists of $1,000 principal amount of
12.50% sr. nts., 11/1/06 and one warrant to purchase shares
of common stock)(4)(12) 250,000 270,000
- -------------------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts., 7/10/98 (5)(11)(15)IDR 1,000,000,000 21,467
- -------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 7,000 5,565
- -------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG, 5% Sec. Nts., Series 661, 7/28/04EUR 1,023,288 1,026,233
- -------------------------------------------------------------------------------------------------------------
DePfa Pfandbriefbank AG (DePfa-Bank), 5.50% Sec. Nts., 1/15/00EUR 565,000 558,267
- -------------------------------------------------------------------------------------------------------------
Dresdner Funding Trust II, 5.79% Sub. Nts., 6/30/11(4)EUR 550,000 499,856
- -------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, 5.625%, 6/10/03GBP 115,000 178,770
- -------------------------------------------------------------------------------------------------------------
Hypothekenbk in Essen, 3.50% Sec. Debs., 3/17/04EUR 2,915,000 2,759,836
- -------------------------------------------------------------------------------------------------------------
IBJ Preferred Capital Co. (The) LLC, 8.79% Bonds, 12/29/49(4)(6) 400,000 371,446
- -------------------------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(4) 150,000 156,750
- -------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27(5) 150,000 96,750
- -------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 150,000 141,750
- -------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(4)(11)(15) 90,000 3,150
- -------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
11% Nts., 6/18/03(5)(11)(15) 100,000 13,000
24% Nts., 6/19/03 (11)(15)IDR 164,300,000 3,057
- -------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 380,000 349,125
- -------------------------------------------------------------------------------------------------------------
SBS Agro Finance BV, 10.25% Bonds, 7/21/00(5)(11)(15) 339,000 19,492
- -------------------------------------------------------------------------------------------------------------
Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(11)(15) 80,000 38,000
- -------------------------------------------------------------------------------------------------------------
Sovereign Bankcorp, 10.50% Sr. Unsec. Nts., 11/15/06 250,000 256,250
- -------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts., 1/1/28 100,000 75,250
- -------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 129,000 125,775
----------
9,117,085
- -------------------------------------------------------------------------------------------------------------
Food & Drug--0.4%
AmeriKing, Inc., 10.75% Sr. Nts., 12/1/06 125,000 115,625
- -------------------------------------------------------------------------------------------------------------
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 500,000 237,500
- -------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 508,200
- -------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc.:
10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03 260,000 32,500
12.625% Sub. Nts., 6/15/02 150,000 50,250
- -------------------------------------------------------------------------------------------------------------
Shoppers Food Warehouse Corp., 9.75% Sr. Nts., 6/15/04 155,000 165,075
----------
1,109,150
</TABLE>
Oppenheimer Strategic Bond Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Food/Tobacco--0.4%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 $150,000 $ 143,625
- -----------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(10) 71,000 55,025
- -----------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 200,000 184,000
- -----------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(11) 200,000 51,000
- -----------------------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 400,000 362,000
- -----------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 200,000 163,000
- -----------------------------------------------------------------------------------------------------------
Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09(4) 200,000 195,000
----------
1,153,650
- -----------------------------------------------------------------------------------------------------------
Forest Products/Containers--1.3%
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05(11) 150,000 17,250
- -----------------------------------------------------------------------------------------------------------
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 125,000 122,500
8.25% Sr. Unsec. Sub. Nts., 8/1/08 125,000 120,625
- -----------------------------------------------------------------------------------------------------------
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05 250,000 196,250
- -----------------------------------------------------------------------------------------------------------
Fletcher Challenge Finance U.S.A., Inc., 8.05% Debs., 6/15/03NZD 80,000 41,634
- -----------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 200,000 189,500
- -----------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 750,000 769,687
- -----------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05 500,000 467,500
- -----------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 750,000 776,250
10.875% Sr. Sub. Nts., 4/1/08 250,000 247,500
- -----------------------------------------------------------------------------------------------------------
SD Warren Co.:
12% Sr. Sub. Nts., Series B, 12/15/04 200,000 209,500
14% Unsec. Nts., 12/15/06(13) 417,149 469,293
- -----------------------------------------------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 150,000 139,312
----------
3,766,801
- -----------------------------------------------------------------------------------------------------------
Gaming/Leisure--2.0%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(10) 50,000 20,250
- -----------------------------------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 100,000 70,500
- -----------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 275,000 254,719
- -----------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 120,000 136,050
- -----------------------------------------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 400,000 406,000
- -----------------------------------------------------------------------------------------------------------
Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 450,000 438,750
- -----------------------------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 100,000 71,500
- -----------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 500,000 465,000
- -----------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 250,000 262,500
- -----------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 425,000 425,000
- -----------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 350,000 344,750
- -----------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., 8.75% Sr. Unsec. Nts., 4/15/09 350,000 323,750
- -----------------------------------------------------------------------------------------------------------
Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06 400,000 384,000
- -----------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 325,000 300,625
- -----------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
8.125% Sr. Nts., 1/1/06 300,000 292,500
8.75% Sr. Unsec. Sub. Nts., 1/1/09 700,000 693,000
</TABLE>
12 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Gaming/Leisure (continued)
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08(4)(11)(15) $ 250,000 $ 60,000
- -------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(10) 200,000 139,000
9.25% Sr. Nts., 4/1/06 100,000 98,750
9.75% Sr. Nts., 6/15/07 250,000 250,000
- -------------------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 200,000 196,250
----------
5,632,894
- -------------------------------------------------------------------------------------------------------
Healthcare--1.1%
Charles River Labs ONC, Units (each unit consists of $1,000 principal
amount of 13.50% sr. sub. nts., 10/1/09 and one warrant to purchase
3.942 shares of common stock)(4)(12) 350,000 365,750
- -------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 900,000 832,500
- -------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc.:
8.75% Sr. Nts., 11/15/08(4) 200,000 192,000
8.75% Sr. Nts., 11/15/08(4) 350,000 336,000
- -------------------------------------------------------------------------------------------------------
Kinetic Concepts, Inc., 9.625% Sr. Unsec. Sub. Nts., Series B, 11/1/07 250,000 186,250
- -------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 250,000 203,750
- -------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 150,000 144,750
- -------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Sub. Nts., 1/15/07 600,000 582,000
- -------------------------------------------------------------------------------------------------------
Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09(4) 300,000 312,000
----------
3,155,000
- -------------------------------------------------------------------------------------------------------
Housing--1.0%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 50,000 47,750
- -------------------------------------------------------------------------------------------------------
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 223,750
- -------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 400,000 368,000
- -------------------------------------------------------------------------------------------------------
Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 300,000 293,250
- -------------------------------------------------------------------------------------------------------
Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07 100,000 97,500
- -------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 300,000 283,500
- -------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 650,000 632,125
9.25% Sr. Nts., Series B, 3/15/07 150,000 147,000
- -------------------------------------------------------------------------------------------------------
Panolam Industries International, Inc., 11.50% Sr. Sub. Nts., 2/15/09(4) 600,000 613,500
----------
2,706,375
- -------------------------------------------------------------------------------------------------------
Information Technology--1.2%
Amkor Technologies, Inc., 9.25% Sr. Nts., 5/1/06(4) 700,000 686,000
- -------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 200,000 185,000
- -------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 20,000 20,000
- -------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 350,000 309,312
- -------------------------------------------------------------------------------------------------------
Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07 500,000 516,250
- -------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08 505,000 486,694
- -------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 6.50% Sub. Nts., 9/30/05(5) 1,000,000 800,000
- -------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 150,000 164,625
- -------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 175,000 144,594
----------
3,312,475
</TABLE>
Oppenheimer Strategic Bond Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Manufacturing--1.0%
Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 $ 150,000 $ 147,562
- ------------------------------------------------------------------------------------------------------
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 125,000 115,156
- ------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(4) 300,000 318,000
- ------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 150,000 62,250
- ------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 250,000 201,250
- ------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 300,000 262,500
- ------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 250,000 71,250
- ------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 129,375
- ------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 270,000 267,300
- ------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 125,000 129,687
- ------------------------------------------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub. Nts., 9/30/09 150,000 143,625
- ------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 250,000 251,250
- ------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 200,000 81,000
- ------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 540,000 491,400
- ------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08 150,000 142,500
- ------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03 50,000 49,312
----------
2,863,417
- ------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--1.3%
Azteca Holdings SA, 11% Sr. Sec. Nts., 6/15/02 155,000 139,887
- ------------------------------------------------------------------------------------------------------
Chancellor Media Corp.:
8.125% Sr. Sub. Nts., Series B, 12/15/07 200,000 200,000
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 400,000 405,000
10.50% Sr. Sub. Nts., Series B, 1/15/07 90,000 98,100
- ------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 600,000 573,000
- ------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 95,000 99,275
- ------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(6) 100,000 107,000
- ------------------------------------------------------------------------------------------------------
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 800,000 800,000
- ------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 150,000 139,125
9% Sr. Unsec. Sub. Nts., 7/15/07 210,000 197,925
- ------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., 9.625% Sr. Sub. Nts., 11/1/09 400,000 404,000
- ------------------------------------------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Sr. Nts., Series A, 2/15/04 100,000 89,500
10.50% Sr. Nts., Series B, 2/15/07 150,000 130,500
- ------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 275,000 261,937
9% Sr. Sub. Nts., Series B, 1/15/06(15) 100,000 96,750
----------
3,741,999
</TABLE>
14 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--2.2%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 $ 350,000 $ 315,875
8.375% Sr. Nts., Series B, 2/1/08 100,000 93,250
9.25% Sr. Nts., 10/1/02 385,000 385,000
9.375% Sr. Nts., 11/15/09 500,000 492,500
10.50% Sr. Unsec. Nts., Series B, 7/15/04 70,000 72,975
- ----------------------------------------------------------------------------------------------------------
Bresnan Communications, Inc., 0%/9.25% Sr. Disc. Nts., 2/1/09(10) 250,000 173,750
- ----------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter Communication Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(10) 1,700,000 1,005,125
8.25% Sr. Unsec. Nts., 4/1/07 400,000 371,000
- ----------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 250,000 265,000
- ----------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 940,000 949,400
- ----------------------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(5) 62,802 62,802
- ----------------------------------------------------------------------------------------------------------
EchoStar II, 8.25% Sinking Fund Bonds, 11/9/01(5) 78,168 78,169
- ----------------------------------------------------------------------------------------------------------
Falcon Holding Group LP:
0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(10) 350,000 263,812
8.375% Sr. Unsec. Debs., Series B, 4/15/10 200,000 202,750
- ----------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09(4) 400,000 415,000
- ----------------------------------------------------------------------------------------------------------
NTL Communications Corp., 9.875% Sr. Nts., 11/15/09(4)EUR 200,000 202,790
- ----------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 200,000 214,250
- ----------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07CAD 400,000 278,450
- ----------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(10) 770,000 496,650
----------
6,338,548
- ----------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--1.4%
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 700,000 623,000
- ----------------------------------------------------------------------------------------------------------
IPC Magazines Group plc, 9.625% Bonds, 3/15/08(5)GBP 300,000 295,637
- ----------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07(5) 150,000 147,750
- ----------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 50,000 51,250
- ----------------------------------------------------------------------------------------------------------
Metromedia International Group, Inc., 0%/10.50% Sr. Unsec. Disc. Nts.,
9/30/07(5)(10) 436,950 207,551
- ----------------------------------------------------------------------------------------------------------
Premier Graphics, Inc., 11.50% Sr. Unsec. Nts., 12/1/05 200,000 141,000
- ----------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10 250,000 177,500
9.50% Sr. Unsec. Sub. Nts., 6/1/08 500,000 380,000
- ----------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 200,000 191,000
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 500,000 473,750
- ----------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 300,000 313,677
- ----------------------------------------------------------------------------------------------------------
WRC Media Corp., Units (each unit consists of $1,000 principal amount
of 12.75% sr. sub. nts., 11/15/09 and one warrant to purchase 1.353
shares of common stock)(4)(12) 800,000 798,000
----------
3,800,115
</TABLE>
Oppenheimer Strategic Bond Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--7.9%
Adelphia Business Solutions, Inc., 12% Sr. Sub. Nts., 11/1/07 $ 400,000 $428,000
- ---------------------------------------------------------------------------------------------------------
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(10) 700,000 448,000
- ---------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(10) 200,000 173,000
7.625% Bonds, 7/31/08DEM 500,000 257,604
8.875% Sr. Nts., 11/30/07DEM 100,000 53,772
10.125% Sr. Nts., 11/30/07GBP 170,000 288,367
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)(10)(12) 200,000 203,000
- ---------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07(10) 250,000 239,375
- ---------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 80,000 84,600
- ---------------------------------------------------------------------------------------------------------
Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 50,000 35,375
- ---------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(10) 700,000 444,500
- ---------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(10) 825,000 783,750
- ---------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 50,000 49,750
- ---------------------------------------------------------------------------------------------------------
Equinix, Inc., Units (each unit consists of $1,000 principal amount of
13% sr. nts., 12/1/07 and one warrant to purchase 11.255
shares of common stock)(4)(12) 200,000 205,000
- ---------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
10.75% Sr. Nts., 12/15/09(4) 850,000 869,125
11.25% Sr. Nts., 7/1/08 665,000 689,937
- ---------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(10) 175,000 97,125
- ---------------------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(10) 250,000 163,750
- ---------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 510,000 512,550
- ---------------------------------------------------------------------------------------------------------
Global Telesystems Group, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(4)EUR 250,000 254,745
- ---------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(4)(10) 25,000 28,000
- ---------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc./GST Network Funding Corp., Inc., 0%/10.50%
Sr. Disc. Nts., 5/1/08(10) 125,000 60,937
- ---------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(10) 255,000 189,975
- ---------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(10) 195,000 146,737
- ---------------------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(10) 115,000 61,237
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
8.50% Sr. Nts., Series B, 1/15/08 250,000 230,000
8.60% Sr. Unsec. Nts., Series B, 6/1/08 225,000 207,000
8.875% Sr. Nts., 11/1/07 365,000 341,275
- ---------------------------------------------------------------------------------------------------------
Jazztel plc, 13.25% Sr. Nts., 12/15/09(4)EUR 900,000 911,987
- ---------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(10) 600,000 345,000
- ---------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(10) 1,000,000 610,000
9.125% Sr. Unsec. Nts., 5/1/08 250,000 236,875
- ---------------------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
8.125% Sr. Unsec. Nts., 2/15/09 725,000 679,687
8.375% Sr. Nts., 3/15/08 513,000 487,350
9.25% Sr. Nts., 7/15/07 75,000 75,281
- ---------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 250,000 257,500
10% Sr. Unsec. Nts., Series B, 11/15/08 400,000 411,000
</TABLE>
16 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
Netia Holdings BV:
0%/11% Sr. Disc. Nts., 11/1/07(10)DEM 400,000 $ 134,816
0%/11% Sr. Disc. Nts., Series B, 11/1/07(10)DEM 200,000 67,408
0%/11.25% Sr. Disc. Nts., Series B, 11/1/07(10) 100,000 65,250
10.25% Sr. Nts., Series B, 11/1/07 50,000 42,625
- ----------------------------------------------------------------------------------------------------------
Netia Holdings II BV, 13.50% Sr. Nts., 6/15/09(4)EUR 400,000 414,637
- ----------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 200,000 189,000
9.625% Sr. Nts., 10/1/07 350,000 343,000
10.75% Sr. Unsec. Nts., 11/15/08 300,000 310,500
10.75% Sr. Unsec. Nts., 6/1/09 310,000 320,075
- ----------------------------------------------------------------------------------------------------------
NTL Communications Corp., 0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(10) 85,000 60,563
- ----------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(10) 300,000 208,500
0%/9.75% Sr. Nts., Series B, 4/15/09(10)GBP 775,000 723,820
0%/10.75% Sr. Unsec. Unsub. Nts., Series B, 4/1/08(10)GBP 115,000 123,035
7% Cv. Unsec. Sub. Nts., 12/15/08 100,000 264,500
10% Sr. Nts., Series B, 2/15/07 100,000 103,250
- ----------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(11) 200,000 149,000
- ----------------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05(14) 700,000 695,625
10.50% Sr. Nts., 12/1/06(4)EUR 100,000 101,898
- ----------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.:
0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(10) 365,000 283,788
0%/9.47% Sr. Disc. Nts., 10/15/07(10) 495,000 403,425
- ----------------------------------------------------------------------------------------------------------
RSL Communications plc:
0%/10% Bonds, 3/15/08(10)DEM 100,000 31,903
10.50% Gtd. Sr. Nts., 11/15/08 250,000 236,250
- ----------------------------------------------------------------------------------------------------------
Shaw Communications, Inc., 8.54% Debs., 9/30/27CAD 340,000 211,797
- ----------------------------------------------------------------------------------------------------------
Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09(4)EUR 500,000 507,603
- ----------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/9.875% Sr. Nts., 4/15/09(4)(10)GBP 300,000 307,753
0%/11% Sr. Disc. Debs., 10/1/07(10) 200,000 187,500
- ----------------------------------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 500,000 485,000
- ----------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 100,000 103,500
- ----------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV:
0%/13.375% Sr. Disc. Nts., 11/1/09(4)(10) 500,000 282,500
10.875% Sr. Nts., 8/1/09EUR 750,000 765,178
10.875% Sr. Nts., 8/1/09 500,000 508,750
11.25% Sr. Nts., 11/1/09(4)EUR 250,000 257,261
- ----------------------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 225,000 230,625
11.25% Sr. Unsec. Nts., 12/1/08 500,000 527,500
13.50% Sr. Unsec. Nts., 6/15/04 65,000 71,663
- ----------------------------------------------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 500,000 498,750
- ----------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(10) 500,000 292,500
- ----------------------------------------------------------------------------------------------------------
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(4) 100,000 103,500
-----------
22,175,414
</TABLE>
Oppenheimer Strategic Bond Fund/VA 17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--3.6%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 $100,000 $ 79,625
- --------------------------------------------------------------------------------------------------
Celcaribe SA, 14.50% Sr. Sec. Nts., 3/15/04 150,000 125,250
- --------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(10) 400,000 43,500
- --------------------------------------------------------------------------------------------------
Clearnet Communications, Inc., 0%/14.75% Sr. Disc. Nts., 12/15/05(10) 25,000 24,656
- --------------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/14.125% Sr. Unsec. Deferred Bonds, 3/1/05(4)(10) 350,000 168,000
- --------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(10) 500,000 315,000
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(10) 500,000 378,125
- --------------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(10) 175,000 101,063
- --------------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 460,000 522,100
- --------------------------------------------------------------------------------------------------
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts., Series B, 7/15/05(10)(11)(15) 90,000 36,450
12% Cv. Sr. Sub. Nts., 2/15/01(11)(15) 210,000 1,313
- --------------------------------------------------------------------------------------------------
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)(11)(12) 100,000 46,500
- --------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 300,000 271,500
- --------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., Series B, 10/15/07(10)CAD 300,000 139,398
0%/14% Sr. Disc. Nts., Series B, 6/1/06(10) 300,000 266,250
- --------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(10) 410,000 330,050
- --------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.95% Sr. Disc. Nts., 2/15/08(10) 245,000 172,725
0%/10.65% Sr. Disc. Nts., 9/15/07(10) 800,000 600,000
9.75% Sr. Disc. Nts., 8/15/04 300,000 310,500
- --------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(4) 735,000 793,800
11.625% Sr. Nts., 8/15/06 630,000 670,950
11.625% Sr. Nts., Series A, 8/15/06 400,000 426,000
- --------------------------------------------------------------------------------------------------
Orange plc:
8% Sr. Nts., 8/1/08 250,000 253,438
8.75% Sr. Unsec. Nts., 6/1/06 250,000 260,000
- --------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 200,000 145,000
- --------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(10) 550,000 255,750
- --------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(10) 325,000 214,500
- --------------------------------------------------------------------------------------------------
Polska Telefoniz Cyfrowa International Financial II SA,
11.25% Sr. Sub. Nts., 12/1/09(4)EUR 200,000 203,796
- --------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., Series B, 12/15/06 250,000 254,375
11.75% Sr. Sub. Nts., 7/15/07 275,000 301,125
- --------------------------------------------------------------------------------------------------
PTC International Finance BV, 0%/10.75% Gtd. Sr. Unsec.
