-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nht5+eQ7wKb5Etxei28IoPK/zwL2wPKsv5BVS4H8uoRo2zZipo36LFAs1rexR+XK K9RBEuaN5EDYoiXMoZU8KQ== 0000752737-99-000004.txt : 19990430 0000752737-99-000004.hdr.sgml : 19990430 ACCESSION NUMBER: 0000752737-99-000004 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 35 FILED AS OF DATE: 19990429 EFFECTIVENESS DATE: 19990429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER VARIABLE ACCOUNT FUNDS CENTRAL INDEX KEY: 0000752737 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 840974272 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 002-93177 FILM NUMBER: 99603890 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-04108 FILM NUMBER: 99603891 BUSINESS ADDRESS: STREET 1: 3410 S GALENA ST CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 2: 3410 S GALENA ST CITY: DENVER STATE: CO ZIP: 80231 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER VARIABLE LIFE FUNDS DATE OF NAME CHANGE: 19860609 485BPOS 1 OPPENHEIMER VARIABLE ACCOUNT FUNDS Registration No. 2-93177 File No. 811-4108 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ x ] Pre-Effective Amendment No. _____ [ ] Post-Effective Amendment No. 34 [ x ] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ x ] Amendment No. 30 [ x ] - ---------------------------------------------------------------------- Oppenheimer Variable Account Funds - ----------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) - ------------------------------------------------------------------------ 6803 South Tucson Way, Englewood, Colorado 80112 - ------------------------------------------------------------------------ (Address of Principal Executive Offices) (Zip Code) - ----------------------------------------------------------------------- 303-768-3200 - ------------------------------------------------------------------------ Registrant's Telephone Number, including Area Code) - ------------------------------------------------------------------------- Andrew J. Donohue, Esq. - -------------------------------------------------------------------------- OppenheimerFunds, Inc. Two World Trade Center, New York, New York 10048-0203 - ------------------------------------------------------------------------ (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box): [ ] Immediately upon filing pursuant to paragraph (b) [ x ] On May 1, 1999 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] On May 1, 1999 pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] On _______________ pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. (OppenheimerFunds logo) Oppenheimer Money Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Money Fund/VA is a money market mutual fund. Its goal is to seek the maximum current income from investments in money market securities that is consistent with low capital risk and the maintenance of liquidity. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks maximum current income from investment in money market securities consistent with low capital risk and the maintenance of liquidity. What Does the Fund Invest In? The Fund is a money market fund. It invests in a variety of high-quality money market securities to seek current income. Money market securities are short-term debt instruments issued by the U.S. government, domestic and foreign corporations or financial institutions and other entities. They include, for example, bank obligations, repurchase agreements, commercial paper, other corporate debt obligations and government debt obligations maturing in 397 days or less. Who Is the Fund Designed For? The Fund's shares are available only as an underlying investment option for certain variable annuities, variable life insurance policies and insurance company separate accounts. The Fund is an option under those insurance products for investors who want to earn income at current money market rates while preserving the value of their investment, because the Fund is managed to keep its share price stable at $1.00. The Fund does not invest for the purpose of seeking capital appreciation or gains. Main Risks of Investing in the Fund All investments carry risks to some degree. Funds that invest in debt obligations for income may be subject to credit risks and interest rate risks. However, the Fund is a money market fund that seeks income by investing in short-term debt securities that must meet strict credit and maturity standards set by its Board of Trustees following special rules for money market funds under federal law. Those rules require the Fund to maintain o high credit quality in its portfolio, o a short average portfolio maturity to reduce the effects of changes in interest rates on the value of the Fund's securities and diversification of the Fund's investments among issuers to reduce the effects of a default by any one issuer on the value of the Fund's shares. Even so, there are risks that one or more of the Fund's investments could have its credit rating downgraded, or the issuer could default, or that interest rates could rise sharply, causing the value of the investment (and the Fund's share price) to fall. If insurance products holding Fund shares redeem them at a rate greater than anticipated by the Manager, the Fund might have to sell portfolio securities prior to their maturity at a loss. As a result, there is a risk that the Fund's shares could fall below $1.00 per share. Income on short-term securities tends to be lower than income on longer term debt securities, so the Fund's yield will likely be lower than the yield on longer-term fixed income funds. The Fund's investment manager, OppenheimerFunds, Inc., tries to reduce risks by diversifying investments and by carefully researching securities before they are purchased. However, an investment in the Fund is not a complete investment program. The rate of the Fund's income will vary from day to day, generally reflecting changes in overall short-term interest rates. There is no assurance that the Fund will achieve its investment objective. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. The Fund's Past Performance The bar chart and table below show how the Fund's returns may vary over time, by showing changes in the Fund's performance1 from year to year for the last ten calendar years and its average annual total returns for the 1-, 5- and 10- year periods. Variability of returns is one measure of the risks of investing in a money market fund. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for annual total return data for bar chart.] For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 1.17%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 2.38% (2nd Q '89) and the lowest return for a calendar quarter was 0.77% (2nd Q'93). - ------------------------------- ---------------------------- - ---------------------------- ---------------------------- Average Annual Total Returns for the periods ended December 31, 1998 1 Year 5 Years 10 Years Oppenheimer Money 5.25% 5.10% 5.61% Fund/VA - ------------------------------- ---------------------------- - ---------------------------- ---------------------------- The returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all distributions have been reinvested in additional shares. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names The total returns are not the Fund's current yield. The Fund's current yield more closely reflects the Fund's current earnings. To obtain the Fund's current 7-day yield, call the Transfer Agent toll-free at 1-888-470-0861. _________________ 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no name designation, and the performance shown is for that class. The other class of shares, Class 2, are not offered in this Prospectus. About the Fund's Investments The Fund's Principal Investment Policies. The Fund invests in short-term money market securities meeting quality standards established for money market funds under the Investment Company Act. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based on the Manager's evaluation of investment opportunities. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. |X| What Types of Money Market Securities Does the Fund Invest In? The following is a brief description of the types of money market securities the Fund can invest in. Money market securities are high-quality, short-term debt instruments that may be issued by the U.S. government, corporations, banks or other entities. They may have fixed, variable or floating interest rates. All of the Fund's investments must meet the special quality requirements set under the Investment Company Act and described briefly below. |_| U.S. Government Securities. These