Sub. Bonds, 7/1/07(5)(10) 134,000 90,115
- --------------------------------------------------------------------------------------------------
Real Time Data Co., 11% Disc. Nts., 5/31/09(4)(13) 118,366 113,825
- --------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 300,000 308,250
- --------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(10) 700,000 416,500
</TABLE>
18 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications (continued)
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(10) $500,000 $ 301,250
- -----------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.,
0%/12.50% Sr. Disc. Nts., 8/15/06(10) 65,000 60,188
- -----------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 200,000 184,000
- -----------------------------------------------------------------------------------------------------
Voicestream Wireless Corp., 10.375% Sr. Nts., 11/15/09(4) 900,000 931,500
-----------
10,116,367
- -----------------------------------------------------------------------------------------------------
Metals/Minerals--1.5%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(4) 250,000 163,125
- -----------------------------------------------------------------------------------------------------
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 500,000 475,000
9.125% Sr. Nts., 12/15/06 300,000 306,750
- -----------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 200,000 193,000
- -----------------------------------------------------------------------------------------------------
Centaur Mining & Exploration Ltd., 11% Sr. Nts., 12/1/07 100,000 99,625
- -----------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 500,000 477,500
- -----------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 50,000 42,250
- -----------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 250,000 251,250
- -----------------------------------------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(10) 250,000 81,250
- -----------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 995,000 900,475
- -----------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 500,000 517,500
- -----------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 500,000 495,000
- -----------------------------------------------------------------------------------------------------
Republic Technologies International Holdings LLC/RTI Capital Corp., Units
(each unit consists of $1,000 principal amount of 13.75% sr. nts., 7/15/09
and one warrant to purchase Cl. D common stock at $0.01 per share)(12) 200,000 133,000
-----------
4,135,725
- -----------------------------------------------------------------------------------------------------
Retail--0.4%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 236,000 225,380
- -----------------------------------------------------------------------------------------------------
Central Termica Guemes, 12% Bonds, 11/26/01(4)(11)(15) 100,000 5,000
- -----------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 300,000 211,500
- -----------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 100,000 91,500
- -----------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 100,000 93,000
- -----------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 225,000 193,500
- -----------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 200,000 195,000
-----------
1,014,880
- -----------------------------------------------------------------------------------------------------
Service--1.4%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09 435,000 386,606
10% Sr. Sub. Nts., 8/1/09(4) 950,000 855,000
- -----------------------------------------------------------------------------------------------------
Dura Operating Corp., 9% Sr. Sub. Nts., Series B, 5/1/09EUR 400,000 379,413
- -----------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 200,000 195,000
- -----------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 350,000 343,000
- -----------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
6.75% Cv. Sr. Sub. Nts., 9/15/03 125,000 60,000
7.375% Gtd. Sr. Unsec. Nts., 8/15/05 250,000 200,000
</TABLE>
Oppenheimer Strategic Bond Fund/VA 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Service (continued)
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09 $ 400,000 $ 389,000
- ------------------------------------------------------------------------------------------------------------
United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 250,000 241,250
- ------------------------------------------------------------------------------------------------------------
URS Corp., 12.25% Sr. Sub. Nts., Series B, 5/1/09 500,000 515,000
- ------------------------------------------------------------------------------------------------------------
US Unwired, Inc., 0%/13.375% Sr. Disc. Nts., 11/1/09(4)(10) 700,000 413,000
------------
3,977,269
- ------------------------------------------------------------------------------------------------------------
Transportation--2.5%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 450,000 439,313
- ------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(4) 300,000 301,500
- ------------------------------------------------------------------------------------------------------------
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 300,000 280,500
- ------------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 75,000 29,438
- ------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06 250,000 248,125
- ------------------------------------------------------------------------------------------------------------
Federal-Mogul Corp., 7.875% Nts., 7/1/10 300,000 267,254
- ------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04GBP 540,000 864,345
- ------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 500,000 525,000
- ------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc.:
9.125% Sr. Sub. Nts., 7/15/07 100,000 98,250
11% Sr. Sub. Nts., 7/15/06 225,000 236,250
- ------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05 425,000 388,875
- ------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 300,000 115,500
- ------------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 200,000 202,000
Millennium Seacarriers, Inc., Units (each unit consists of $1,000 principal
amount of 12% first priority ship mtg. sr. sec. nts., 7/15/05 and one
warrant to purchase five shares of common stock)(5)(12) 250,000 143,750
- ------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 275,000 127,875
Units (each unit consists of $1,000 principal amount of 11.63% second
priority ship mtg. nts., 6/30/07 and 7.66 warrants)(4)(6)(12) 150,000 11,250
- ------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07(5) 1,300,000 1,228,500
- ------------------------------------------------------------------------------------------------------------
Pycsa Panama SA, 10.28% Sr. Sec. Bonds, 12/15/12(5) 195,800 116,012
- ------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Sub. Nts., 10/15/09(4) 400,000 410,000
- ------------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 100,000 95,000
- ------------------------------------------------------------------------------------------------------------
TFM SA de CV, 10.25% Sr. Nts., 6/15/07 200,000 184,500
- ------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 430,000 278,963
- ------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts.,
Series B, 12/15/03 300,000 307,500
- ------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 184,770 83,609
------------
6,983,309
- ------------------------------------------------------------------------------------------------------------
Utility--0.4%
Beaver Valley II Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 199,000 198,751
- ------------------------------------------------------------------------------------------------------------
Calpine Corp.:
7.75% Sr. Nts., 4/15/09 450,000 427,500
8.75% Sr. Nts., 7/15/07 230,000 231,725
10.50% Sr. Nts., 5/15/06 100,000 106,000
- ------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 250,000 267,687
------------
1,231,663
------------
Total Corporate Bonds and Notes (Cost $120,275,567) 110,027,009
</TABLE>
20 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
============================================================================================================
Preferred Stocks--2.1%
- ------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(13) 2,995 $ 54,659
- ------------------------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25% Gtd. Bonds, 12/31/26 100,000 90,250
- ------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A(5)(13) 19,767 494,175
- ------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Sr. Exchangeable, Non-Vtg.(13) 61 16,622
- ------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable,
Series B, Non-Vtg.(13) 242 240,185
- ------------------------------------------------------------------------------------------------------------
Contour Energy Co., $2.625 Cum. Cv.(15) 1,800 3,375
- ------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg. 46,000 759,000
- ------------------------------------------------------------------------------------------------------------
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. 2,000 70,750
- ------------------------------------------------------------------------------------------------------------
Doane Products Co., 14.25% Exchangeable, Non-Vtg.(5)(15) 5,000 222,500
- ------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(13) 253 254,897
13% Sr. Exchangeable, Non-Vtg.(13) 319 348,507
- ------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(13) 185 37,462
- ------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(5)(15) 5,000 231,250
- ------------------------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr., Series C, Non-Vtg.(5) 4,491 11,227
- ------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale California, l2% Non-Cum.
Exchangeable Perpetual, Series A(5) 20 300
- ------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(13) 135 123,188
- ------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr., Series E, Non-Vtg.(4) 2,100 71,400
- ------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc.:
13%, Non-Vtg.(4)(13) 9 7,493
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)(5)(12)(13) 50 44,625
- ------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable
Preferred Stock, Non-Vtg.(13) 6,061 68,186
- ------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(13) 121 121,303
- ------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(13) 19,029 1,022,809
- ------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(13) 24 246,000
- ------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg. 8,000 698,000
9.20% Exchangeable, Series F, Non-Vtg. 1,000 91,750
- ------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(13) 235 241,463
- ------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(13) 10 50,250
13.75% Exchangeable(4) 2 10,050
- ------------------------------------------------------------------------------------------------------------
Star Gas Partners, LP 187 2,478
- ------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
9.16% Cv., Series B, Non-Vtg. 10,000 241,250
9.20% Sr. 1,000 15,563
----------
Total Preferred Stocks (Cost $7,931,185) 5,890,967
============================================================================================================
Other Securities--0.0%
- ------------------------------------------------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts., 4/30/05NZD 60,000 32,036
14.50% Cv. Sub. Nts., 9/30/00NZD 60,000 32,981
----------
Total Other Securities (Cost $91,017) 65,017
</TABLE>
Oppenheimer Strategic Bond Fund/VA 21
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
============================================================================================================
Common Stocks--0.9%
- ------------------------------------------------------------------------------------------------------------
Celcaribe SA(4)(15) 24,390 $ 39,634
- ------------------------------------------------------------------------------------------------------------
Coinstar, Inc.(15) 700 9,800
- ------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc.(15) 2,404 41,469
- ------------------------------------------------------------------------------------------------------------
Horizon Group Properties, Inc.(15) 358 1,208
- ------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(15) 320 12,420
- ------------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(15) 10,327 547,977
- ------------------------------------------------------------------------------------------------------------
Optel, Inc.(15) 210 2
- ------------------------------------------------------------------------------------------------------------
Premier Holdings Ltd.(15) 18,514 62,485
- ------------------------------------------------------------------------------------------------------------
Price Communications Corp. 33,471 930,936
- ------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(15) 370 4
- ------------------------------------------------------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A(15) 1,814 128,114
- ------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc.(15) 15,500 278,031
- ------------------------------------------------------------------------------------------------------------
Viatel, Inc.(15) 1,189 63,760
- ------------------------------------------------------------------------------------------------------------
Weatherford International, Inc. 7,581 302,766
- ------------------------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc.(15) 6,273 8,625
- ------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $891,044) 2,427,231
<CAPTION>
Units
<S> <C> <C>
============================================================================================================
Rights, Warrants and Certificates--0.1%
- ------------------------------------------------------------------------------------------------------------
Adelphia Business Solutions, Inc. Wts., Exp. 4/15/01(5) 60 10,500
- ------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Wts., Exp. 2/25/00 1,315 2,762
- ------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07(5) 16,000 4,800
- ------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/15/05 165 3,706
- ------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/15/03(5) 200 10,025
- ------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07(5) 100 26,512
- ------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08 400 4,900
- ------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(5) 175 26,272
- ------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/15/05(5) 7,500 75
- ------------------------------------------------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/1/05 325 78,000
- ------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/1/01 2,404 2,103
- ------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/23/03 1,668 --
Exp. 1/23/03(5) 953 10
Exp. 5/1/05(5) 2,181 218
Exp. 9/1/04(5) 2,800 2,976
- ------------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/00(5) 531 7,969
- ------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 825 10,181
- ------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02 200 --
- ------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07(5) 270 --
- ------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(5) 725 2,221
- ------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08(5) 200 100
- ------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(5) 150 1,819
- ------------------------------------------------------------------------------------------------------------
Mexico Value Rts., Exp. 6/30/03 384,000 --
- ------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(5) 600 40,017
</TABLE>
22 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Units Note 1
<S> <C> <C>
==================================================================================================================
Rights, Warrants and Certificates (continued)
- ------------------------------------------------------------------------------------------------------------------
Millennium Seacarriers, Inc. Wts., Exp. 7/15/05(5) 250 $ 281
- ------------------------------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA Wts., Exp. 3/15/04(5) 800 12,100
- ------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc.:
Wts., Exp. 6/1/06(5) 300 15
14% Sr. Disc. Nts. Wts., Exp. 3/31/03 300 15
- ------------------------------------------------------------------------------------------------------------------
Real Time Data Co. Wts., Exp. 5/31/04(5) 36,431 364
- ------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/1/05(4) 1,500 33,562
--------
Total Rights, Warrants and Certificates (Cost $26,622) 281,503
<CAPTION>
Principal
Amount(1)
<S> <C> <C>
==================================================================================================================
Structured Instruments--3.8%
- ------------------------------------------------------------------------------------------------------------------
Citibank NA (Nassau Branch), Mexican Peso Linked Nts.:
26.10%, 10/29/01MXN 5,630,625 611,970
27.40%, 9/20/01 384,000 417,869
- ------------------------------------------------------------------------------------------------------------------
Citibank NA (New York), Mexican Peso Linked Nts., 23.95%, 11/5/01MXN 7,280,764 771,876
- ------------------------------------------------------------------------------------------------------------------
Citibank NA, Polish Zloty Linked Nts., 16.10%, 11/3/00PLZ 2,542,214 609,271
- ------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch), Russian OFZ Linked Nts.:
14%, 9/27/00(5)RUR 3,610,000 73,042
15%, 2/23/00(5)RUR 8,008,000 207,615
18.339%, 2/23/00(5) 240,000 171,422
18.598%, 10/25/00(5) 240,000 125,058
25%, 2/6/02(5)(6)RUR 277,180 4,035
25%, 2/6/02(5)(6)RUR 277,180 3,535
25%, 5/22/02(5)(6)RUR 277,180 3,691
25%, 6/5/02(5)(6)RUR 277,180 3,669
25%, 6/5/02(5)(6)RUR 3,150,400 57,977
25%, 9/18/02(5)(6)RUR 277,180 3,416
25%, 10/9/02(5)(6)RUR 277,180 3,641
25%, 2/5/03(5)(6)RUR 277,180 3,472
25%, 5/21/03(5)(6)RUR 277,180 3,254
25%, 6/4/03(5)(6)RUR 277,180 3,247
25%, 9/17/03(5)(6)RUR 277,180 3,113
25%, 10/8/03(5)(6)RUR 277,180 3,324
25%, 1/21/04(5)(6)RUR 277,180 3,114
Series 1, 25%, 6/4/03(6)RUR 2,561,555 41,561
Zero Coupon, 46.10%, 12/15/01(5)(9)RUR 950,000 7,990
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Indian Rupee/Japanese Yen Linked Nts., Zero Coupon,
12.56%, 8/17/01(9) 350,000 244,685
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Indonesian Rupiah Linked Nts., 13.667%, 6/30/00 475,000 457,615
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, New York, Philippine Peso/Japanese Yen Linked Nts.,
10.55%, 5/12/00 135,000 106,933
- ------------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, Lehman High Yield Index Linked Nts., 8.75%, 5/5/00 750,000 757,433
- ------------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, Turkish Lira Treasury Bill Linked Nts., Zero Coupon,
79.84%, 5/24/00(9)TRL 346,810,000,000 525,506
- ------------------------------------------------------------------------------------------------------------------
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](5) 26,086 24,946
</TABLE>
Oppenheimer Strategic Bond Fund/VA 23
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
===================================================================================================================
Structured Instruments (continued)
- -------------------------------------------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. Emerging Market Bond Index Linked Nts., 9.50%, 7/14/00 $ 2,493,380 $ 2,801,542
- -------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. Turkey Treasury Bond Linked Nts.:
87.282%, 1/9/01(6)TRL 350,300,000,000 790,565
87.283%, 1/7/01(6)TRL 185,000,000,000 417,512
- -------------------------------------------------------------------------------------------------------------------
Russia (Government of) Federal Loan Bonds:
Series 5022, 15%, 2/23/00(5)RUR 5,417,000 140,441
Series 27010, 25%, 9/17/03(5)(6)RUR 3,590,420 57,082
- -------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Brazil Credit Linked Nts.:
6%, 4/2/03(5) 310,000 246,831
Series 2, 6%, 4/2/03(5) 310,000 246,831
- -------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Turkey Treasury Bill Linked Nts.:
92.10%, 8/24/00(6) 320,000 270,371
94.10%, 8/24/00(6) 372,386 317,359
- -------------------------------------------------------------------------------------------------------------------
Salomon, Inc. Indonesian Rupiah Linked Nts.:
29.55%, 4/12/00 50,000 64,156
32.65%, 4/6/00 135,000 173,035
- -------------------------------------------------------------------------------------------------------------------
Standard Chartered Bank, Philippine Peso/Japanese Yen Linked Nts.,
16.04%, 5/10/00 130,000 93,509
- -------------------------------------------------------------------------------------------------------------------
Total Structured Instruments (Cost $12,506,847) 10,873,514
<CAPTION>
Date Strike Contracts
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Options Purchased--0.1%
- -------------------------------------------------------------------------------------------------------------------
European Monetary Unit Put (5) 1/14/00 1.020EUR 10,160,000 174,912
- -------------------------------------------------------------------------------------------------------------------
Hong Kong Dollar Put 1/11/00 7.894HKD 4,815,340 --
- -------------------------------------------------------------------------------------------------------------------
Japanese Yen Put 3/6/00 105.950JPY 144,000,000 8,496
- -------------------------------------------------------------------------------------------------------------------
South Korean Won Call 6/1/00 1,100.000KRW 1,600,500,000 20,406
- -------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York, The Emerging
Markets Bond Index Linked Nts. Call (5) 1/19/00 349.730% 1,600 126,056
- -------------------------------------------------------------------------------------------------------------------
Total Options Purchased (Cost $224,174) 329,870
- -------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $303,769,877) 101.4% 286,143,077
- -------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (1.4) (4,057,459)
------------- ------------
Net Assets 100.0% $282,085,618
============= ============
</TABLE>
24 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP--Argentine Peso IDR--Indonesian Rupiah
AUD--Australian Dollar JPY--Japanese Yen
CAD--Canadian Dollar KRW--South Korean Won
DEM--German Mark MXN--Mexican Nuevo Peso
DKK--Danish Krone NOK--Norwegian Krone
EUR--Euro NZD--New Zealand Dollar
FRF--French Franc PLZ--Polish Zloty
GBP--British Pound Sterling RUR--Russian Ruble
GRD--Greek Drachma SEK--Swedish Krona
HKD--Hong Kong Dollar TRL--Turkish Lira
HUF--Hungarian Forint ZAR--South African Rand
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. When-issued security to be delivered and settled after December 31, 1999.
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 $16,799,089 or 5.96% of the Fund's net
assets as of December 31, 1999.
5. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
6. Represents the current interest rate for a variable or increasing rate
security.
7. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
8. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
Principal Expiration Exercise Premium Market Value
Subject to Call/Put Date Price Received Note 1
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brazilian Real Put (BRR) 3,347,205 1/28/00 2.054BRR $55,420 $ 3,347
Japanese Yen Call (JPY) 144,000,000 3/6/00 96.100JPY 14,910 13,104
------- -------
$70,330 $16,451
======= =======
</TABLE>
9. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
11. Issuer is in default.
12. 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.
13. Interest or dividend is paid in kind.
14. Securities with an aggregate market value of $577,958 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
15. Non-income producing security.
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 25
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
================================================================================================
Assets
Investments, at value (cost $303,769,877)--see accompanying statement $286,143,077
- ------------------------------------------------------------------------------------------------
Cash 780,123
- ------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $20,652) 20,652
- ------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 56,495
- ------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and principal paydowns 5,466,483
Shares of beneficial interest sold 168,739
Investments sold 26,690
Other 4,848
------------
Total assets 292,667,107
================================================================================================
Liabilities
Unrealized depreciation on foreign currency contracts 102,696
- ------------------------------------------------------------------------------------------------
Options written, at value (premiums received $70,330)--see accompanying statement 16,451
- ------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $9,294,950 purchased on a when-issued basis) 9,303,817
Shares of beneficial interest redeemed 1,098,260
Closed foreign currency contracts 16,992
Daily variation on futures contracts 675
Transfer and shareholder servicing agent fees 184
Trustees' compensation 22
Other 42,392
- ------------------------------------------------------------------------------------------------
Total liabilities 10,581,489
================================================================================================
Net Assets $282,085,618
============
================================================================================================
Composition of Net Assets
Paid-in capital $285,264,616
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 22,685,394
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (8,158,504)
- ------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (17,705,888)
- ------------------------------------------------------------------------------------------------
Net assets--applicable to 56,728,056 shares of beneficial
interest outstanding $282,085,618
============
================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $4.97
</TABLE>
See accompanying Notes to Financial Statements.
26 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
======================================================================================
Investment Income
Interest (net of foreign withholding taxes of $68,279) $26,884,872
- --------------------------------------------------------------------------------------
Dividends 554,128
-----------
Total income 27,439,000
======================================================================================
Expenses
Management fees 2,066,323
- --------------------------------------------------------------------------------------
Custodian fees and expenses 35,149
- --------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,108
- --------------------------------------------------------------------------------------
Trustees' compensation 1,291
- --------------------------------------------------------------------------------------
Other 55,271
-----------
Total expenses 2,160,142
Less expenses paid indirectly (11,572)
-----------
Net expenses 2,148,570
======================================================================================
Net Investment Income 25,290,430
======================================================================================
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investments (including premiums on options exercised) (6,481,356)
Closing of futures contracts 406,580
Closing and expiration of option contracts written 203,611
Foreign currency transactions (2,492,662)
- --------------------------------------------------------------------------------------
Net realized loss (8,363,827)
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (5,804,195)
Translation of assets and liabilities denominated in foreign currencies (2,989,088)
-----------
Net change (8,793,283)
-----------
Net realized and unrealized loss (17,157,110)
======================================================================================
Net Increase in Net Assets Resulting from Operations $ 8,133,320
===========
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 27
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
===========================================================================================================
Operations
Net investment income $ 25,290,430 $ 20,451,817
- -----------------------------------------------------------------------------------------------------------
Net realized loss (8,363,827) (2,696,918)
- -----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (8,793,283) (11,476,607)
------------ ------------
Net increase in net assets resulting from operations 8,133,320 6,278,292
===========================================================================================================
Dividends and/or Distributions to Shareholders
- -----------------------------------------------------------------------------------------------------------
Dividends from net investment income (15,617,496) (3,974,494)
- -----------------------------------------------------------------------------------------------------------
Distributions from net realized gain -- (2,561,341)
===========================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 10,369,398 71,618,535
===========================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------
Total increase 2,885,222 71,360,992
- -----------------------------------------------------------------------------------------------------------
Beginning of period 279,200,396 207,839,404
------------ ------------
End of period (including undistributed net investment
income of $22,685,394 and $15,570,425, respectively) $282,085,618 $279,200,396
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
28 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $5.12 $5.12 $5.09 $4.91 $4.60
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .39 .39 .38 .38
Net realized and unrealized gain (loss) (.31) (.24) .04 .19 .30
- ------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations .14 .15 .43 .57 .68
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.29) (.09) (.39) (.39) (.37)
Distributions from net realized gain -- (.06) (.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.29) (.15) (.40) (.39) (.37)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.97 $5.12 $5.12 $5.09 $4.91
===== ===== ===== ===== =====
- ------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(1) 2.83% 2.90% 8.71% 12.07% 15.33%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $282,086 $279,200 $207,839 $118,716 $60,098
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $278,668 $250,227 $159,934 $82,604 $37,698
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.08% 8.17% 8.23% 8.48% 9.32%
Expenses 0.78% 0.80%(3) 0.83%(3) 0.85%(3) 0.85%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 81% 134% 150% 144% 87%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods 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. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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, 1999, were $242,578,613 and $216,840,010, respectively.
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies Oppenheimer Strategic Bond Fund/VA (the Fund)
is a 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 Fund's investment objective is
to seek a high level of current income principally derived from interest of debt
securities and seeks to enhance that income by writing covered call option on
debt securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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 Fund invests in foreign currency-linked structured notes
whose market value and redemption price are linked to foreign currency exchange
rates. The structured notes may be leveraged, which increases the notes'
volatility relative to the face of the security. Fluctuations in value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of December 31, 1999, the market value of these
securities comprised 3.85% of the Fund's net assets and resulted in realized and
unrealized losses of $1,597,657. The Fund also hedges a portion of the foreign
currency exposure generated by these securities, as discussed in Note 5.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months after the transaction date; however,
the fund may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond trade
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 Fund maintains segregated assets with a market value equal to or
greater than the amount of its purchase commitments. The purchase of securities
on a when-issued or forward commitment basis may increase the volatility of the
Fund's net asset value to the extent the Fund makes such purchases while
remaining substantially fully invested. As of December 31, 1999, the Fund had
entered into outstanding when-issued or forward commitments of $9,294,950.
In connection with its ability to purchase securities on a when-issued
or forward commitment basis, the Fund may enter into mortgage dollar-rolls in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
30 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Security Credit Risk. The Fund invests 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 Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of December 31, 1999, securities with an
aggregate market value of $1,533,192, representing 0.54% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. As of December 31,
1999, the Fund had available for federal income tax purposes an unused capital
loss carryover of approximately $6,413,000, which expires between 2006 and 2007.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $2,557,965. Accumulated net
realized loss on investments was decreased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
Oppenheimer Strategic Bond Fund/VA 31
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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 Fund has 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 December 31, 1999 Year Ended December 31, 1998
------------------------------ -----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Sold 13,301,419 $65,503,594 21,445,910 $109,659,739
Dividends and/or distributions reinvested 3,226,755 15,617,496 1,279,028 6,535,835
Redeemed (14,369,937) (70,751,692) (8,759,684) (44,577,039)
----------- ----------- ---------- ------------
Net increase 2,158,237 $10,369,398 13,965,254 $ 71,618,535
=========== =========== ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized depreciation on securities and options
written of $17,572,921 was composed of gross appreciation of $6,256,650, and
gross depreciation of $23,829,571.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management Fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. 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, 0.60% of the
next $200 million and 0.50% of average annual net assets over $1 billion. The
Fund's management fee for the year ended December 31, 1999 was 0.74% of average
annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
32 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Foreign Currency Contracts (continued)
As of December 31, 1999, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Contract Description Dates Amounts (000s) December 31, 1999 Appreciation Depreciation
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
British Pound Sterling (GBP) 1/24/00 185 EUR $ 298,855 $ -- $ 826
Euro (EUR) 2/24/00 1,200 JPY 1,212,790 -- 43,034
Japanese Yen (JPY) 2/7/00 254,500 JPY 2,505,580 -- 1,562
------- --------
-- 45,422
------- --------
Contracts to Sell
- -----------------
British Pound Sterling (GBP) 1/30/00-6/5/00 980 GBP 1,582,807 3,914 14,584
Euro (EUR) 1/24/00-6/5/00 2,170 EUR 2,192,917 44,664 --
Euro (EUR) 1/24/00 289 GBP 291,763 7,917 --
Hong Kong Dollar (HKD) 1/26/00-1/31/00 4,859 HKD 625,030 -- 15,030
Japanese Yen (JPY) 2/24/00 129,600 EUR 1,279,172 -- 23,348
Mexican Nuevo Peso (MXN) 2/17/00 6,270 MXN 649,557 -- 4,312
------- --------
56,495 57,274
------- --------
Total Unrealized Appreciation and Depreciation $56,495 $102,696
======= ========
</TABLE>
================================================================================
6. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund 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 Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund 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 Fund may recognize a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
Oppenheimer Strategic Bond Fund/VA 33
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
6. Futures Contracts (continued)
As of December 31, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Date Contracts December 31, 1999 (Depreciation)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
Euro-Bund 3/8/00 33 $3,458,613 $(35,868)
U.S. Treasury Bonds, 20 yr. 3/22/00 22 2,000,625 (40,906)
U.S. Treasury Nts., 10 yr. 3/22/00 6 575,156 (9,047)
--------
(85,821)
--------
Contracts to Sell
- -----------------
Canadian Government Bonds, 10 yr. 3/22/00 5 409,383 2,522
Euro-Schatz 3/8/00 71 7,338,365 20,128
Japanese Government Bonds, 10 yr. 3/9/00 2 2,598,259 (33,845)
United Kingdom Long Gilt 3/29/00 3 539,949 11,486
U.S. Treasury Nts., 5 yr. 3/22/00 31 3,038,484 39,094
--------
39,385
--------
$(46,436)
========
</TABLE>
================================================================================
7. Option Activity
The Fund 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 Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes 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 Fund 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.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives 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 Fund 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 Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
34 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
7. Option Activity (continued)
Written option activity for the year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
---------------------------- -------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Options outstanding as of
December 31, 1998 147,606,100 $ 25,235 -- $ --
Options written 509,978,550 50,659 28,409,390 402,988
Options closed or expired (513,584,650) (60,984) (25,059,496) (273,394)
Options exercised -- -- (2,689) (74,174)
------------ -------- ----------- ---------
Options outstanding as of
December 31, 1999 144,000,000 $ 14,910 3,347,205 $ 55,420
============ ======== =========== =========
</TABLE>
================================================================================
8. Illiquid or Restricted Securities and Currency
As of December 31, 1999, investments in securities and currency 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 also
be considered illiquid if it lacks a readily available market or if its
valuation has not changed for a certain period of time. The Fund intends to
invest no more than 15% of its net assets (determined at the time of purchase
and reviewed periodically) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional investors,
are not subject to that limitation. The aggregate value of illiquid or
restricted securities subject to this limitation as of December 31, 1999, was
$13,116,671, which represents 4.64% of the Fund's net assets, of which $629,649
is considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation Per
Unit as of
Acquisition Cost Per December 31,
Security Dates Unit 1999
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Bonds
- -----
TAGHeuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95 100.00% 109.66%
Stocks and Warrants
- -------------------
CGA Group Ltd., Preferred 6/17/97 $25.00 $25.00
- ----------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 -- 0.30
- ----------------------------------------------------------------------------------------------------
Real Time Data Wts., Exp. 5/31/04 6/30/99 0.01 0.01
Currency
- --------
Russian Ruble 12/22/99-
12/28/99 0.04 0.04
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Small Cap Growth
Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Small Cap Growth Fund/VA (which is
a series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the year ended December 31, 1999 and the period ended
December 31, 1998 and the financial highlights for the period May 1, 1998, to
December 31, 1999. These financial statements and financial highlights are the
responsibility of the Fund's 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, 1999, 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
Small Cap Growth Fund/VA as of December 31, 1999, 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 24, 2000
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
==============================================================================================================
Common Stocks--84.2%
- --------------------------------------------------------------------------------------------------------------
Capital Goods--8.5%
- --------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.5%
Armor Holdings, Inc.(1) 2,500 $ 32,812
- --------------------------------------------------------------------------------------------------------------
Electrical Equipment--0.2%
Plug Power, Inc.(1) 500 14,125
- --------------------------------------------------------------------------------------------------------------
Industrial Services--5.5%
Corporate Executive Board Co.(1) 1,000 55,875
- --------------------------------------------------------------------------------------------------------------
CyberSource Corp.(1) 300 15,525
- --------------------------------------------------------------------------------------------------------------
Digimarc Corp.(1) 500 25,000
- --------------------------------------------------------------------------------------------------------------
Keynote Systems, Inc.(1) 300 22,125
- --------------------------------------------------------------------------------------------------------------
Loislaw.com, Inc.(1) 600 23,475
- --------------------------------------------------------------------------------------------------------------
Metamor Worldwide, Inc.(1) 1,200 34,950
- --------------------------------------------------------------------------------------------------------------
Navidec, Inc.(1) 900 10,800
- --------------------------------------------------------------------------------------------------------------
Navigant Consulting, Inc.(1) 1,100 11,962
- --------------------------------------------------------------------------------------------------------------
Source Information Management Co. (The)(1) 3,600 60,300
- --------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc.(1) 6,000 92,250
- --------------------------------------------------------------------------------------------------------------
Waste Connections, Inc.(1) 1,800 25,987
--------
378,249
- --------------------------------------------------------------------------------------------------------------
Manufacturing--2.3%
AstroPower, Inc.(1) 1,500 21,000
- --------------------------------------------------------------------------------------------------------------
Asyst Technologies, Inc.(1) 600 39,337
- --------------------------------------------------------------------------------------------------------------
Koala Corp.(1) 6,000 84,000
- --------------------------------------------------------------------------------------------------------------
Metron Technology NV(1) 800 12,850
--------
157,187
- --------------------------------------------------------------------------------------------------------------
Communication Services--6.9%
- --------------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--4.1%
Clarent Corp.(1) 600 46,650
- --------------------------------------------------------------------------------------------------------------
Efficient Networks, Inc.(1) 300 20,400
- --------------------------------------------------------------------------------------------------------------
Internap Network Services Corp.(1) 150 25,950
- --------------------------------------------------------------------------------------------------------------
Latitude Communications, Inc.(1) 1,000 26,125
- --------------------------------------------------------------------------------------------------------------
MGC Communications, Inc.(1) 2,100 106,575
- --------------------------------------------------------------------------------------------------------------
Network Plus Corp.(1) 1,300 27,300
- --------------------------------------------------------------------------------------------------------------
Triton PCS Holdings, Inc., Cl. A(1) 300 13,650
- --------------------------------------------------------------------------------------------------------------
Z-Tel Technologies, Inc.(1) 400 16,150
--------
282,800
- --------------------------------------------------------------------------------------------------------------
Telephone Utilities--0.3%
Allied Riser Communications Corp.(1) 1,100 22,756
</TABLE>
4 Oppenheimer Small Cap Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Telecommunications: Wireless--2.5%
Aether Systems, Inc.(1) 200 $ 14,325
- --------------------------------------------------------------------------------------------------------------
AirGate PCS, Inc.(1) 100 5,275
- --------------------------------------------------------------------------------------------------------------
Airnet Communications Corp.(1) 200 7,275
- --------------------------------------------------------------------------------------------------------------
Chartered Semiconductor Manufacturing, Sponsored ADR(1) 600 43,800
- --------------------------------------------------------------------------------------------------------------
Phone.com, Inc.(1) 150 17,391
- --------------------------------------------------------------------------------------------------------------
Proxim, Inc.(1) 600 66,000
- --------------------------------------------------------------------------------------------------------------
TeleCorp PCS, Inc.(1) 200 7,600
- --------------------------------------------------------------------------------------------------------------
Tritel, Inc.(1) 300 9,506
--------
171,172
- --------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--12.0%
- --------------------------------------------------------------------------------------------------------------
Consumer Services--1.5%
Cornell Corrections, Inc.(1) 4,000 33,500
- --------------------------------------------------------------------------------------------------------------
Getty Images, Inc.(1) 700 34,212
- --------------------------------------------------------------------------------------------------------------
Jupiter Communications, Inc.(1) 400 12,100
- --------------------------------------------------------------------------------------------------------------
Netcentives, Inc.(1) 400 24,925
--------
104,737
- --------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.0%
Activision, Inc.(1) 3,000 45,937
- --------------------------------------------------------------------------------------------------------------
Handleman Co.(1) 3,500 46,812
- --------------------------------------------------------------------------------------------------------------
JAKKS Pacific, Inc.(1) 2,400 44,850
--------
137,599
- --------------------------------------------------------------------------------------------------------------
Media--2.0%
Lifeminders.com, Inc.(1) 500 28,875
- --------------------------------------------------------------------------------------------------------------
NetRatings, Inc.(1) 100 4,812
- --------------------------------------------------------------------------------------------------------------
True North Communications, Inc. 900 40,219
- --------------------------------------------------------------------------------------------------------------
Tweeter Home Entertainment Group, Inc. 1,800 63,900
--------
137,806
- --------------------------------------------------------------------------------------------------------------
Retail: Specialty--6.5%
BOLDER Technologies Corp.(1) 2,500 31,875
- --------------------------------------------------------------------------------------------------------------
Charlotte Russe Holding, Inc.(1) 800 16,800
- --------------------------------------------------------------------------------------------------------------
Chico's Fas, Inc.(1) 800 30,100
- --------------------------------------------------------------------------------------------------------------
Copart, Inc.(1) 1,200 52,200
- --------------------------------------------------------------------------------------------------------------
Cost Plus, Inc.(1) 800 28,500
- --------------------------------------------------------------------------------------------------------------
David's Bridal, Inc.(1) 3,800 42,512
- --------------------------------------------------------------------------------------------------------------
Factory 2-U Stores, Inc.(1) 2,000 56,750
- --------------------------------------------------------------------------------------------------------------
Pantry, Inc. (The)(1) 2,200 31,075
- --------------------------------------------------------------------------------------------------------------
PurchasePro.com, Inc.(1) 500 68,750
- --------------------------------------------------------------------------------------------------------------
School Specialty, Inc.(1) 1,600 24,200
- --------------------------------------------------------------------------------------------------------------
Whitehall Jewellers, Inc. 1,200 44,250
- --------------------------------------------------------------------------------------------------------------
Yankee Candle, Inc. (The)(1) 1,600 26,100
--------
453,112
</TABLE>
Oppenheimer Small Cap Growth Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Consumer Staples--7.9%
- --------------------------------------------------------------------------------------------------------------
Broadcasting--3.0%
Citadel Communications Corp.(1) 900 $ 58,387
- --------------------------------------------------------------------------------------------------------------
Classic Communications, Inc.(1) 500 18,281
- --------------------------------------------------------------------------------------------------------------
Cumulus Media, Inc., Cl. A(1) 900 45,675
- --------------------------------------------------------------------------------------------------------------
Insight Communications Co., Inc.(1) 900 26,662
- --------------------------------------------------------------------------------------------------------------
Radio Unica Corp.(1) 400 11,550
- --------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., Cl. A(1) 1,200 48,300
--------
208,855
- --------------------------------------------------------------------------------------------------------------
Education--0.8%
Corinthian Colleges, Inc.(1) 1,700 40,587
- --------------------------------------------------------------------------------------------------------------
ZapMe! Corp.(1) 1,700 14,662
--------
55,249
- --------------------------------------------------------------------------------------------------------------
Entertainment--3.4%
Buca, Inc.(1) 4,000 41,000
- --------------------------------------------------------------------------------------------------------------
Cinar Films, Inc., Cl. B(1) 4,000 98,000
- --------------------------------------------------------------------------------------------------------------
Imax Corp.(1) 1,500 41,062
- --------------------------------------------------------------------------------------------------------------
P.F. Chang's China Bistro, Inc.(1) 2,300 57,212
--------
237,274
- --------------------------------------------------------------------------------------------------------------
Food--0.7%
Diedrich Coffee, Inc.(1) 5,000 20,312
- --------------------------------------------------------------------------------------------------------------
Wild Oats Markets, Inc.(1) 1,200 26,625
--------
46,937
- --------------------------------------------------------------------------------------------------------------
Energy--0.4%
- --------------------------------------------------------------------------------------------------------------
Energy Services--0.4%
Cal Dive International, Inc.(1) 800 26,500
- --------------------------------------------------------------------------------------------------------------
Financial--3.4%
- --------------------------------------------------------------------------------------------------------------
Banks--1.5%
Investors Financial Services Corp. 1,500 69,000
- --------------------------------------------------------------------------------------------------------------
Labrance & Co., Inc.(1) 3,000 38,250
--------
107,250
- --------------------------------------------------------------------------------------------------------------
Diversified Financial--1.4%
MicroFinancial, Inc. 5,000 58,438
- --------------------------------------------------------------------------------------------------------------
NextCard, Inc.(1) 600 17,325
- --------------------------------------------------------------------------------------------------------------
ReSourcePhoenix.com, Inc.(1) 1,000 19,750
--------
95,513
- --------------------------------------------------------------------------------------------------------------
Insurance--0.5%
Advance Paradigm, Inc.(1) 1,600 34,500
</TABLE>
6 Oppenheimer Small Cap Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Healthcare--5.1%
- --------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--3.8%
Abgenix, Inc.(1) 500 $ 66,250
- --------------------------------------------------------------------------------------------------------------
BioCryst Pharmaceuticals, Inc.(1) 1,500 44,250
- --------------------------------------------------------------------------------------------------------------
Cubist Pharmaceuticals, Inc.(1) 1,100 21,175
- --------------------------------------------------------------------------------------------------------------
Maxygen, Inc.(1) 200 14,200
- --------------------------------------------------------------------------------------------------------------
Nuerocrine Biosciences, Inc.(1) 2,100 51,975
- --------------------------------------------------------------------------------------------------------------
Syncor International Corp.(1) 1,500 43,688
- --------------------------------------------------------------------------------------------------------------
Ventana Medical Systems, Inc.(1) 1,000 24,875
--------
266,413
- --------------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.3%
Hanger Orthopedic Group, Inc.(1) 500 5,000
- --------------------------------------------------------------------------------------------------------------
NovaMed Eyecare, Inc.(1) 600 4,050
- --------------------------------------------------------------------------------------------------------------
PlanetRx.com, Inc.(1) 700 10,150
- --------------------------------------------------------------------------------------------------------------
Renal Care Group, Inc.(1) 2,400 56,100
- --------------------------------------------------------------------------------------------------------------
SciQuest.com, Inc.(1) 200 15,900
--------
91,200
- --------------------------------------------------------------------------------------------------------------
Technology--40.0%
- --------------------------------------------------------------------------------------------------------------
Computer Hardware--6.1%
3DO Co. (The) 5,500 50,016
- --------------------------------------------------------------------------------------------------------------
Creo Products, Inc.(1) 1,200 46,125
- --------------------------------------------------------------------------------------------------------------
Echelon Corp.(1) 1,000 19,563
- --------------------------------------------------------------------------------------------------------------
Gadzoox Networks, Inc. 300 13,069
- --------------------------------------------------------------------------------------------------------------
Network Appliance, Inc.(1) 1,200 99,675
- --------------------------------------------------------------------------------------------------------------
Optimal Robotics Corp.(1) 1,200 44,700
- --------------------------------------------------------------------------------------------------------------
SanDisk Corp.(1) 500 48,125
- --------------------------------------------------------------------------------------------------------------
SmartDisk Corp.(1) 300 9,825
- --------------------------------------------------------------------------------------------------------------
Xircom, Inc.(1) 1,200 90,000
--------
421,098
- --------------------------------------------------------------------------------------------------------------
Computer Services--10.9%
Alloy Online, Inc.(1) 1,800 28,350
- --------------------------------------------------------------------------------------------------------------
AppNet, Inc.(1) 600 26,250
- --------------------------------------------------------------------------------------------------------------
Art Technology Group, Inc.(1) 400 51,250
- --------------------------------------------------------------------------------------------------------------
BackWeb Technologies Ltd.(1) 800 33,700
- --------------------------------------------------------------------------------------------------------------
Braun Consulting, Inc.(1) 1,200 85,800
- --------------------------------------------------------------------------------------------------------------
C-bridge Internet Solutions, Inc.(1) 300 14,588
- --------------------------------------------------------------------------------------------------------------
CAIS Internet, Inc.(1) 1,000 35,500
- --------------------------------------------------------------------------------------------------------------
Critical Path, Inc.(1) 300 28,313
- --------------------------------------------------------------------------------------------------------------
El Sitio, Inc.(1) 200 7,350
- --------------------------------------------------------------------------------------------------------------
Finisar Corp.(1) 100 8,988
- --------------------------------------------------------------------------------------------------------------
Interactive Pictures Corp.(1) 900 20,981
- --------------------------------------------------------------------------------------------------------------
Kopin Corp.(1) 900 37,800
- --------------------------------------------------------------------------------------------------------------
MedQuist, Inc.(1) 600 15,488
- --------------------------------------------------------------------------------------------------------------
OneSource Information Services, Inc.(1) 4,500 60,469
</TABLE>
Oppenheimer Small Cap Growth Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Computer Services (continued)
Packeteer, Inc.(1) 400 $ 28,400
- --------------------------------------------------------------------------------------------------------------
pcOrder.com, Inc.(1) 600 30,600
- --------------------------------------------------------------------------------------------------------------
Predictive Systems, Inc.(1) 300 19,650
- --------------------------------------------------------------------------------------------------------------
Ramp Networks, Inc.(1) 1,600 24,400
- --------------------------------------------------------------------------------------------------------------
Salon.com, Inc.(1) 3,600 18,000
- --------------------------------------------------------------------------------------------------------------
Stamps.com, Inc.(1) 750 31,219
- --------------------------------------------------------------------------------------------------------------
Student Advantage, Inc.(1) 1,500 33,281
- --------------------------------------------------------------------------------------------------------------
Tanning Technology Corp. 450 26,522
- --------------------------------------------------------------------------------------------------------------
Viant Corp.(1) 300 29,700
- --------------------------------------------------------------------------------------------------------------
WatchGuard Technologies, Inc.(1) 700 21,175
- --------------------------------------------------------------------------------------------------------------
WebTrends Corp.(1) 500 40,500
--------
758,274
- --------------------------------------------------------------------------------------------------------------
Computer Software--17.8%
Accrue Software, Inc.(1) 400 21,650
- --------------------------------------------------------------------------------------------------------------
Active Software, Inc.(1) 400 36,800
- --------------------------------------------------------------------------------------------------------------
Advent Software, Inc.(1) 1,500 96,656
- --------------------------------------------------------------------------------------------------------------
AGENCY.COM Ltd.(1) 100 5,100
- --------------------------------------------------------------------------------------------------------------
Allaire Corp.(1) 300 43,894
- --------------------------------------------------------------------------------------------------------------
Andover.Net, Inc.(1) 400 14,250
- --------------------------------------------------------------------------------------------------------------
Best Software, Inc.(1) 1,000 29,500
- --------------------------------------------------------------------------------------------------------------
BindView Development Corp.(1) 2,600 129,188
- --------------------------------------------------------------------------------------------------------------
Brio Technology, Inc.(1) 1,500 63,000
- --------------------------------------------------------------------------------------------------------------
Data Return Corp.(1) 700 37,450
- --------------------------------------------------------------------------------------------------------------
E.piphany, Inc.(1) 150 33,469
- --------------------------------------------------------------------------------------------------------------
eCollege.com(1) 800 8,750
- --------------------------------------------------------------------------------------------------------------
FreeMarkets, Inc.(1) 50 17,066
- --------------------------------------------------------------------------------------------------------------
GRIC Communications, Inc.(1) 200 5,075
- --------------------------------------------------------------------------------------------------------------
iBasis, Inc.(1) 500 14,375
- --------------------------------------------------------------------------------------------------------------
iManage, Inc.(1) 200 6,425
- --------------------------------------------------------------------------------------------------------------
Interactive Intelligence, Inc.(1) 1,100 29,288
- --------------------------------------------------------------------------------------------------------------
Intertrust Technologies Corp.(1) 150 17,644
- --------------------------------------------------------------------------------------------------------------
Legato Systems, Inc.(1) 600 41,288
- --------------------------------------------------------------------------------------------------------------
McAfee.com Corp.(1) 400 18,000
- --------------------------------------------------------------------------------------------------------------
Metasolv Software, Inc.(1) 250 20,438
- --------------------------------------------------------------------------------------------------------------
Micromuse, Inc.(1) 700 119,000
- --------------------------------------------------------------------------------------------------------------
Mission Critical Software, Inc.(1) 400 28,000
- --------------------------------------------------------------------------------------------------------------
National Information Consortium, Inc.(1) 800 25,600
- --------------------------------------------------------------------------------------------------------------
NetIQ Corp.(1) 1,200 62,475
- --------------------------------------------------------------------------------------------------------------
Novadigm, Inc.(1) 1,300 26,975
- --------------------------------------------------------------------------------------------------------------
OnDisplay, Inc.(1) 100 9,088
- --------------------------------------------------------------------------------------------------------------
Optio Software, Inc.(1) 1,000 23,500
- --------------------------------------------------------------------------------------------------------------
Preview Systems, Inc.(1) 200 12,975
- --------------------------------------------------------------------------------------------------------------
Primus Knowledge Solutions, Inc.(1) 700 31,719
</TABLE>
8 Oppenheimer Small Cap Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Computer Software (continued)
Quest Software, Inc.(1) 200 $ 20,400
- --------------------------------------------------------------------------------------------------------------
SERENA Software, Inc.(1) 1,200 37,125
- --------------------------------------------------------------------------------------------------------------
SonicWALL, Inc. 400 16,100
- --------------------------------------------------------------------------------------------------------------
Telemate.Net Software, Inc.(1) 1,000 16,250
- --------------------------------------------------------------------------------------------------------------
TenFold Corp.(1) 700 27,956
- --------------------------------------------------------------------------------------------------------------
Verity, Inc.(1) 800 34,050
- --------------------------------------------------------------------------------------------------------------
Viador, Inc.(1) 700 29,663
- --------------------------------------------------------------------------------------------------------------
Vitria Technology, Inc.(1) 100 23,400
----------
1,233,582
- --------------------------------------------------------------------------------------------------------------
Communications Equipment--1.4%
Advanced Fibre Communications, Inc.(1) 1,200 53,625
- --------------------------------------------------------------------------------------------------------------
Extreme Networks, Inc.(1) 150 12,525
- --------------------------------------------------------------------------------------------------------------
Inet Technologies, Inc.(1) 450 31,444
----------
97,594
- --------------------------------------------------------------------------------------------------------------
Electronics--3.8%
ACT Manufacturing, Inc.(1) 1,200 45,000
- --------------------------------------------------------------------------------------------------------------
Alpha Industries, Inc.(1) 800 45,850
- --------------------------------------------------------------------------------------------------------------
ANADIGICS, Inc.(1) 400 18,875
- --------------------------------------------------------------------------------------------------------------
ASM International NV(1) 1,800 41,400
- --------------------------------------------------------------------------------------------------------------
ATMI, Inc.(1) 1,300 42,981
- --------------------------------------------------------------------------------------------------------------
Audiovox Corp., Cl. A(1) 1,000 30,375
- --------------------------------------------------------------------------------------------------------------
Caliper Technologies Corp.(1) 100 6,675
- --------------------------------------------------------------------------------------------------------------
InterTAN, Inc.(1) 1,200 31,350
----------
262,506
----------
Total Common Stocks (Cost $4,138,541) 5,835,100
<CAPTION>
Principal
Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements--1.5%
- --------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%,
dated 12/31/99, to be repurchased at $100,023 on 1/3/00, collateralized
by U.S. Treasury Bonds, 5.25%-12%, 2/15/01-11/15/28, with a value
of $39,249 and U.S. Treasury Nts., 5%-7.50%, 12/31/00-2/15/07,
with a value of $62,809 (Cost $100,000) $100,000 100,000
- --------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $4,238,541) 85.7% 5,935,100
- --------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 14.3 991,496
--------- ----------
Net Assets 100.0% $6,926,596
========= ==========
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
Oppenheimer Small Cap Growth Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
==========================================================================================
Assets
Investments, at value (cost $4,238,541)--see accompanying statement $5,935,100
- ------------------------------------------------------------------------------------------
Cash 1,000,432
- ------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 3,066
Interest and dividends 343
Other 5,360
----------
Total assets 6,944,301
==========================================================================================
Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed 12,487
Shareholder reports 2,780
Legal, auditing and other professional fees 1,158
Registration and filing fees 1,080
Trustees' compensation 76
Other 124
----------
Total liabilities 17,705
==========================================================================================
Net Assets $6,926,596
==========
==========================================================================================
Composition of Net Assets
Paid-in capital $4,791,913
- ------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 438,124
- ------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 1,696,559
----------
Net assets--applicable to 492,201 shares of beneficial interest outstanding $6,926,596
==========
==========================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $14.07
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Small Cap Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
==========================================================================================
Investment Income
Interest $ 25,318
- ------------------------------------------------------------------------------------------
Dividends 1,127
----------
Total income 26,445
==========================================================================================
Expenses
Management fees 20,414
- ------------------------------------------------------------------------------------------
Shareholder reports 16,643
- ------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 7,311
- ------------------------------------------------------------------------------------------
Custodian fees and expenses 2,410
- ------------------------------------------------------------------------------------------
Trustees' compensation 1,051
- ------------------------------------------------------------------------------------------
Other 2,373
----------
Total expenses 50,202
Less expenses paid indirectly (2,398)
Less voluntary assumption of expenses (11,200)
----------
Net expenses 36,604
==========================================================================================
Net Investment Loss (10,159)
==========================================================================================
Realized and Unrealized Gain
Net realized gain on investments 493,584
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 1,591,588
----------
Net realized and unrealized gain 2,085,172
==========================================================================================
Net Increase in Net Assets Resulting from Operations $2,075,013
==========
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Small Cap Growth Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Period Ended
December 31, December 31,
1999 1998(1)
===============================================================================================================
<S> <C> <C>
Operations
Net investment loss $ (10,159) $ (2,339)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 493,584 (45,301)
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 1,591,588 104,971
---------- --------
Net increase in net assets resulting from operations 2,075,013 57,331
===============================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 3,857,279 936,973
===============================================================================================================
Net Assets
Total increase 5,932,292 994,304
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 994,304 --
---------- --------
End of period $6,926,596 $994,304
========== ========
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
See accompanying Notes to Financial Statements.
12 Oppenheimer Small Cap Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998(1)
===========================================================================================
<S> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 9.60 $10.00
- -------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.02) (.02)
Net realized and unrealized gain (loss) 4.49 (.38)
- -------------------------------------------------------------------------------------------
Total income (loss) from investment operations 4.47 (.40)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $14.07 $ 9.60
====== ======
===========================================================================================
Total Return, at Net Asset Value(2) 46.56% (4.00)%
===========================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $6,927 $994
- -------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,738 $441
- -------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment loss (0.37)% (0.79)%
Expenses 1.83% 0.87%(4)
Expenses, net of voluntary assumption of expenses 1.34% N/A
- -------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 176% 61%
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods less than one full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $7,060,737 and $4,155,665, respectively.
See accompanying Notes to Financial Statements.
Oppenheimer Small Cap Growth Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Small Cap Growth Fund/VA (the Fund) is a 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 Fund's investment objective is to seek capital
appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in accumulated net investment loss of $10,159. Accumulated net realized
gain on investments was decreased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
14 Oppenheimer Small Cap Growth Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. 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.
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 Fund has 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 December 31, 1999 Year Ended December 31, 1998(1)
---------------------------- ------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 504,223 $5,008,676 114,434 $1,030,883
Redeemed (115,553) (1,151,397) (10,903) (93,910)
-------- ---------- ------- ----------
Net increase 388,670 $3,857,279 103,531 $ 936,973
======== ========== ======= ==========
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities of $1,696,559
was composed of gross appreciation of $1,896,881, and gross depreciation of
$200,322.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 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 Manager has
voluntarily reimbursed certain Fund expenses. The Fund's management fee for the
year ended December 31, 1999 was 0.75% of average annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Main Street Growth &
Income Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Main Street Growth & Income/VA
(which is a series of Oppenheimer Variable Account Funds) as of December 31,
1999, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended December 31, 1999 and
1998 and the financial highlights for the period July 5, 1995, to December 31,
1999. These financial statements and financial highlights are the responsibility
of the Fund's 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, 1999, 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
Main Street Growth & Income Fund/VA as of December 31, 1999, 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 24, 2000
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
===================================================================================================================
<S> <C> <C>
Common Stocks--94.6%
- -------------------------------------------------------------------------------------------------------------------
Basic Materials--2.9%
- -------------------------------------------------------------------------------------------------------------------
Chemicals--2.0%
Dexter Corp. 7,000 $ 278,250
- -------------------------------------------------------------------------------------------------------------------
Dow Chemical Co. 18,500 2,472,062
- -------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 88,400 5,823,350
- -------------------------------------------------------------------------------------------------------------------
Ecolab, Inc. 6,900 269,962
- -------------------------------------------------------------------------------------------------------------------
Engelhard Corp. 3,000 56,625
- -------------------------------------------------------------------------------------------------------------------
Great Lakes Chemical Corp. 1,200 45,825
- -------------------------------------------------------------------------------------------------------------------
International Flavors & Fragrances, Inc. 3,000 113,250
- -------------------------------------------------------------------------------------------------------------------
Lafarge Corp. 8,100 223,762
- -------------------------------------------------------------------------------------------------------------------
Rohm & Haas Co. 6,900 280,744
- -------------------------------------------------------------------------------------------------------------------
Schulman (A.), Inc. 10,000 163,125
- -------------------------------------------------------------------------------------------------------------------
Union Carbide Corp. 20,500 1,368,375
- -------------------------------------------------------------------------------------------------------------------
Universal Corp. 5,000 114,062
- -------------------------------------------------------------------------------------------------------------------
W.R. Grace & Co.(1) 4,000 55,500
-----------
11,264,892
- -------------------------------------------------------------------------------------------------------------------
Gold & Precious Minerals--0.0%
Homestake Mining Co. 10,100 78,906
- -------------------------------------------------------------------------------------------------------------------
Metals--0.6%
AK Steel Holding Corp. 10,000 188,750
- -------------------------------------------------------------------------------------------------------------------
Alcoa, Inc. 18,400 1,527,200
- -------------------------------------------------------------------------------------------------------------------
Inco Ltd.(1) 19,900 467,650
- -------------------------------------------------------------------------------------------------------------------
Nucor Corp. 6,000 328,875
- -------------------------------------------------------------------------------------------------------------------
Reliance Steel & Aluminum Co. 15,000 351,562
- -------------------------------------------------------------------------------------------------------------------
Ryerson Tull, Inc. 13,000 252,687
- -------------------------------------------------------------------------------------------------------------------
Worthington Industries, Inc. 1,600 26,500
-----------
3,143,224
- -------------------------------------------------------------------------------------------------------------------
Paper--0.3%
Georgia Pacific Group 7,600 385,700
- -------------------------------------------------------------------------------------------------------------------
Louisiana-Pacific Corp. 21,300 303,525
- -------------------------------------------------------------------------------------------------------------------
Rayonier, Inc. 4,000 193,250
- -------------------------------------------------------------------------------------------------------------------
Weyerhaeuser Co. 8,300 596,044
- -------------------------------------------------------------------------------------------------------------------
Willamette Industries, Inc. 7,000 325,062
-----------
1,803,581
- -------------------------------------------------------------------------------------------------------------------
Capital Goods--10.5%
- -------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.6%
Boeing Co. 147,100 6,113,844
- -------------------------------------------------------------------------------------------------------------------
General Dynamics Corp. 25,300 1,334,575
- -------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 11,600 253,750
- -------------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp. 8,000 432,500
- -------------------------------------------------------------------------------------------------------------------
Raytheon Co., Cl. B 15,000 398,437
- -------------------------------------------------------------------------------------------------------------------
TRW, Inc. 7,600 394,725
-----------
8,927,831
4 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Electrical Equipment--3.7%
AVX Corp. 9,400 $ 469,412
- -------------------------------------------------------------------------------------------------------------------
CommScope, Inc.(1) 65,000 2,620,312
- -------------------------------------------------------------------------------------------------------------------
Conexant Systems, Inc.(1) 9,400 623,925
- -------------------------------------------------------------------------------------------------------------------
Emerson Electric Co. 30,000 1,721,250
- -------------------------------------------------------------------------------------------------------------------
General Electric Co. 80,000 12,380,000
- -------------------------------------------------------------------------------------------------------------------
Integrated Device Technology, Inc.(1) 7,000 203,000
- -------------------------------------------------------------------------------------------------------------------
Rockwell International Corp. 24,700 1,182,512
- -------------------------------------------------------------------------------------------------------------------
SPX Corp.(1) 6,000 484,875
- -------------------------------------------------------------------------------------------------------------------
Symbol Technologies, Inc. 8,850 562,528
-----------
20,247,814
- -------------------------------------------------------------------------------------------------------------------
Industrial Services--0.6%
Coflexip SA, Sponsored ADR 62,500 2,375,000
- -------------------------------------------------------------------------------------------------------------------
Fluor Corp. 4,900 224,787
- -------------------------------------------------------------------------------------------------------------------
Payches, Inc. 3,300 132,000
- -------------------------------------------------------------------------------------------------------------------
Valassis Communications, Inc.(1) 10,000 422,500
-----------
3,154,287
- -------------------------------------------------------------------------------------------------------------------
Manufacturing--4.6%
American Standard Cos., Inc.(1) 75,000 3,440,625
- -------------------------------------------------------------------------------------------------------------------
Avery-Dennison Corp. 28,500 2,076,937
- -------------------------------------------------------------------------------------------------------------------
Ball Corp. 3,400 133,875
- -------------------------------------------------------------------------------------------------------------------
Bemis Co., Inc. 4,700 163,912
- -------------------------------------------------------------------------------------------------------------------
Briggs & Stratton Corp. 4,000 214,500
- -------------------------------------------------------------------------------------------------------------------
Cooper Industries, Inc. 13,900 562,081
- -------------------------------------------------------------------------------------------------------------------
Corning, Inc. 4,500 580,219
- -------------------------------------------------------------------------------------------------------------------
Crown Cork & Seal Co., Inc. 2,500 55,937
- -------------------------------------------------------------------------------------------------------------------
Cummins Engine Co., Inc. 1,200 57,975
- -------------------------------------------------------------------------------------------------------------------
Danaher Corp. 5,700 275,025
- -------------------------------------------------------------------------------------------------------------------
Dover Corp. 23,200 1,052,700
- -------------------------------------------------------------------------------------------------------------------
Eaton Corp. 8,700 631,837
- -------------------------------------------------------------------------------------------------------------------
Honeywell International, Inc. 84,375 4,867,383
- -------------------------------------------------------------------------------------------------------------------
Illinois Tool Works, Inc. 20,300 1,371,519
- -------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc. 15,000 265,312
- -------------------------------------------------------------------------------------------------------------------
Mettler-Toledo International, Inc.(1) 6,000 229,125
- -------------------------------------------------------------------------------------------------------------------
Microchip Technology, Inc.(1) 3,000 205,312
- -------------------------------------------------------------------------------------------------------------------
Miller (Herman), Inc. 10,000 230,000
- -------------------------------------------------------------------------------------------------------------------
Minnesota Mining & Manufacturing Co. 42,500 4,159,687
- -------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. 1,800 79,762
- -------------------------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 7,100 364,319
- -------------------------------------------------------------------------------------------------------------------
Pentair, Inc. 2,000 77,000
- -------------------------------------------------------------------------------------------------------------------
Temple-Inland, Inc. 2,000 131,875
- -------------------------------------------------------------------------------------------------------------------
Tyco International Ltd. 33,300 1,294,537
- -------------------------------------------------------------------------------------------------------------------
United Technologies Corp. 47,500 3,087,500
-----------
25,608,954
Oppenheimer Main Street Growth & Income Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Communication Services--5.7%
- -------------------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--3.8%
ADC Telecommunications, Inc.(1) 5,700 $ 413,606
- -------------------------------------------------------------------------------------------------------------------
ALLTELL Corp. 21,000 1,736,437
- -------------------------------------------------------------------------------------------------------------------
AT&T Corp. 299,300 15,189,475
- -------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc.(1) 4,000 579,000
- -------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(1)(2) 1,230 38,191
- -------------------------------------------------------------------------------------------------------------------
Sprint Corp. (Fon Group) 50,000 3,365,625
-----------
21,322,334
- -------------------------------------------------------------------------------------------------------------------
Telephone Utilities--1.9%
BellSouth Corp. 166,000 7,770,875
- -------------------------------------------------------------------------------------------------------------------
GTE Corp. 29,800 2,102,762
- -------------------------------------------------------------------------------------------------------------------
Western Wireless Corp.(1) 9,000 600,750
-----------
10,474,387
- -------------------------------------------------------------------------------------------------------------------
Telecommunications: Wireless--0.0%
United States Cellular Corp.(1) 2,000 201,875
- -------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--17.1%
- -------------------------------------------------------------------------------------------------------------------
Autos & Housing--2.2%
Arvin Industries, Inc. 6,900 195,787
- -------------------------------------------------------------------------------------------------------------------
Bandag, Inc. 2,000 50,000
- -------------------------------------------------------------------------------------------------------------------
Centex Construction Products, Inc. 6,000 234,000
- -------------------------------------------------------------------------------------------------------------------
Cooper Tire & Rubber Co. 7,700 119,831
- -------------------------------------------------------------------------------------------------------------------
Dana Corp. 3,800 113,762
- -------------------------------------------------------------------------------------------------------------------
Delphi Automotive Systems Corp. 79,231 1,247,888
- -------------------------------------------------------------------------------------------------------------------
Fortune Brands, Inc. 15,000 495,937
- -------------------------------------------------------------------------------------------------------------------
Furniture Brands International, Inc.(1) 5,000 110,000
- -------------------------------------------------------------------------------------------------------------------
General Motors Corp. 57,500 4,179,531
- -------------------------------------------------------------------------------------------------------------------
Hughes Supply, Inc. 6,900 148,781
- -------------------------------------------------------------------------------------------------------------------
Johns Manville Corp. 25,800 361,200
- -------------------------------------------------------------------------------------------------------------------
Johnson Controls, Inc. 6,600 375,375
- -------------------------------------------------------------------------------------------------------------------
Lear Corp.(1) 17,500 560,000
- -------------------------------------------------------------------------------------------------------------------
Leggett & Platt, Inc. 14,100 302,269
- -------------------------------------------------------------------------------------------------------------------
Masco Corp. 9,000 228,375
- -------------------------------------------------------------------------------------------------------------------
Maytag Corp. 9,000 432,000
- -------------------------------------------------------------------------------------------------------------------
Meritor Automotive, Inc. 12,000 232,500
- -------------------------------------------------------------------------------------------------------------------
NVR, Inc.(1) 5,000 238,750
- -------------------------------------------------------------------------------------------------------------------
Ryland Group, Inc. (The) 7,000 161,437
- -------------------------------------------------------------------------------------------------------------------
Snap-On, Inc. 4,300 114,219
- -------------------------------------------------------------------------------------------------------------------
Southdown, Inc. 5,400 278,775
- -------------------------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 10,000 186,250
- -------------------------------------------------------------------------------------------------------------------
Tower Automotive, Inc.(1) 8,900 137,394
- -------------------------------------------------------------------------------------------------------------------
Vulcan Materials Co. 8,000 319,500
6 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Autos & Housing (continued)
Webb (Del E.) Corp.(1) 9,900 $ 246,881
- -------------------------------------------------------------------------------------------------------------------
Whirlpool Corp. 12,700 826,294
- -------------------------------------------------------------------------------------------------------------------
York International Corp. 4,800 131,700
-----------
12,028,436
- -------------------------------------------------------------------------------------------------------------------
Consumer Services--0.8%
Avis Rent A Car, Inc.(1) 18,000 460,125
- -------------------------------------------------------------------------------------------------------------------
Catalina Marketing Corp.(1) 3,500 405,125
- -------------------------------------------------------------------------------------------------------------------
CDI Corp.(1) 9,900 238,837
- -------------------------------------------------------------------------------------------------------------------
Dun & Bradstreet Corp. 12,000 354,000
- -------------------------------------------------------------------------------------------------------------------
H&R Block, Inc. 14,000 612,500
- -------------------------------------------------------------------------------------------------------------------
Hertz Corp., Cl. A 5,000 250,625
- -------------------------------------------------------------------------------------------------------------------
Interpublic Group of Cos., Inc. 27,000 1,557,562
- -------------------------------------------------------------------------------------------------------------------
Young & Rubicam, Inc. 8,000 566,000
-----------
4,444,774
- -------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--0.5%
Brunswick Corp. 25,000 556,250
- -------------------------------------------------------------------------------------------------------------------
Harley-Davidson, Inc. 10,000 640,625
- -------------------------------------------------------------------------------------------------------------------
Hasbro, Inc. 10,000 190,625
- -------------------------------------------------------------------------------------------------------------------
Marriott International, Inc., Cl. A 17,000 536,562
- -------------------------------------------------------------------------------------------------------------------
MGM Grand, Inc. 8,624 433,895
- -------------------------------------------------------------------------------------------------------------------
Park Place Entertainment Corp.(1) 50,000 625,000
-----------
2,982,957
- -------------------------------------------------------------------------------------------------------------------
Media--3.0%
Central Newspapers, Inc., Cl. A 5,000 196,875
- -------------------------------------------------------------------------------------------------------------------
Deluxe Corp. 10,000 274,375
- -------------------------------------------------------------------------------------------------------------------
Dow Jones & Co., Inc. 4,000 272,000
- -------------------------------------------------------------------------------------------------------------------
Gannett Co., Inc. 28,000 2,283,750
- -------------------------------------------------------------------------------------------------------------------
Harland (John H.) Co. 10,000 183,125
- -------------------------------------------------------------------------------------------------------------------
Knight-Ridder, Inc. 10,800 642,600
- -------------------------------------------------------------------------------------------------------------------
McClatchy Co., Cl. A 5,000 216,250
- -------------------------------------------------------------------------------------------------------------------
New York Times Co., Cl. A 15,000 736,875
- -------------------------------------------------------------------------------------------------------------------
R.H. Donnelley Corp.(1) 9,900 186,862
- -------------------------------------------------------------------------------------------------------------------
Readers Digest Assn., Inc., Cl. A, Non-Vtg. 28,300 827,775
- -------------------------------------------------------------------------------------------------------------------
Snyder Communications, Inc.(1) 5,000 96,250
- -------------------------------------------------------------------------------------------------------------------
Time Warner, Inc. 114,700 8,308,581
- -------------------------------------------------------------------------------------------------------------------
Times Mirror Co. (The), Cl. A 2,400 160,800
- -------------------------------------------------------------------------------------------------------------------
Tribune Co. 20,000 1,101,250
- -------------------------------------------------------------------------------------------------------------------
USA Networks, Inc.(1) 20,000 1,105,000
-----------
16,592,368
Oppenheimer Main Street Growth & Income Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Retail: General--4.8%
Dayton Hudson Corp. 15,600 $ 1,145,625
- -------------------------------------------------------------------------------------------------------------------
Dillard's, Inc. 4,000 80,750
- -------------------------------------------------------------------------------------------------------------------
Dollar General Corp. 15,600 354,900
- -------------------------------------------------------------------------------------------------------------------
Family Dollar Stores, Inc. 6,000 97,875
- -------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc.(1) 87,500 4,424,219
- -------------------------------------------------------------------------------------------------------------------
K Mart Corp.(1) 55,000 553,437
- -------------------------------------------------------------------------------------------------------------------
Kohl's Corp.(1) 7,700 555,844
- -------------------------------------------------------------------------------------------------------------------
May Department Stores Co. 45,000 1,451,250
- -------------------------------------------------------------------------------------------------------------------
Nordstrom, Inc. 6,000 157,125
- -------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 7,000 139,562
- -------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co. 42,000 1,278,375
- -------------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 237,700 16,431,012
-----------
26,669,974
- -------------------------------------------------------------------------------------------------------------------
Retail: Specialty--5.1%
Abercrombie & Fitch Co., Cl. A(1) 43,000 1,147,562
- -------------------------------------------------------------------------------------------------------------------
American Eagle Outfitters, Inc.(1) 11,200 504,000
- -------------------------------------------------------------------------------------------------------------------
American Greetings Corp., Cl. A 2,200 51,975
- -------------------------------------------------------------------------------------------------------------------
Ann Taylor Stores Corp.(1) 10,000 344,375
- -------------------------------------------------------------------------------------------------------------------
Bed Bath & Beyond, Inc.(1) 2,700 93,825
- -------------------------------------------------------------------------------------------------------------------
Best Buy Co., Inc.(1) 23,000 1,154,312
- -------------------------------------------------------------------------------------------------------------------
BJ's Wholesale Club, Inc.(1) 8,000 292,000
- -------------------------------------------------------------------------------------------------------------------
Circuit City Stores-Circuit City Group 9,600 432,600
- -------------------------------------------------------------------------------------------------------------------
Gap, Inc. 55,500 2,553,000
- -------------------------------------------------------------------------------------------------------------------
Home Depot, Inc. 180,600 12,382,387
- -------------------------------------------------------------------------------------------------------------------
Lands' End, Inc.(1) 4,700 163,325
- -------------------------------------------------------------------------------------------------------------------
Limited, Inc. 20,700 896,569
- -------------------------------------------------------------------------------------------------------------------
Linens 'N Things, Inc.(1) 5,000 148,125
- -------------------------------------------------------------------------------------------------------------------
Lowe's Cos., Inc. 21,500 1,284,625
- -------------------------------------------------------------------------------------------------------------------
Nike, Inc., Cl. B 20,000 991,250
- -------------------------------------------------------------------------------------------------------------------
Office Depot, Inc.(1) 20,000 218,750
- -------------------------------------------------------------------------------------------------------------------
Payless ShoeSource, Inc.(1) 15,000 705,000
- -------------------------------------------------------------------------------------------------------------------
Ross Stores, Inc. 43,000 771,312
- -------------------------------------------------------------------------------------------------------------------
Sherwin-Williams Co. 23,000 483,000
- -------------------------------------------------------------------------------------------------------------------
Shopko Stores, Inc.(1) 10,000 230,000
- -------------------------------------------------------------------------------------------------------------------
Tandy Corp. 20,000 983,750
- -------------------------------------------------------------------------------------------------------------------
Tiffany & Co. 10,000 892,500
- -------------------------------------------------------------------------------------------------------------------
TJX Cos., Inc. 31,200 637,650
- -------------------------------------------------------------------------------------------------------------------
Too, Inc.(1) 2,957 51,008
- -------------------------------------------------------------------------------------------------------------------
Toys "R" Us, Inc.(1) 23,000 329,187
- -------------------------------------------------------------------------------------------------------------------
Zale Corp.(1) 12,000 580,500
-----------
28,322,587
8 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Textile/Apparel & Home Furnishings--0.7%
Jones Apparel Group, Inc.(1) 65,099 $1,765,810
- -------------------------------------------------------------------------------------------------------------------
Liz Claiborne, Inc. 14,000 526,750
- -------------------------------------------------------------------------------------------------------------------
Mohawk Industries, Inc.(1) 7,900 208,362
- -------------------------------------------------------------------------------------------------------------------
Shaw Industries, Inc. 46,000 710,125
- -------------------------------------------------------------------------------------------------------------------
VF Corp. 16,000 480,000
- -------------------------------------------------------------------------------------------------------------------
Warnaco Group, Inc. (The), Cl. A 11,600 142,825
- -------------------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc. 12,000 210,000
----------
4,043,872
- -------------------------------------------------------------------------------------------------------------------
Consumer Staples--5.7%
- -------------------------------------------------------------------------------------------------------------------
Beverages--0.5%
Adolph Coors Co., Cl. B 3,500 183,750
- -------------------------------------------------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 37,800 2,679,075
- -------------------------------------------------------------------------------------------------------------------
Brown-Forman Corp., Cl. B 700 40,075
----------
2,902,900
- -------------------------------------------------------------------------------------------------------------------
Broadcasting--1.7%
CBS Corp.(1) 38,000 2,429,625
- -------------------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special 101,000 5,106,813
- -------------------------------------------------------------------------------------------------------------------
Cox Communications, Inc., Cl. A(1) 10,000 515,000
- -------------------------------------------------------------------------------------------------------------------
MediaOne Group, Inc.(1) 21,000 1,613,063
----------
9,664,501
- -------------------------------------------------------------------------------------------------------------------
Entertainment--0.7%
Brinker International, Inc.(1) 85,000 2,040,000
- -------------------------------------------------------------------------------------------------------------------
Darden Restaurants, Inc. 14,600 264,625
- -------------------------------------------------------------------------------------------------------------------
Ruby Tuesday, Inc. 10,000 181,875
- -------------------------------------------------------------------------------------------------------------------
Tricon Global Restaurants, Inc.(1) 27,600 1,066,050
- -------------------------------------------------------------------------------------------------------------------
Wendy's International, Inc. 26,600 548,625
----------
4,101,175
- -------------------------------------------------------------------------------------------------------------------
Food--0.4%
Agribrands International, Inc.(1) 10,000 460,000
- -------------------------------------------------------------------------------------------------------------------
ConAgra, Inc. 12,500 282,031
- -------------------------------------------------------------------------------------------------------------------
Corn Products International, Inc. 9,900 324,225
- -------------------------------------------------------------------------------------------------------------------
Hormel Foods Corp. 4,000 162,500
- -------------------------------------------------------------------------------------------------------------------
IBP, Inc. 12,000 216,000
- -------------------------------------------------------------------------------------------------------------------
Sysco Corp. 20,800 822,900
----------
2,267,656
- -------------------------------------------------------------------------------------------------------------------
Food & Drug Retailers--0.4%
Albertson's, Inc. 31,800 1,025,550
- -------------------------------------------------------------------------------------------------------------------
CVS Corp. 26,500 1,058,344
- -------------------------------------------------------------------------------------------------------------------
SUPERVALU, Inc. 7,700 154,000
- -------------------------------------------------------------------------------------------------------------------
Walgreen Co. 5,100 149,175
----------
2,387,069
- -------------------------------------------------------------------------------------------------------------------
Household Goods--0.6%
Kimberly-Clark Corp. 50,000 3,262,500
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Tobacco--1.4%
Philip Morris Cos., Inc. 275,000 $ 6,376,563
- -------------------------------------------------------------------------------------------------------------------
R.J. Reynolds Tobacco Holdings, Inc. 44,900 791,363
- -------------------------------------------------------------------------------------------------------------------
UST, Inc. 15,700 395,444
-----------
7,563,370
- -------------------------------------------------------------------------------------------------------------------
Energy--11.5%
- -------------------------------------------------------------------------------------------------------------------
Energy Services--3.0%
BJ Services Co.(1) 57,500 2,404,219
- -------------------------------------------------------------------------------------------------------------------
Coastal Corp. 4,600 163,013
- -------------------------------------------------------------------------------------------------------------------
Cooper Cameron Corp.(1) 60,000 2,936,250
- -------------------------------------------------------------------------------------------------------------------
Nabors Industries, Inc.(1) 30,000 928,125
- -------------------------------------------------------------------------------------------------------------------
Noble Drilling Corp.(1) 60,000 1,965,000
- -------------------------------------------------------------------------------------------------------------------
Santa Fe International Corp. 50,000 1,293,750
- -------------------------------------------------------------------------------------------------------------------
Stolt Comex Seaway SA, ADR(1) 315,000 3,465,000
- -------------------------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc. 39,000 1,313,813
- -------------------------------------------------------------------------------------------------------------------
Weatherford International, Inc. 50,000 1,996,875
-----------
16,466,045
- -------------------------------------------------------------------------------------------------------------------
Oil: Domestic--5.2%
Amerada Hess Corp. 13,700 777,475
- -------------------------------------------------------------------------------------------------------------------
Burlington Resources, Inc. 37,500 1,239,844
- -------------------------------------------------------------------------------------------------------------------
Chevron Corp. 37,700 3,265,763
- -------------------------------------------------------------------------------------------------------------------
Chieftain International, Inc.(1) 53,600 924,600
- -------------------------------------------------------------------------------------------------------------------
Conoco, Inc., Cl. B 11,000 273,625
- -------------------------------------------------------------------------------------------------------------------
Devon Energy Corp. 25,000 821,875
- -------------------------------------------------------------------------------------------------------------------
EOG Resources, Inc. 35,600 625,225
- -------------------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 140,288 11,301,952
- -------------------------------------------------------------------------------------------------------------------
Frontier Oil Corp.(1) 61,300 413,775
- -------------------------------------------------------------------------------------------------------------------
Murphy Oil Corp. 21,600 1,239,300
- -------------------------------------------------------------------------------------------------------------------
Newfield Exploration Co.(1) 16,000 428,000
- -------------------------------------------------------------------------------------------------------------------
Noble Affiliates, Inc. 8,000 171,500
- -------------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co. 15,000 705,000
- -------------------------------------------------------------------------------------------------------------------
Stone Energy Corp.(1) 9,700 345,563
- -------------------------------------------------------------------------------------------------------------------
Tesoro Petroleum Corp.(1) 34,000 393,125
- -------------------------------------------------------------------------------------------------------------------
Texaco, Inc. 55,100 2,992,619
- -------------------------------------------------------------------------------------------------------------------
Tosco Corp. 5,000 135,938
- -------------------------------------------------------------------------------------------------------------------
Vastar Resources, Inc. 50,000 2,950,000
-----------
29,005,179
10 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Oil: International--3.3%
Anderson Exploration Ltd.(1) 66,400 $ 791,405
- -------------------------------------------------------------------------------------------------------------------
Beau Canada Exploration Ltd.(1) 308,600 362,482
- -------------------------------------------------------------------------------------------------------------------
Berkley Petroleum Corp.(1) 90,000 786,637
- -------------------------------------------------------------------------------------------------------------------
Canadian 88 Energy Corp. 300,000 414,565
- -------------------------------------------------------------------------------------------------------------------
Canadian Hunter Exploration Ltd.(1) 15,000 246,148
- -------------------------------------------------------------------------------------------------------------------
Canadian Natural Resources Ltd.(1) 70,000 1,704,899
- -------------------------------------------------------------------------------------------------------------------
Encal Energy Ltd.(1) 70,000 319,215
- -------------------------------------------------------------------------------------------------------------------
Newport Petroleum Corp.(1) 152,500 347,716
- -------------------------------------------------------------------------------------------------------------------
Paramount Resources Ltd. 49,900 586,126
- -------------------------------------------------------------------------------------------------------------------
Prize Energy, Inc.(1) 57,692 11,959
- -------------------------------------------------------------------------------------------------------------------
Ranger Oil Ltd.(1) 85,300 265,218
- -------------------------------------------------------------------------------------------------------------------
Rio Alto Exploration Ltd.(1) 29,300 412,990
- -------------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co., NY Shares 173,100 10,461,731
- -------------------------------------------------------------------------------------------------------------------
Talisman Energy, Inc.(1) 50,000 1,274,788
- -------------------------------------------------------------------------------------------------------------------
Ulster Petroleums Ltd.(1) 35,000 310,751
-----------
18,296,630
- -------------------------------------------------------------------------------------------------------------------
Financial--9.2%
- -------------------------------------------------------------------------------------------------------------------
Banks--2.7%
Bank of America Corp. 30,000 1,505,625
- -------------------------------------------------------------------------------------------------------------------
BB&T Corp. 11,600 317,550
- -------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 70,000 5,438,125
- -------------------------------------------------------------------------------------------------------------------
First Union Corp. 41,200 1,351,875
- -------------------------------------------------------------------------------------------------------------------
M&T Bank Corp. 100 41,425
- -------------------------------------------------------------------------------------------------------------------
National City Corp. 6,000 142,125
- -------------------------------------------------------------------------------------------------------------------
Northern Trust Corp. 10,600 561,800
- -------------------------------------------------------------------------------------------------------------------
Old Kent Financial Corp. 17,000 601,375
- -------------------------------------------------------------------------------------------------------------------
PNC Bank Corp. 32,000 1,424,000
- -------------------------------------------------------------------------------------------------------------------
Prosperity Bancshares, Inc. 67,500 1,080,000
- -------------------------------------------------------------------------------------------------------------------
TCF Financial Corp. 3,000 74,625
- -------------------------------------------------------------------------------------------------------------------
Wachovia Corp. 6,800 462,400
- -------------------------------------------------------------------------------------------------------------------
Wells Fargo Co. 42,800 1,730,725
- -------------------------------------------------------------------------------------------------------------------
Zions Bancorp 3,000 177,563
-----------
14,909,213
Oppenheimer Main Street Growth & Income Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Diversified Financial--3.6%
AMBAC Financial Group, Inc. 7,000 $ 365,313
- -------------------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. 8,500 363,375
- -------------------------------------------------------------------------------------------------------------------
Citigroup, Inc. 134,500 7,473,156
- -------------------------------------------------------------------------------------------------------------------
Financial Security Assurance Holdings Ltd. 7,000 364,875
- -------------------------------------------------------------------------------------------------------------------
Freddie Mac 26,800 1,261,275
- -------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 18,600 1,751,888
- -------------------------------------------------------------------------------------------------------------------
Household International, Inc. 17,000 633,250
- -------------------------------------------------------------------------------------------------------------------
MGIC Investment Corp. 21,500 1,294,031
- -------------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 17,300 2,469,575
- -------------------------------------------------------------------------------------------------------------------
PaineWebber Group, Inc. 7,400 287,213
- -------------------------------------------------------------------------------------------------------------------
PMI Group, Inc. (The) 30,000 1,464,375
- -------------------------------------------------------------------------------------------------------------------
Providian Financial Corp. 19,000 1,730,188
- -------------------------------------------------------------------------------------------------------------------
SEI Investments Co. 2,000 238,031
-----------
19,696,545
- -------------------------------------------------------------------------------------------------------------------
Insurance--2.4%
Aetna, Inc. 9,000 502,313
- -------------------------------------------------------------------------------------------------------------------
AFLAC, Inc. 6,300 297,281
- -------------------------------------------------------------------------------------------------------------------
Allmerica Financial Corp. 16,000 890,000
- -------------------------------------------------------------------------------------------------------------------
Allstate Corp. 48,000 1,152,000
- -------------------------------------------------------------------------------------------------------------------
American General Corp. 11,400 864,975
- -------------------------------------------------------------------------------------------------------------------
AXA Financial, Inc. 46,000 1,558,250
- -------------------------------------------------------------------------------------------------------------------
Cigna Corp. 32,000 2,578,000
- -------------------------------------------------------------------------------------------------------------------
Cincinnati Financial Corp. 9,700 302,519
- -------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 14,600 260,975
- -------------------------------------------------------------------------------------------------------------------
Hartford Life, Inc., Cl. A 10,000 440,000
- -------------------------------------------------------------------------------------------------------------------
Jefferson-Pilot Corp. 9,500 648,375
- -------------------------------------------------------------------------------------------------------------------
Lincoln National Corp. 20,000 800,000
- -------------------------------------------------------------------------------------------------------------------
Loews Corp. 15,100 916,381
- -------------------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc. 8,000 765,500
- -------------------------------------------------------------------------------------------------------------------
Progressive Corp. 5,200 380,250
- -------------------------------------------------------------------------------------------------------------------
Quantum Corp.-DLT & Storage Systems(1) 6,000 90,750
- -------------------------------------------------------------------------------------------------------------------
Radian Group, Inc. 4,000 191,000
- -------------------------------------------------------------------------------------------------------------------
UnumProvident Corp. 12,000 384,750
-----------
13,023,319
- -------------------------------------------------------------------------------------------------------------------
Savings & Loans--0.5%
Dime Bancorp, Inc. 15,000 226,875
- -------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc.(1) 30,000 517,500
- -------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp. 5,000 167,500
- -------------------------------------------------------------------------------------------------------------------
Greenpoint Financial Corp. 13,000 309,563
- -------------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc. 62,000 1,612,000
- -------------------------------------------------------------------------------------------------------------------
Webster Financial Corp. 5,000 117,813
-----------
2,951,251
12 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Healthcare--7.4%
- -------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--6.4%
Abbott Laboratories 51,100 $ 1,855,569
- -------------------------------------------------------------------------------------------------------------------
Alpharma, Inc. 5,000 153,750
- -------------------------------------------------------------------------------------------------------------------
ALZA Corp., Cl. A(1) 5,000 173,125
- -------------------------------------------------------------------------------------------------------------------
Amgen, Inc.(1) 84,200 5,057,263
- -------------------------------------------------------------------------------------------------------------------
Andrx Corp.(1) 10,000 423,125
- -------------------------------------------------------------------------------------------------------------------
Biogen, Inc.(1) 19,000 1,605,500
- -------------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 98,500 6,322,469
- -------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 92,200 8,586,125
- -------------------------------------------------------------------------------------------------------------------
Mallinckrodt, Inc. 4,000 127,250
- -------------------------------------------------------------------------------------------------------------------
Medimmune, Inc.(1) 6,000 995,250
- -------------------------------------------------------------------------------------------------------------------
Merck & Co., Inc. 88,600 5,941,738
- -------------------------------------------------------------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(1) 6,000 732,000
- -------------------------------------------------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 16,800 756,000
- -------------------------------------------------------------------------------------------------------------------
Schering-Plough Corp. 57,500 2,425,781
- -------------------------------------------------------------------------------------------------------------------
Trigon Healthcare, Inc.(1) 7,500 221,250
-----------
35,376,195
- -------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.0%
Alberto-Culver Co., Cl. B 2,000 51,625
- -------------------------------------------------------------------------------------------------------------------
Allergan, Inc. 15,200 756,200
- -------------------------------------------------------------------------------------------------------------------
Biomet, Inc. 7,000 280,000
- -------------------------------------------------------------------------------------------------------------------
Cardinal Health, Inc. 33,000 1,579,875
- -------------------------------------------------------------------------------------------------------------------
Guidant Corp.(1) 2,100 98,700
- -------------------------------------------------------------------------------------------------------------------
PacifiCare Health Systems, Inc.(1) 2,600 137,800
- -------------------------------------------------------------------------------------------------------------------
PerkinElmer, Inc. 5,200 216,775
- -------------------------------------------------------------------------------------------------------------------
Shared Medical Systems Corp. 1,000 50,938
- -------------------------------------------------------------------------------------------------------------------
United Healthcare Corp. 31,600 1,678,750
- -------------------------------------------------------------------------------------------------------------------
VISX, Inc.(1) 8,000 414,000
-----------
5,264,663
- -------------------------------------------------------------------------------------------------------------------
Technology--20.8%
- -------------------------------------------------------------------------------------------------------------------
Computer Hardware--4.9%
Adaptec, Inc.(1) 12,000 598,500
- -------------------------------------------------------------------------------------------------------------------
Apple Computer, Inc.(1) 17,000 1,747,813
- -------------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 42,000 1,092,000
- -------------------------------------------------------------------------------------------------------------------
Electronics for Imaging, Inc.(1) 14,000 813,750
- -------------------------------------------------------------------------------------------------------------------
Gateway, Inc.(1) 8,000 576,500
- -------------------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 50,000 5,696,875
- -------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 109,000 11,772,000
- -------------------------------------------------------------------------------------------------------------------
KLA Instruments Corp.(1) 4,800 534,600
- -------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 15,300 1,384,650
- -------------------------------------------------------------------------------------------------------------------
NCR Corp.(1) 5,000 189,375
- -------------------------------------------------------------------------------------------------------------------
Pitney Bowes, Inc. 15,400 744,013
- -------------------------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 31,000 1,443,438
Oppenheimer Main Street Growth & Income Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Computer Hardware (continued)
Xircom, Inc.(1) 10,000 $ 750,000
-----------
27,343,514
- -------------------------------------------------------------------------------------------------------------------
Computer Services--0.7%
Automatic Data Processing, Inc. 28,300 1,524,663
- -------------------------------------------------------------------------------------------------------------------
DST Systems, Inc.(1) 3,000 228,938
- -------------------------------------------------------------------------------------------------------------------
First Data Corp. 33,000 1,627,313
- -------------------------------------------------------------------------------------------------------------------
Keane, Inc.(1) 6,000 190,500
-----------
3,571,414
- -------------------------------------------------------------------------------------------------------------------
Computer Software--6.7%
Adobe Systems, Inc. 8,000 538,000
- -------------------------------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 12,900 1,031,194
- -------------------------------------------------------------------------------------------------------------------
Cadence Design Systems, Inc.(1) 9,000 216,000
- -------------------------------------------------------------------------------------------------------------------
Computer Sciences Corp.(1) 4,000 378,500
- -------------------------------------------------------------------------------------------------------------------
Compuware Corp.(1) 29,000 1,080,250
- -------------------------------------------------------------------------------------------------------------------
Electronic Arts, Inc.(1) 4,000 336,000
- -------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 31,500 2,108,531
- -------------------------------------------------------------------------------------------------------------------
Legato Systems, Inc.(1) 10,000 688,125
- -------------------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 228,150 26,636,513
- -------------------------------------------------------------------------------------------------------------------
Peoplesoft, Inc.(1) 20,000 426,250
- -------------------------------------------------------------------------------------------------------------------
Siebel Systems, Inc.(1) 10,000 840,000
- -------------------------------------------------------------------------------------------------------------------
Synopsys, Inc.(1) 3,400 226,950
- -------------------------------------------------------------------------------------------------------------------
Veritas Software Corp.(1) 18,000 2,576,250
-----------
37,082,563
- -------------------------------------------------------------------------------------------------------------------
Communications Equipment--2.3%
Cisco Systems, Inc.(1) 94,000 10,069,750
- -------------------------------------------------------------------------------------------------------------------
General Instrument Corp.(1) 11,000 935,000
- -------------------------------------------------------------------------------------------------------------------
Harmonic, Inc.(1) 4,000 379,750
- -------------------------------------------------------------------------------------------------------------------
Tellabs, Inc.(1) 17,400 1,116,863
-----------
12,501,363
- -------------------------------------------------------------------------------------------------------------------
Electronics--5.5%
Advanced Micro Devices, Inc. 12,400 358,825
- -------------------------------------------------------------------------------------------------------------------
Analog Devices, Inc.(1) 18,000 1,674,000
- -------------------------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 36,000 1,165,500
- -------------------------------------------------------------------------------------------------------------------
Grainger (W.W.), Inc. 17,000 812,813
- -------------------------------------------------------------------------------------------------------------------
Intel Corp. 187,000 15,392,438
- -------------------------------------------------------------------------------------------------------------------
Lam Research Corp.(1) 10,000 1,115,625
- -------------------------------------------------------------------------------------------------------------------
Micron Technology, Inc. 40,000 3,110,000
- -------------------------------------------------------------------------------------------------------------------
Motorola, Inc. 9,300 1,369,425
- -------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp.(1) 34,700 1,485,594
- -------------------------------------------------------------------------------------------------------------------
QLogic Corp.(1) 6,000 959,250
- -------------------------------------------------------------------------------------------------------------------
RF Micro Devices, Inc.(1) 7,000 479,063
- -------------------------------------------------------------------------------------------------------------------
Teradyne, Inc.(1) 14,500 957,000
- -------------------------------------------------------------------------------------------------------------------
Waters Corp.(1) 9,400 498,200
- -------------------------------------------------------------------------------------------------------------------
Xilinx, Inc.(1) 30,000 1,364,063
-----------
30,741,796
14 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Photography--0.7%
Eastman Kodak Co. 46,000 $3,047,500
- -------------------------------------------------------------------------------------------------------------------
Xerox Corp. 45,000 1,020,938
----------
4,068,438
- -------------------------------------------------------------------------------------------------------------------
Transportation--1.4%
- -------------------------------------------------------------------------------------------------------------------
Air Transportation--0.8%
Alaska Air Group, Inc.(1) 16,000 562,000
- -------------------------------------------------------------------------------------------------------------------
Continental Airlines, Inc., Cl. B(1) 51,558 2,287,886
- -------------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc. 25,000 1,245,313
- -------------------------------------------------------------------------------------------------------------------
Northwest Airlines Corp., Cl. A(1) 3,000 66,750
- -------------------------------------------------------------------------------------------------------------------
UAL Corp.(1) 2,900 224,931
----------
4,386,880
- -------------------------------------------------------------------------------------------------------------------
Railroads & Truckers--0.6%
Burlington Northern Santa Fe Corp. 35,800 868,150
- -------------------------------------------------------------------------------------------------------------------
CNF Transportation, Inc. 10,000 345,000
- -------------------------------------------------------------------------------------------------------------------
Navistar International Corp.(1) 2,000 94,750
- -------------------------------------------------------------------------------------------------------------------
Rollins Truck Leasing Co. 10,000 119,375
- -------------------------------------------------------------------------------------------------------------------
Union Pacific Corp. 39,600 1,727,550
- -------------------------------------------------------------------------------------------------------------------
USFreightways Corp. 2,000 95,750
- -------------------------------------------------------------------------------------------------------------------
XTRA Corp.(1) 5,000 213,125
----------
3,463,700
- -------------------------------------------------------------------------------------------------------------------
Utilities--2.4%
- -------------------------------------------------------------------------------------------------------------------
Electric Utilities--2.4%
Allegheny Energy, Inc. 20,000 538,750
- -------------------------------------------------------------------------------------------------------------------
Ameren Corp. 13,300 435,575
- -------------------------------------------------------------------------------------------------------------------
Calpine Corp.(1) 6,000 384,000
- -------------------------------------------------------------------------------------------------------------------
Carolina Power & Light Co. 3,500 106,531
- -------------------------------------------------------------------------------------------------------------------
Conectiv, Inc. 4,000 67,250
- -------------------------------------------------------------------------------------------------------------------
Consolidated Edison Co. of New York, Inc. 12,000 414,000
- -------------------------------------------------------------------------------------------------------------------
DTE Energy Co. 16,700 523,963
- -------------------------------------------------------------------------------------------------------------------
Duke Energy Corp. 11,000 551,375
- -------------------------------------------------------------------------------------------------------------------
Edison International 5,500 144,031
- -------------------------------------------------------------------------------------------------------------------
Energy East Corp. 30,000 624,375
- -------------------------------------------------------------------------------------------------------------------
Entergy Corp. 19,300 496,975
- -------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp. 30,000 680,625
- -------------------------------------------------------------------------------------------------------------------
Florida Progress Corp. 16,000 677,000
- -------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 21,600 924,750
- -------------------------------------------------------------------------------------------------------------------
GPU, Inc. 15,000 449,063
- -------------------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc. 10,000 170,625
- -------------------------------------------------------------------------------------------------------------------
Northeast Utilities Co. 10,400 213,850
- -------------------------------------------------------------------------------------------------------------------
OGE Energy Corp. 9,900 188,100
- -------------------------------------------------------------------------------------------------------------------
Peco Energy Co. 19,600 681,100
- -------------------------------------------------------------------------------------------------------------------
PG&E Corp. 31,300 641,650
- -------------------------------------------------------------------------------------------------------------------
PP&L Resources, Inc. 25,500 583,313
Oppenheimer Main Street Growth & Income Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares Note 1
- -------------------------------------------------------------------------------------------------------------------
Electric Utilities (continued)
Public Service Enterprise Group, Inc. 25,000 $ 870,313
- -------------------------------------------------------------------------------------------------------------------
Southern Co. 32,300 759,050
- -------------------------------------------------------------------------------------------------------------------
Texas Utilities Co. 16,000 569,000
- -------------------------------------------------------------------------------------------------------------------
TNP Enterprises, Inc. 18,000 742,500
- -------------------------------------------------------------------------------------------------------------------
Unicom Corp. 26,000 871,000
- -------------------------------------------------------------------------------------------------------------------
UtiliCorp United, Inc. 3,000 58,313
------------
13,367,077
- -------------------------------------------------------------------------------------------------------------------
Gas Utilities--0.0%
NICOR, Inc. 1,200 39,000
- -------------------------------------------------------------------------------------------------------------------
Sempra Energy 8,700 151,163
------------
190,163
------------
Total Common Stocks (Cost $460,541,934) 525,168,172
===================================================================================================================
Other Securities--0.5%
- -------------------------------------------------------------------------------------------------------------------
Reliant Energy, Inc., 7% Automatic Common Exchange Securities for
Time Warner, Inc. Common Stock (Cost $1,170,994) 25,000 3,012,500
Principal
Amount
===================================================================================================================
Repurchase Agreements--7.3%
- -------------------------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 3%, dated 12/31/99, to be
repurchased at $40,310,075 on 1/3/00, collateralized by U.S. Treasury Nts.,
5.625%-6.125%, 11/30/00-12/31/01, with a value of $41,163,751 (Cost $40,300,000) $40,300,000 40,300,000
- -------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $502,012,928) 102.4% 568,480,672
- -------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (2.4) (13,169,640)
----------- ------------
Net Assets 100.0% $555,311,032
=========== ============
</TABLE>
1. Non-income producing security.
2. Identifies issues considered to be illiquid or restricted--See Note 7 of
Notes to Financial Statements.
See accompanying Notes to Financial Statements.
16 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===============================================================================================
Assets
Investments, at value (cost $502,012,928)--see accompanying statement $568,480,672
- -----------------------------------------------------------------------------------------------
Cash 815,492
- -----------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 1,561,996
Shares of beneficial interest sold 1,353,452
Interest and dividends 408,004
Other 5,662
------------
Total assets 572,625,278
===============================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 16,455,193
Shares of beneficial interest redeemed 757,476
Transfer and shareholder servicing agent fees 186
Other 101,391
------------
Total liabilities 17,314,246
===============================================================================================
Net Assets $555,311,032
============
===============================================================================================
Composition of Net Assets
Paid-in capital $454,999,711
- -----------------------------------------------------------------------------------------------
Undistributed net investment income 2,471,016
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 31,372,614
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 66,467,691
------------
Net assets--applicable to 22,545,003 shares of beneficial
interest outstanding $555,311,032
============
===============================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $24.63
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Main Street Growth & Income Fund/VA 17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
================================================================================================
Investment Income
Dividends (net of foreign withholding taxes of $9,543) $ 4,116,206
- ------------------------------------------------------------------------------------------------
Interest 1,409,101
-----------
Total income 5,525,307
================================================================================================
Expenses
Management fees 2,864,220
- ------------------------------------------------------------------------------------------------
Custodian fees and expenses 102,216
- ------------------------------------------------------------------------------------------------
Trustees' compensation 2,364
- ------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,103
- ------------------------------------------------------------------------------------------------
Other 85,634
-----------
Total expenses 3,056,537
Less expenses paid indirectly (5,133)
-----------
Net expenses 3,051,404
================================================================================================
Net Investment Income 2,473,903
================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 37,106,529
Closing and expiration of option contracts written (1,299,413)
Foreign currency transactions (2,141)
-----------
Net realized gain 35,804,975
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 41,728,791
Translation of assets and liabilities denominated in foreign currencies 150,803
-----------
Net change 41,879,594
-----------
Net realized and unrealized gain 77,684,569
================================================================================================
Net Increase in Net Assets Resulting from Operations $80,158,472
===========
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
==================================================================================================
<S> <C> <C>
Operations
Net investment income $ 2,473,903 $ 1,744,608
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) 35,804,975 (1,957,235)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 41,879,594 6,335,797
------------ ------------
Net increase in net assets resulting from operations 80,158,472 6,123,170
==================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (1,427,635) (449,201)
- --------------------------------------------------------------------------------------------------
Distributions from net realized gain (2,405,256) (9,891,403)
==================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions 170,632,137 157,202,998
==================================================================================================
Net Assets
Total increase 246,957,718 152,985,564
- --------------------------------------------------------------------------------------------------
Beginning of period 308,353,314 155,367,750
------------ ------------
End of period (including undistributed net investment
income of $2,471,016 and $1,425,924, respectively) $555,311,032 $308,353,314
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Main Street Growth & Income Fund/VA 19
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995(1)
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $20.48 $20.58 $16.37 $12.51 $10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .11 .13 .19 .14 .01
Net realized and unrealized gain 4.29 .92 4.91 3.91 2.52
- ---------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 4.40 1.05 5.10 4.05 2.53
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) (.05) (.17) (.14) (.02)
Distributions from net realized gain (.16) (1.10) (.72) (.05) --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.25) (1.15) (.89) (.19) (.02)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.63 $20.48 $20.58 $16.37 $12.51
====== ====== ====== ====== ======
===========================================================================================================================
Total Return, at Net Asset Value(2) 21.71% 4.70% 32.48% 32.51% 25.25%
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $555,311 $308,353 $155,368 $47,009 $4,288
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $391,063 $234,306 $ 94,906 $21,562 $1,809
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 0.63% 0.74% 1.15% 1.41% 0.50%
Expenses 0.78% 0.79%(4) 0.83%(4) 1.00%(4) 2.07%(4)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 118% 86% 79% 113% 24%
</TABLE>
1. For the period from July 5, 1995 (commencement of operations) to December 31,
1995.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 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 for periods less than one full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $585,193,287 and $443,805,600, respectively.
See accompanying Notes to Financial Statements.
20 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Main Street Growth & Income Fund/VA (the Fund), formerly known as
Oppenheimer Growth & Income Fund, is a 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 Fund's
investment objective is to seek a high total return (which includes growth in
the value of its shares as well as current income) from equity and debt
securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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 price 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.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities 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.
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 Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
Oppenheimer Main Street Growth & Income Fund/VA 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
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 the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of 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 Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $1,176. Accumulated net
realized gain on investments was increased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Realized gains and losses on
investments and options written and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
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 Fund has 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 December 31, 1999 Year Ended December 31, 1998
---------------------------------- ------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 9,936,050 $224,240,741 9,181,075 $189,060,690
Dividends and/or distributions reinvested 186,334 3,832,892 468,325 10,340,604
Redeemed (2,632,085) (57,441,496) (2,145,877) (42,198,296)
---------- ------------ ---------- ------------
Net increase 7,490,299 $170,632,137 7,503,523 $157,202,998
========== ============ ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities of
$66,467,744 was composed of gross appreciation of $85,539,274, and gross
depreciation of $19,071,530.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management Fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. 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. The Fund's management fee for the
year ended December 31, 1999 was 0.73% of average annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
22 Oppenheimer Main Street Growth & Income Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
================================================================================
6. Option Activity
The Fund 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 Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes 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 Fund 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.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives 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 Fund 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 Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
-------------------------------- --------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding as of December 31, 1998 1,325 $ 570,160 100 $ 41,573
Options written 6,829 5,027,060 -- --
Options closed or expired (7,593) (5,445,702) -- --
Options exercised (561) (151,518) (100) (41,573)
------ ----------- ---- --------
Options outstanding as of December 31, 1999 -- $ -- -- $ --
====== =========== ==== ========
</TABLE>
Oppenheimer Main Street Growth & Income Fund/VA 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
7. Illiquid or Restricted Securities
As of December 31, 1999, 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 also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of December 31, 1999, was $38,191,
which represents 0.01% of the Fund's net assets, of which $38,191 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Unit as of
Acquisition Cost Per December 31,
Security Dates Unit 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intermedia Communications, Inc. 9/29/98-12/29/98 $12.51-$21.54 $31.05
</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.
<PAGE>
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.
<PAGE>
B-1
Appendix B
- -------------------------------------------------------------------------------
Industry Classifications
- -------------------------------------------------------------------------------
Aerospace/Defense Food and Drug Retailers
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 Industrial Services
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
<PAGE>
C-3
APPENDIX C - MAJOR SHAREHOLDERS
As of April 1, 2000, 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 under "Major Shareholders" on page 41:
Monarch ReliaStar GE Nationwide Aetna
Money Fund/VA 26,171,804.122 11,093,546.362 * * *
12.47% 5.28%
High Income Fund/VA * * 16,604,140.786 * *
48.99%
Bond Fund/VA * * 7,448,544.944 26,927,389.349 *
14.11% 50.99%
Aggressive Growth * * 4,983,384.798 3,330,369.703 *
Fund/VA 16.44% 10.99%
Capital Appreciation
Fund/VA * * 6,535,825.800 12,600,353.500 *
18.52% 35.70%
Multiple
Strategies 2,927,574.165 2,066,955.383 5,345,372.214 19,388,503.010 *
Fund/VA 8.21% 5.80% 15.00% 54.40%
Global
Securities * * * 31,070,936.176 *
Fund/VA 45.87%
Strategic Bond Fund/VA * * * * 8,607,862.354
13.99%
Main Street
Growth & Income * * * 8,455,401.615 3,167,637.365
Fund/VA 29.28% 10.97%
Small Cap Growth
Fund/VA * * * * *
- ---------------
*Less than 5% of the outstanding shares of that Fund.
(continued)
<PAGE>
MassMutual Jefferson-Pilot CUNA American General
Money Fund/VA 150,976,417.325 * * *
71.92%
High
Income Fund/VA 6,815,140.706 * 5,817,683.356 *
20.10% 17.16%
Bond Fund/VA 12,069,185.864 4,073,511.357 * *
22.86% 7.71%
Aggressive Growth 18,771,463,001 * * *
Fund/VA 61.92%
Capital Appreciation
Fund/VA 8,195,775.646 3,187,616.811 * *
23.21% 9.03%
Multiple Strategies 3,788,175.008 * * *
Fund/VA 10.63%
Global Securities 32,566,965.144 * * *
Fund/VA 48.08%
Strategic Bond
Fund/VA 41,864,107.650 * * *
68.03%
Main Street
Growth & Income 12,674,904.018 * * *
Fund/VA 43.90%
Small Cap Growth 656,758.164 * * 207,970.245
Fund/VA 72.22% 22.87%
- -----------
*Less than 5% of the outstanding shares of that Fund.
(continued)
Protective
Money Fund/VA 13,991,905.170
6.67%
High Income Fund/VA *
Bond Fund/VA *
Aggressive Growth *
Fund/VA
Capital Appreciation
Fund/VA *
Multiple Strategies
Fund/VA *
Global Securities *
Fund/VA
Strategic Bond
Fund/VA 6,211,146.010
10.09%
Main Street
Growth & Income 3,121,995.390
Fund/VA 10.81%
Small Cap Growth *
Fund/VA
<PAGE>
- -------------------------------------------------------------------------------
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
(OppenheimerFunds logo)
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Tenth Restated Declaration of Trust dated 5/1/00: 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.
(c) (i) Oppenheimer Money Fund/VA specimen share certificate: Previously filed
with Registrant's Post-Effective Amendment No. 34 (4/29/99), and incorporated
herein by reference.
(ii) Oppenheimer Bond Fund/VA specimen share certificate: Previously
filed with Registrant's Post-Effective Amendment No. 34 (4/29/99), and
incorporated herein by reference.
(iii) Oppenheimer Capital Appreciation Fund/VA specimen share
certificate: Previously filed with Registrant's Post-Effective Amendment No.
34 (4/29/99), and incorporated herein by reference.
(iv) Oppenheimer High Income Fund/VA specimen share certificate:
Previously filed with Registrant's Post-Effective Amendment No.
34 (4/29/99), and incorporated herein by reference.
(v) Oppenheimer Aggressive Growth Fund/VA specimen share
certificate: Previously filed with Registrant's Post-Effective Amendment No.
34 (4/29/99), and incorporated herein by reference.
(vi) Oppenheimer Multiple Strategies Fund/VA specimen share
certificate: Previously filed with Registrant's Post-Effective Amendment No.
34 (4/29/99), and incorporated herein by reference.
(vii) Oppenheimer Global Securities Fund/VA specimen share
certificate: Previously filed with Registrant's Post-Effective Amendment No.
34 (4/29/99), and incorporated herein by reference.
(viii) Oppenheimer Strategic Bond Fund/VA specimen share
certificate: Previously filed with Registrant's Post-Effective Amendment No.
34 (4/29/99), and incorporated herein by reference.
(ix) Oppenheimer Main Street Growth & Income Fund/VA specimen share
certificate: Previously filed with Registrant's Post-Effective Amendment No. 34
(4/29/99), and incorporated herein by reference.
(x) Oppenheimer Small Cap Growth Fund/VA specimen share
certificate: Previously filed with Registrant's Post-Effective Amendment No.
34 (4/29/99), and incorporated herein by reference.
(xi) Oppenheimer Money Fund/VA Service class specimen share certificate:
Filed herewith.
(xii)Oppenheimer Bond Fund/VA Service class specimen share certificate:
Filed herewith.
(xiii) Oppenheimer Capital Appreciation Fund/VA Service class specimen
share certificate: Filed herewith.
(xiv)Oppenheimer High Income Fund/VA Service class specimen share
certificate: Filed herewith.
(xv) Oppenheimer Aggressive Growth Fund/VA Service class specimen share
certificate: Filed herewith.
(xvi)Oppenheimer Multiple Strategies Fund/VA Service class specimen
share certificate: Filed herewith.
(xvii) Oppenheimer Global Securities Fund/VA Service class specimen share
certificate: Filed herewith.
(viii) Oppenheimer Strategic Bond Fund/VA Service class specimen share
certificate: Filed herewith.
(xix)Oppenheimer Main Street Growth & Income Fund/VA Service class
specimen share certificate: Filed herewith.
(xx) Oppenheimer Small Cap Growth Fund/VA Service class 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) Amended and Restated Investment Advisory Agreement for Oppenheimer
Aggressive Growth Fund/VA dated 5/1/99: Previously filed with Registrant's
Post-Effective Amendment No. 34 (4/29/99), and incorporated herein by reference.
(v) 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.
(vi) 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.
(vii)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.
(viii) 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.
(ix) 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.
(x) 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 Service 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 Service 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 Service 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 Service 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 Service 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 Service 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 Service 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 Service 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 Service 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 Service 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 herewith.
(j) Independent Auditors' Consent: Filed herewith.
(k) Not applicable.
(l) Not applicable.
(m) (i) Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Money Fund/VA dated 2/29/00: Filed herewith.
(ii) Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Bond Fund/VA dated 2.29.00: Filed herewith.
(iii)Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Capital Appreciation Fund/VA dated 2.29.00:
Filed herewith.
(iv) Amended and Restated Distribution and Service Plan and Agreement
for Service shares of Oppenheimer High Income Fund/VA dated 2.29.00: Filed
herewith.
(v) Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Aggressive Growth Fund/VA dated 2.29.00:
Filed herewith.
(vi) Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Multiple Strategies Fund/VA dated 2.29.00:
Filed herewith.
(vii)Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Global Securities Fund/VA dated 2.29.00:
Filed herewith.
(viii) Amended and Restated Distribution and Service Plan and
Agreement for Service shares of Oppenheimer Strategic Bond Fund/VA dated
2.29.00: Filed herewith.
(ix) Amended and Restated Distribution and Service Plan and
Agreement for Service shares of Oppenheimer Main Street Growth & Income
Fund/VA dated 2.29.00: Filed herewith.
(x) Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Small Cap Growth Fund/VA dated 2.29.00:
Filed herewith.
(n) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through
8/24/99: Previously filed with Pre-Effective Amendment No. 1 to the
Registration Statement of Oppenheimer Senior Floating Rate Fund (Reg. No.
333-82579), 8/27/99, and incorporated herein by reference.
(o) Reserved
(p) Amended and Restated Code of Ethics of the Oppenheimer Funds dated March 1,
2000 under Rule 17j-1 of the Investment Company Act of 1940: Previously filed
with the Registration Statement of Oppenheimer Emerging Technologies Fund (Reg.
No. 33-32108), 3/10/00, and incorporated herein by reference.
- -- Powers of Attorney: For all Trustees except Edward L. Cameron,
previously filed with Post-Effective Amendment No. 41 to the Registration
Statement of Oppenheimer High Yield Fund (Reg. No. 2-62078), 8/26/99, and
incorporated herein by reference.
- -- Power of Attorney: For Edward L. Cameron, filed with Post-Effective
Amendment No. 5 to the Registration Statement of Oppenheimer Real Asset Fund
(Reg. No. 333-14887), 12/28/99.
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.
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; 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.
Janette Aprilante
Assistant Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Senior 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).
Richard Bayha,
Senior Vice President None.
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
OppenheimerFunds, Inc./Mutual Fund Accounting
(April 1994 - May 1996), and a Fund Controller
for OppenheimerFunds, Inc.
Mark Binning None.
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).
Chad Boll,
Assistant Vice President None
Scott Brooks,
Vice President None.
Jeffrey Burns Stradley, Ronen Stevens and Young, LLP
(February 1998-September 1999)
Morgan Lewis and Bockius, LLP (April 1995-
February 1998)
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice President of Rochester
Fund Services, Inc.
Christopher Capot,
Assistant Vice President Assistant Vice President of Public Relations at
Webster Financial Corporation (December 1995 -
December 1998).
Michael Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President of
Centennial Asset Management Corporation.
John Cardillo,
Assistant Vice President None.
Elisa Chrysanthis None.
Assistant Vice President
H.C. Digby Clements,
Vice President:
Rochester Division None.
Mark Curry,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President
and Chief Investment
Officer Chief Investment Officer (since 6/99); Chief
Executive Officer and Senior Manager of
HarbourView Asset Management Corporation; Trustee
(1993 - present) of Awhtolia College - Greece;
formerly Chief Executive Officer (1993-June
1999).
John Davis
Assistant Vice President EAB Financial (April 1998-February 1999) and
South Carolina Credit Union (August 1996-April
1998).
William DeJianne, None.
Assistant Vice President
Robert A. Densen,
Senior Vice President None.
Ruggero De Rosi
Vice President Formerly, Chief Strategist at ING
Barings (July 1998 - March 2000) and Vice
President/Global Markets at Citicorp Securities
(May 1995 - July 1998).
Sheri Devereux,
Vice President None.
Max Dietshe Deloitte & Touche LLP (1989-1999).
Vice President
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).
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
Asset Management Corporation Shareholder
Services, Inc., Shareholder Financial Services,
Inc. and Oppenheimer Partnership Holdings, Inc.
since (September 1995); President and a
director of Centennial Asset Management
Corporation (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 Director of OppenheimerFunds
International, Ltd. and Oppenheimer Millennium
Funds plc (since October 1997); an officer of
other Oppenheimer funds.
Bruce Dunbar, None.
Vice President
Daniel Engstrom,
Assistant Vice President None.
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.
Leslie A. Falconio,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since 6/99).
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 OppenheimerFunds, Inc./Mutual
Fund Accounting (April 1994 - May 1996), and a
Fund Controller for OppenheimerFunds, Inc.
Katherine P. Feld,
Vice President and Secretary Vice President and
Secretary of the Distributor; Secretary of
HarbourView Asset Management Corporation, and
Centennial Asset Management Corporation;
Secretary, Vice President and Director of
Centennial Capital Corporation; Vice President
and Secretary of Oppenheimer Real Asset
Management, Inc.
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.
David Foxhoven,
Assistant Vice President Formerly Manager, Banking Operations Department
(July 1996 - November 1998).
Dan Gangemi,
Vice President None.
Erin Gardiner,
Assistant Vice President None.
Subrata Ghose
Assistant Vice President Formerly, Equity Analyst at Fidelity
Investments (1995 - March 2000).
Charles Gilbert,
Assistant Vice President None.
Alan Gilston,
Vice President Formerly, Vice President (1987 - 1997) for
Schroder Capital Management International.
Jill Glazerman,
Vice President None.
Mikhail Goldverg
Assistant Vice President None.
Jeremy Griffiths,
Executive Vice President,
Chief Financial Officer and Chief Financial Officer and Treasurer (since
March
Director 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).
Robert Guy None.
Senior Vice President
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,
Chairman of OppenheimerFunds Formerly Executive Vice President and
Services, a Division of OFI Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager
Dorothy Hirshman, None.
Assistant Vice President
Merryl Hoffman,
Vice President and None.
Senior Counsel
Merrell Hora,
Assistant Vice President Research Fellow for the University of Minnesota
(July 1997- July 1998).
Scott T. Huebl,
Vice President None.
James Hyland,
Assistant Vice President Formerly Manager of Customer Research for
Prudential Investments (February 1998 - July
1999).
Kathleen T. Ives,
Vice President None.
William Jaume,
Vice President None.
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew Jordan,
Assistant Vice President None.
Deborah Kaback
Vice President and
Senior Counsel Senior Vice President and Deputy General
Counsel of Oppenheimer Capital (April
1989-November 1999).
Lewis Kamman
Vice President
Senior Consultant for Bell Atlantic Network
Integration, Inc. (June 1997-December 1998) and
Vice President for JP Morgan, Inc. (August
1994-June 1997).
Thomas W. Keffer,
Senior Vice President None.
Erica Klein,
Assistant Vice President None.
Walter Konops,
Assistant Vice President None.
Avram Kornberg,
Vice President None.
Jimmy Kourkoulakos,
Assistant 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 Asset
Management Corporation; 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 and Assistant
General Counsel None.
David Mabry,
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 Asset Management Corporation; and a
director of Shareholder Services, Inc. (since
August 1994), and Shareholder Financial
Services, Inc. (September 1995); 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 OppenheimerFunds, Inc.; 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 manager subsidiary of
OppenheimerFunds, Inc. 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 Formerly an Associate at Davis, Graham,
& Stubbs (January 1998 - July 1998); Associate;
Myer, Swanson, Adams & Wolf, P.C. (May 1996 -
June 1998).
Loretta McCarthy,
Executive Vice President None.
Lisa Migan,
Assistant Vice President None.
Andrew J. Mika
Senior Vice President Formerly a Second Vice President
for Guardian Investments (June 1990 - October
1999).
Denis R. Molleur,
Vice President and
Senior Counsel 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,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since 6/99).
Robert E. Patterson,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Frank Pavlak,
Vice President Branch Chief of Investment Company Examinations
at U.S. Securities and Exchange Commission
(January 1981 - December 1998).
James Phillips
Assistant Vice President None.
David Pellegrino Vice President.
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 Formerly Assistant Vice President and Business
Analyst for Pershing, Jersey City (August 1997
-November 1997); Senior Business Consultant,
American International Group (January 1996 -
July 1997).
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
Jeffrey Rosen,
Vice President None.
Michael S. Rosen,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Marci Rossell,
Vice President and
Corporate Economist Economist with Federal
Reserve Bank of Dallas (April 1996 - March
1999).
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.
Andrew Ruotolo
Executive Vice President of
Oppenheimer Funds Services, a
division of OFI Formerly Chief Operations Officer for American
International Group (1997-August 1999).
William Rylander Phoenix Investment Partners (1981-2000).
Rohit Sah,
Assistant Vice President None.
Valerie Sanders,
Vice President None.
Jeff Schneider,
Vice President Director, Personal Decisions International.
Ellen Schoenfeld,
Assistant Vice President None.
David Schultz,
Senior Vice President
and Chief Executive Officer Senior Managing Director, President (since
April 1999) and Chief Executive Officer of
HarbourView Asset Management Corporation (since
June 1999).
Stephanie Seminara,
Vice President None.
Jennifer Sexton,
Vice President None.
Martha Shapiro,
Assistant Vice President None.
Christian D. Smith
Senior Vice President Formerly Co-head of the Municipal Portfolio
Management Team, Portfolio Manager for
Prudential Global Asset Management (January
1990 - September 1999).
Connie Song,
Assistant Vice President None.
Richard Soper,
Vice President None.
Keith Spencer Equity trader.
Vice President
Cathleen Stahl,
Vice President Assistant Vice President & Manager of Women &
Investing Program
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.
Jayne Stevlingson,
Vice President None.
Marlo Stil,
Vice President Investment Specialist and Career
Agent/Registered
Representative for MML Investor services, Inc.
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 Asset
Management Corporation.
Kevin Surrett,
Assistant Vice President Assistant Vice President of Product Development
At Evergreen Investor Services, Inc. (June 1995
- -
May 1999).
Wayne Strauss,
Assistant Vice President: Rochester
Division Formerly Senior Editor, West Publishing Company
(January 1997 - March 1997).
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 Centennial Asset Management
Corporation and Chairman of the Board of
Shareholder Services, Inc.
Susan Switzer,
Assistant Vice President None.
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.
Angela Uttaro,
Assistant Vice President None.
Mark Vandehey,
Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Annette Von Brandis,
Assistant Vice President None.
Phillip Vottiero,
Vice President Chief Financial officer for the Sovlink Group
(April 1996 - June 1999).
Teresa Ward,
Vice President None.
Jerry Webman,
Senior Vice President Director of New York-based tax-exempt fixed
income Oppenheimer funds.
Barry Weiss Fitch IBCA (1996 - January 2000)
Assistant Vice President
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 Asset
Management Corporation.
William L. Wilby,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; Vice
President of HarbourView Asset Management
Corporation.
Donna Winn, Senior Vice President/Distribution Marketing.
Senior Vice President
Brian W. Wixted, Formerly Principal and Chief Operating
Officer,
Senior Vice President and Bankers Trust Company - Mutual Fund Services
Treasurer 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).
Carol Wolf,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial
Asset Management Corporation; Vice President,
Finance and Accounting; Point of Contact:
Finance Supporters of Children; Member of the
Oncology Advisory Board of the Childrens
Hospital.
Caleb Wong,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since 6/99) .
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of Shareholder Services,
Inc. (since May 1985), Shareholder Financial
Services, Inc. (since November 1989),
OppenheimerFunds International Ltd. (since
1998), Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer
funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Mark Zavanelli,
Assistant Vice President None.
Arthur J. Zimmer,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; Vice
President of Centennial Asset Management
Corporation.
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 Capital Preservation 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 Trinity Core Fund Oppenheimer Trinity Growth Fund
Oppenheimer Trinity Value Fund 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 Small Cap Fund Oppenheimer
Main Street Funds, Inc. Oppenheimer Municipal Fund Oppenheimer Real Asset Fund
Oppenheimer Senior Floating Rate Fund Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc. Oppenheimer Variable Account Funds Panorama
Series 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
OppenheimerFunds Distributor, Inc. is the Distributor of the Service 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.
(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 Vice President None
31 Racquel Drive
Marietta, GA 30064
Peter Beebe Vice President None
876 Foxdale Avenue
Winnetka, IL 60093
Douglas S. Blankenship Vice President None
17011 Woodbank
Spring, TX 77379
Peter W. Brennan Senior Vice President None
8826 Amberton Lane
Charlotte, NC 28226
Kevin Brosmith Senior Vice President None.
856 West Fullerton
Chicago, IL 60614
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
1730 N. Clark Street
#3203
Chicago, IL 60614
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 55419
Joseph DiMauro Vice President None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236
Rhonda Dixon-Gunner(1) Assistant Vice PresidentNone
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
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
35 Crown Terrace
Yardley, PA 19067
George Fahey Vice President None
141 Breon Lane
Elkton, MD 21921
Eric Fallon Vice President None
10 Worth Circle
Newton, MA 02158
Katherine P. Feld(2) Vice President None
Vice President & Secretary & Senior Counsel
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
4734 Highland Place Center
Lakeland, FL 33813
Luiggino Galleto Vice President None
10302 Reisling Court
Charlotte, NC 28277
Michelle Gans Vice President None
8327 Kimball Drive
Eden Prairie, MN 55347
L. Daniel Garrity Vice President None
27 Covington Road
Avondale, GA 30002
Lucio Giliberti Vice President None
78 Metro Vista Drive
Hawthorne, NJ 07506
Ralph Grant(2) Vice President/National None
Sales Manager
Michael Guman Vice President None
3913 Pleasent Avenue
Allentown, PA 18103
Linda Harding Vice President/FID None
6229 Love Drive
#413
Irving, TX 75039
Webb Heidinger Vice President None
138 Gates Street
Portsmouth, NH 03801
Phillip Hemery Vice President None
184 Park Avenue
Rochester, NY 14607
Edward Hrybenko (2) Vice President None
Richard L. Hymes (2) Vice President None
Byron Ingram(1) Assistant Vice PresidentNone
Kathleen T. Ives(1) Vice President None
Lynn Jensen Vice President None
5120 Patterson Street
Long Beach, CA 90815
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
Richard Klein Senior Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Brent Krantz Vice President None
2609 SW 149th Place
Seattle, WA 98166
Oren Lane Vice President None
5286 Timber Bend Drive
Brighton, MI 48116
Todd Lawson Vice President None
10687 East Ida Avenue
Englewood, CO 80111
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 Wesley Hill Lane
Warwick, NY 10990
John Lynch (2) Vice President None
Michael Magee Assistant Vice PresidentNone
1496 East 32nd Street
Brooklyn, NY 11234
Steve Manns Vice President None
1941 W. Wolfram Street
Chicago, IL 60657
Todd Marion Vice President None
3 St. Marks Place
Cold Spring Harbor, NY 11724
LuAnn Mascia(2) Assistant Vice PresidentNone
Marie Masters Vice President None
8384 Glen Eagle Drive
Manlius, NY 13104
Theresa-Marie Maynier Vice President None
2421 Charlotte Drive
Charlotte, NC 28203
Anthony Mazzariello Vice President None
704 Beaver Road
Leetsdale, PA 15056
John McDonough Vice President None
3812 Leland Street
Chevy Chase, MD 20815
Kent McGowan Vice President None
18424 12th Avenue West
Lynnwood, WA 98037
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-Marie Nakamura Vice President None
4111 Colony Plaza
Newport, CA 92660
John Nesnay Vice President None
3410 East County Line
#17
Highlands Ranch, CO 80126
Chad V. Noel Vice President None
2408 Eagleridge Drive
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 Drive
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
Christopher L. Quinson (2) Vice President/ None
Variable Annuities
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
Douglas Rentschler Vice President None
677 Middlesex Road
Grosse Pointe Park, MI 48230
Ruxandra Risko(2) Vice President None
Michael S. Rosen(2) Vice President None
Kenneth Rosenson Vice President None
3505 Malibu Country Drive
Malibu, CA 90265
James Ruff(2) President & Director 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 PresidentNone
Timothy J. Stegner Vice President None
794 Jackson Street
Denver, CO 80206
Marlo Stil Vice President None
8579 Prestwick Drive
La Jolla, CA 92037
Peter Sullivan Vice President None
21445 S. E 35th Street
Issaquah, WA 98029
David Sturgis Vice President None
81 Surrey Lane
Boxford, MA 01921
Scott Such(1) Senior Vice President None
Brian Summe Vice President None
239 N. Colony Drive
Edgewood, KY 41017
George Sweeney Senior 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
2200 North Wilson Blvd.
Suite 102-176
Arlington, VA 22201
Tanya Valency (2) Assistant Vice PresidentNone
Mark Vandehey(1) Vice President None
Brian Villec (2) Vice President None
Andrea Walsh(1) Vice President None
Suzanne Walters(1) Assistant Vice PresidentNone
Michael Weigner Vice President None
5722 Harborside Drive
Tampa, FL 33615
Donn Weise Vice President None
3249 Earlmar Drive
Los Angeles, CA 90064
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
Brian W. Wixted (1) Vice President Vice President and
and Treasurer Treasurer of the Oppenheimer
funds.
(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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant certifies that it meets all 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 25th day of April, 2000.
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 25, 2000
- --------------------- Board of Trustees
James C. Swain and Principal Executive
Officer
/s/ Brian W. Wixted* Treasurer April 25, 2000
- -------------------------------------
Brian W. Wixted
/s/ Bridget A. Macaskill* President and April 25, 2000
- -------------------- Trustee
Bridget A. Macaskill
/s/ William H. Armstrong* Trustee April 25, 2000
- ------------------------
William H. Armstrong
/s/ Robert G. Avis* Trustee April 25, 2000
- -------------------------
Robert G. Avis
/s/ William A. Baker* Trustee April 25, 2000
- ---------------------------
William A. Baker
/s/ George C. Bowen* Trustee April 25, 2000
- -------------------------
George C. Bowen.
/s/ Edward L. Cameron* Trustee April 25, 2000
- -------------------------
Edward L. Cameron
/s/ Jon S. Fossel* Trustee April 25, 2000
- -------------------------
Jon S. Fossel
/s/ Sam Freedman* Trustee April 25, 2000
- ------------------------
Sam Freedman
/s/ Raymond J. Kalinowski* Trustee April 25, 2000
- --------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee April 25, 2000
- -------------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee April 25, 2000
- --------------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee April 25, 2000
- --------------------------
Ned M. Steel
*By: /s/ Robert G. Zack
- ---------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Post-Effective Amendment No. 35
Registration No. 2-93177
EXHIBIT INDEX
23(a) Tenth Restated Declaration of Trust dated 5/1/00
23(e)(ix) Oppenheimer Money Fund/VA Service class specimen share certificate
23(e)(xii) Oppenheimer Bond Fund/VA Service class specimen share certificate
23(e)(xiii) Oppenheimer Capital Appreciation Fund/VA Service class
specimen share certificate
23(e)(xiv)Oppenheimer High Income Fund/VA Service class
specimen share certificate
23(e)(xv) Oppenheimer Aggressive Growth Fund/VA Service class
specimen share certificate
23(e)(xvi) Oppenheimer Multiple Strategies Fund/VA Service class specimen
share certificate
23(e)(xvii) Oppenheimer Global Securities Fund/VA Service class
specimen share certificate
23(e)(xix) Oppenheimer Main Street Growth & Income Fund/VA Service class
specimen share certificate
23(i)(viii) Opinion and Consent of Counsel
23 (j) Independent Auditor's Consent
23(m)(i) Amended and Restated Distribution and Service Plan and Agreement
for Service shares of Oppenheimer Money Fund/VA
23(m)(ii) Amended and Restated Distribution and Service Plan and Agreement
for Service shares of Oppenheimer Bond Fund/VA
23(m)(iii) Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Capital Appreciation Fund/VA
23(m)(iv) Amended and Restated Distribution and Service Plan and Agreement
for Service shares of Oppenheimer High Income Fund/VA
23(m)(v) Amended and Restated Distribution and Service Plan and Agreement
for Service shares of Oppenheimer Aggressive Growth Fund/VA
23(m)(vi) Amended and Restated Distribution and Service Plan and
Agreement for Service shares of Oppenheimer Multiple
Strategies Fund/VA
23(m)(vii) Amended and Restated Distribution and Service Plan and Agreement for
Service shares of Oppenheimer Global Securities Fund/VA
23(m)(viii) Amended and Restated Distribution and Service Plan and
Agreement for Service shares of Oppenheimer Strategic Bond Fund/VA
23(m)(ix) Amended and Restated Distribution and Service Plan and Agreement
for Service shares of Oppenheimer Main Street Growth & Income Fund/VA
23(m)(x) Amended and Restated Distribution and Service Plan and Agreement
for Service shares of Oppenheimer Small Cap Growth Fund/VA
-1-
TENTH
RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER VARIABLE ACCOUNT FUNDS
TENTH RESTATED DECLARATION OF TRUST, made as of May 1, 2000 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, (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, and (x) by the Ninth Restated Declaration of Trust dated May 1, 1999,
the Trustees amended and restated such Declaration of Trust to change the names
of all ten series;
WHEREAS, the Trustees desire to amend such Declaration of Trust, as
amended, without Shareholder approval pursuant to Section (B) of Article Fourth,
to change the name of the Class previously designated as "Class 2".
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 Tenth
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
(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 the Eighth Restated
Declaration of Trust (previously named "Class 2 shares") are redesignated
"Service Shares" pursuant to this Tenth Restated Declaration of Trust. 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.
<PAGE>
(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.
<PAGE>
(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.
<PAGE>
(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:
<PAGE>
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.
<PAGE>
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.
<PAGE>
(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.
<PAGE>
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;
<PAGE>
(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
<PAGE>
(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.
<PAGE>
(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.
<PAGE>
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:
<PAGE>
(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.
<PAGE>
(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:
<PAGE>
-28-
-28-
(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, 2000.
/s/ William A. Baker /s/ Robert M. Kirchner
William A. Baker Robert M. Kirchner
197 Desert Lakes Drive 2800 S. University Blvd. #131
Palm Springs, CA 92264 Denver, Colorado 80210
/s/ Ned M. Steel /s/ C. Howard Kast
Ned M. Steel C. Howard Kast
3416 S. Race Street 2252 East Alameda, #30
Englewood, CO 80110 Denver, Colorado 80209
/s/ Raymond J. Kalinowski /s/ Jon S. Fossel
Raymond J. Kalinowski Jon S. Fossel
44 Portland Drive Box 44-Mead Street
St. Louis, Missouri 63131 Waccabuc, NY 10597
/s/ James C. Swain /s/ Sam Freedman
James C. Swain Sam Freedman
355 Adams Street 4975 Lake Shore Drive
Denver, CO 80206 Littleton, CO 80123
/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
/s/ Bridget A. Macaskill /s/ George C. Bowen
Bridget A. Macaskill George C. Bowen
160 East 81 Street 9224 Bauer Court
New York, NY 10028 Lone Tree, CO 80124
/s/ William L. Armstrong /s/ Edward L. Cameron
- ------------------------ ---------------------
William L. Armstrong Edward L. Cameron
11 Carriage Lane Spring Valley Road
Littleton, Colorado 80121 Morristown, New Jersey 07960
OPPENHEIMER MONEY FUND/VA
Share Certificate for Service Shares(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) SERVICE 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 SERVICE 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
<PAGE>
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)
<PAGE>
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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 for Service Shares(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) SERVICE 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 SERVICE 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
<PAGE>
(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
<PAGE>
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_____________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
_________________________________________________________ Service 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 for Service Shares(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) SERVICE 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 SERVICE 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
<PAGE>
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)
<PAGE>
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#4
OPPENHEIMER HIGH INCOME FUND/VA
Share Certificate for Service Shares(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) SERVICE 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 SERVICE 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
<PAGE>
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)
<PAGE>
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#6
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
Share Certificate for Service Shares (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) SERVICE 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 SERVICE 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
<PAGE>
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)
<PAGE>
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#3
OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
Share Certificate for Service Shares(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) SERVICE 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 SERVICE 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)
<PAGE>
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
<PAGE>
(box for identifying number)
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#8
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Share Certificate for Service Shares (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) SERVICE 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 683811855
(at left) is the owner of
(centered)FULLY PAID SERVICE 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
<PAGE>
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)
<PAGE>
- -----------------------------------------------------------------
(Please print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#1
OPPENHEIMER STRATEGIC BOND FUND/VA
Share Certificate for Service Shares(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) SERVICE 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 SERVICE 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
<PAGE>
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)
<PAGE>
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#9
OPPENHEIMER SMALL CAP GROWTH FUND/VA
Share Certificate for Service Shares(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) SERVICE 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 SERVICE 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
<PAGE>
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)
<PAGE>
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#10
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
Share Certificate for Service Shares (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) SERVICE 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 683811863
(at left) is the owner of
(centered)FULLY PAID SERVICE 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
<PAGE>
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)
<PAGE>
______________________________________________________________ (Please
print or type name and address of assignee)
- ------------------------------------------------------
__________________________________________________________ Service 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.
CERTIFIC\600#5
Myer, Swanson, Adams & Wolf, P.C.
Attorneys At Law
The Colorado State Bank Building
1600 Broadway - Suite 1480
Denver, CO 80202-4918
Telephone (303) 866-9800
Facsimile (303) 866-9818
May 1, 1998
Oppenheimer Variable Account Funds
6803 S. Tucson Way
Englewood, CO 80112
Dear Ladies and Gentlemen:
This opinion is being furnished to Oppenheimer Variable Account Funds, a
Massachusetts business trust, in connection with the Registration Statement on
Form N-1A (the "Registration Statement") under the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended,
for Oppenheimer Small Cap Growth Fund/VA (the "Fund"), filed by the Fund for the
public offering of the Fund's shares. As counsel for the Fund, we have examined
such statutes, regulations, Fund records and other documents and reviewed such
questions of law that we deemed necessary or appropriate for the purposes of
this opinion.
Based upon the foregoing, we are of the opinion that the shares to be
issued as described in the Registration Statement have been duly authorized and,
assuming receipt of the consideration to be paid therefor, upon delivery as
provided in the Registration Statement, will be legally and validly issued,
fully paid and non-assessable (except for the potential liability of
shareholders described in the Fund's Statement of Additional Information).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Registration Statement.
We do not thereby admit that we are within the category of persons whose consent
is required under Section 7 of the 1933 Act or the rules and regulations of the
Securities and Exchange Commission.
Sincerely,
/s/ Allan B. Adams
------------------------
Allan B. Adams
Myer, Swanson, Adams & Wolf, P.C.
n1a/600/opinion
Exhibit 23 (j)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 35 to Registration
Statement No. 2-93177 on Form N-1A of Oppenheimer Variable Account Funds of our
reports dated January 24, 2000, 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
and "Independent Auditors" appearing in the Statement of Additional Information,
which are also a part of such Registration Statement.
/s/ Deloitte & Touche LLP
Denver, Colorado
April 24, 2000
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER MONEY FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER MONEY FUND/VA
(the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER MONEY FUND/VA
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
___________________________
Katherine P. Feld
Vice President and Secretary
OFMI\66012b38
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER BOND FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER BOND FUND/VA (the
"Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER BOND FUND/VA
By: /s/ Robert G. Zack
_________________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
________________________
Katherine P. Feld
Vice President and Secretary
OFMI\63012b38
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER CAPITAL APPRECIATION FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER CAPITAL
APPRECIATION FUND/VA (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER CAPITAL APPRECIATION FUND/VA
By: /s/ Robert G. Zack
_________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
_________________
Katherine P. Feld
Vice President and Secretary
OFMI\61012b38
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER HIGH INCOME FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER HIGH INCOME
FUND/VA (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER HIGH INCOME FUND/VA
By: /s/ Robert G. Zack
________________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
_________________________
Katherine P. Feld
Vice President and Secretary
OFMI\64012b38
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER AGGRESSIVE GROWTH
FUND/VA (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
By: /s/ Robert G. Zack
_________________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
_________________________
Katherine P. Feld
Vice President and Secretary
OFMI\62012b38
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER MULTIPLE
STRATEGIES FUND/VA (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
By: /s/ Robert G. Zack
____________________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
_____________________________
Katherine P. Feld
Vice President and Secretary
OFMI\67012b38
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR CLASS 2 SHARES OF
OPPENHEIMER GLOBAL SECURITIES FUND
SERVICE PLAN AND AGREEMENT (the "Plan") dated the 1st day of May, 1998, by and
between OPPENHEIMER VARIABLE ACCOUNT FUNDS (the ATrust@)for the account of its
OPPENHEIMER GLOBAL SECURITIES FUND (the "Fund") and OPPENHEIMERFUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written service plan for its Class 2 Shares
described in the Fund's registration statement as of the date this Plan takes
effect, contemplated by and to comply with Rule 2830 of the Conduct Rules of the
National Association of Securities Dealers, Inc., pursuant to which the Fund
will reimburse the Distributor for a portion of its costs incurred in connection
with the personal service and maintenance of shareholder accounts (AAccounts@)
that hold Class 2 Shares (the "Shares") of the Fund. The Fund may be deemed to
be acting as distributor of securities of which it is the issuer, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according
to the terms of this Plan. The Distributor is authorized under the Plan to pay
"Insurance Company Recipients," as hereinafter defined, for rendering services
and for the maintenance of Accounts. Such Insurance Company Recipients are
intended to have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other institution which: (i) has rendered services in
connection with the personal service and maintenance of Accounts; (ii)
shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such
questions as may arise concerning such service; and (iii) has been
selected by the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Trust's Board of Trustees
(the "Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan (the
"Independent Trustees") may remove any institution as a Insurance Company
Recipient, whereupon such entity's rights as a third-party beneficiary
hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient is
a fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), or (iii) separate accounts created or sponsored by such
Insurance Company Recipient or its affiliate, but in no event shall any
such Shares be deemed owned by more than one Insurance Company Recipient
for purposes of this Plan. In the event that two entities would otherwise
qualify as Insurance Company Recipients as to the same Shares, the
Insurance Company Recipient which is the dealer of record on the Fund's
books shall be deemed the Insurance Company Recipient as to such Shares
for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
the lesser of: (i) .0625% (.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of the Shares,
computed as of the close of each business day, or (ii) the Distributor's
actual expenses under the Plan for that quarter of the type approved by
the Board. The Distributor will use such fee received from the Fund in its
entirety to reimburse itself for payments to Insurance Company Recipients
and for its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following paragraph. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
customers concerning the Fund, providing such customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that a Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
Payments received by the Distributor from the Fund under the Plan
will not be used to pay any interest expense, carrying charges or other
financial costs, or allocation of overhead by the Distributor, or for any
other purpose other than for the payments described in this Section 3. The
amount payable to the Distributor each quarter will be reduced to the
extent that reimbursement payments otherwise permissible under the Plan
have not been authorized by the Board for that quarter. Any unreimbursed
expenses incurred for any quarter by the Distributor may not be recovered
in later periods.
<PAGE>
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers. However, no such payments shall be made to
any Insurance Company Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such quarter, the
minimum amount ("Minimum Qualified Holdings"), if any, to be set from time
to time by a majority of the Independent Trustees. A majority of the
Independent Trustees may at any time or from time to time increase or
decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Insurance Company Recipient, but not to exceed the
rate set forth above, and/or increase or decrease the number of shares
constituting Minimum Qualified Holdings. The Distributor shall notify all
Insurance Company Recipients of the Minimum Qualified Holdings and the
rate of payments hereunder applicable to Insurance Company Recipients, and
shall provide each Insurance Company Recipient with written notice within
thirty (30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current prospectus
shall constitute sufficient notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund or
from Oppenheimer Variable Account Funds), or (ii) by the Distributor (a
subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made pursuant to this Plan, the identity of
the Insurance Company Recipient of each such payment, and the purposes for which
the payments were made. The report shall state whether all provisions of Section
3 of this Plan have been complied with. The Distributor shall annually certify
to the Board the amount of its total expenses incurred that year with respect to
the personal service and maintenance of Accounts in conjunction with the Board's
annual review of the continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 24, 1998 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 1998. Unless
terminated as hereinafter provided, it shall continue in effect until October
31, 1999 and from year to year thereafter or as the Board may otherwise
determine only so long as such continuance is specifically approved at least
annually by the Board and its Independent Trustees by a vote cast in person at a
meeting called for the purpose of voting on such continuance. This Plan may be
terminated at any time by vote of a majority of the Independent Trustees or by
the vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of Class 2. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Class 2 Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER GLOBAL SECURITIES FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
Katherine P. Feld
Vice President and Secretary
OFMI\60712b
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER STRATEGIC BOND FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER STRATEGIC BOND
FUND/VA (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER STRATEGIC BOND FUND/VA
By: /s/ Robert G. Zack
____________________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
____________________________
Katherine P. Feld
Vice President and Secretary
OFMI\26512b38
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER MAIN STREET
GROWTH & INCOME FUND/VA (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC.
(the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or
affiliate thereof or other person or entity which: (i) has rendered
assistance (whether direct, administrative, or both) in the distribution
of Shares and/or has rendered services in connection with the personal
service and maintenance of Accounts; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning such
service and/or the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Trust's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees") may
remove any institution as a Insurance Company Recipient, whereupon such
entity's rights as a third-party beneficiary hereof shall terminate.
<PAGE>
4
(b) "Qualified Holdings" shall mean, as to any Insurance Company
Recipient, all Shares owned beneficially or of record by: (i) such
Insurance Company Recipient, (ii) such clients of such Insurance Company
Recipient and/or accounts as to which such Insurance Company Recipient
provides administrative services and/or is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), or (iii)
separate accounts created or sponsored by such Insurance Company Recipient
or its affiliate, but in no event shall any such Shares be deemed owned by
more than one Insurance Company Recipient for purposes of this Plan. In
the event that two entities would otherwise qualify as Insurance Company
Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company
Recipient as to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares, computed as of the
close of each business day (the "Service Fee"), provided, however, that
the Distributor may, in its sole discretion, reduce that payment level
from time to time. The Distributor will use such fee received from the
Fund in its entirety for payments to Insurance Company Recipients and for
its other expenditures and costs of the type approved by the Board
incurred in connection with the personal service and maintenance of
Accounts including, but not limited to, the services described in the
following two paragraphs. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Insurance Company Recipient.
The services to be rendered by the Distributor and Insurance Company
Recipients in connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Insurance Company Recipient's
Customers concerning the Fund, providing such Customers with information
on their investment in Shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and Customer liaison services and the maintenance
of Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, an Insurance Company
Recipient may not be rendering appropriate services, then the Distributor,
at the request of the Board, shall require the Insurance Company Recipient
to provide a written report or other information to verify that said
Insurance Company Recipient is providing appropriate services in this
regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Insurance Company Recipient's status as such under
the Plan, whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells
Shares; (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Insurance Company
Recipients; (iii) obtaining financing or providing such financing from its
own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund;
and (iv) paying other direct distribution costs, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those prospectuses furnished to current direct and indirect
holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Insurance Company
Recipient or by its Customers, provided, however, that the Distributor
may, in its sole discretion, reduce that payment level from time to time.
However, no such payments shall be made to any Insurance Company Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any
time or from time to time increase or decrease and thereafter adjust the
rate of fees to be paid to the Distributor or to any Insurance Company
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Insurance Company Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to
Insurance Company Recipients, and shall provide each Insurance Company
Recipient with written notice within thirty (30) days after any change in
these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients:
(i) by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the Fund),
or (ii) by the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER MAIN STREET GROWTH & INCOME
FUND/VA
By: /s/ Robert G. Zack
_________________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
___________________________
Katherine P. Feld
Vice President and Secretary
OFMI\65012b38
AMENDED AND RESTATED
DISTRIBUTION AND
SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC. AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR SERVICE SHARES OF
OPPENHEIMER SMALL CAP GROWTH FUND/VA
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan")
dated the 29th day of February, 2000, by and between OPPENHEIMER VARIABLE
ACCOUNT FUNDS (the "Trust") for the account of its OPPENHEIMER SMALL CAP GROWTH
FUND/VA (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
its Service Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts ("Accounts") that hold Service Shares (the "Shares") of the
Fund. The Fund may be deemed to be acting as distributor of securities of which
it is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"), according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Insurance Company Recipients," as hereinafter
defined, for rendering services and for the maintenance of Accounts and for
distributing Service Shares. Such Insurance Company Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Insurance Company Recipient" shall mean any insurance company or affiliate
thereof or other person or entity which: (i) has rendered assistance (whether
direct, administrative, or both) in the distribution of Shares and/or has
rendered services in connection with the personal service and maintenance of
Accounts; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning such service and/or the sale of Shares; and (iii) has
been selected by the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Trust's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this Plan or
in any agreements relating to this Plan (the "Independent Trustees") may remove
any institution as a Insurance Company Recipient, whereupon such entity's rights
as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Insurance Company Recipient, all
Shares owned beneficially or of record by: (i) such Insurance Company Recipient,
(ii) such clients of such Insurance Company Recipient and/or accounts as to
which such Insurance Company Recipient provides administrative services and/or
is a fiduciary or custodian or co-fiduciary or co-custodian (collectively, the
"Customers"), or (iii) separate accounts created or sponsored by such Insurance
Company Recipient or its affiliate, but in no event shall any such Shares be
deemed owned by more than one Insurance Company Recipient for purposes of this
Plan. In the event that two entities would otherwise qualify as Insurance
Company Recipients as to the same Shares, the Distributor shall determine which
Insurance Company Recipient shall be deemed the Insurance Company Recipient as
to such Shares for purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of
.0625% (.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares, computed as of the close of each
business day (the "Service Fee"), provided, however, that the Distributor may,
in its sole discretion, reduce that payment level from time to time. The
Distributor will use such fee received from the Fund in its entirety for
payments to Insurance Company Recipients and for its other expenditures and
costs of the type approved by the Board incurred in connection with the personal
service and maintenance of Accounts including, but not limited to, the services
described in the following two paragraphs. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Insurance Company
Recipient.
The services to be rendered by the Distributor and Insurance Company Recipients
in connection with the personal service and the maintenance of Accounts may
include, but shall not be limited to, the following: answering routine inquiries
from the Insurance Company Recipient's Customers concerning the Fund, providing
such Customers with information on their investment in Shares, assisting in the
establishment and maintenance of accounts or sub-accounts in the Fund, making
the Fund's investment plans and dividend payment options available, and
providing such other information and Customer liaison services and the
maintenance of Accounts as the Distributor or the Fund may reasonably request.
It may be presumed that an Insurance Company Recipient has provided services
qualifying for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that either the
Distributor or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, an Insurance Company Recipient may not be rendering
appropriate services, then the Distributor, at the request of the Board, shall
require the Insurance Company Recipient to provide a written report or other
information to verify that said Insurance Company Recipient is providing
appropriate services in this regard. If the Distributor still is not satisfied,
it may take appropriate steps to terminate the Insurance Company Recipient's
status as such under the Plan, whereupon such entity's rights as a third-party
beneficiary hereunder shall terminate.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any insurance company, broker,
dealer, bank or other person or entity that directly or indirectly sells Shares;
(ii) paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Insurance Company Recipients; (iii) obtaining
financing or providing such financing from its own resources, or from an
affiliate, for the interest and other borrowing costs of the Distributor's
unreimbursed expenses incurred in rendering distribution assistance and
administrative support services to the Fund; and (iv) paying other direct
distribution costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those prospectuses furnished to current
direct and indirect holders of the Fund's shares ("Shareholders")).
(b) The Distributor shall make payments to any Insurance Company Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed .0625% (.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares computed as of
the close of each business day, of Qualified Holdings owned beneficially or of
record by the Insurance Company Recipient or by its Customers, provided,
however, that the Distributor may, in its sole discretion, reduce that payment
level from time to time. However, no such payments shall be made to any
Insurance Company Recipient for any such quarter in which its Qualified Holdings
do not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees. A majority of the Independent Trustees may at any time or
from time to time increase or decrease and thereafter adjust the rate of fees to
be paid to the Distributor or to any Insurance Company Recipient, but not to
exceed the rate set forth above, and/or increase or decrease the number of
shares constituting Minimum Qualified Holdings. The Distributor shall notify all
Insurance Company Recipients of the Minimum Qualified Holdings and the rate of
payments hereunder applicable to Insurance Company Recipients, and shall provide
each Insurance Company Recipient with written notice within thirty (30) days
after any change in these provisions. Inclusion of such provisions or a change
in such provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Insurance Company Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Trust who are not "interested persons" of the Fund
or the Trust shall be committed to the discretion of the Independent Trustees.
Nothing herein shall prevent the Independent Trustees from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written report to the Trust's Board for its review,
detailing the amount of all payments made under this Plan, and the purposes for
which the payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Shares, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on February 29, 2000 for the purpose of voting on this Plan, and shall
take effect on the later of (i) the date that Shares are first issued to
OppenheimerFunds, Inc. or any other person, or (ii) May 1, 2000. When this Plan
takes effect, the Fund's Service Plan and Agreement dated May 1, 1998, by and
between the Trust and OFI, shall be terminated. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 2000 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
Service shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service Fee in respect of Shares sold
prior to the effective date of such termination. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Service Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Trust under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
on behalf of OPPENHEIMER SMALL CAP GROWTH FUND/VA
By: /s/ Robert G. Zack
________________________
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
_________________________
Katherine P. Feld
Vice President and Secretary
OFMI\60612b38
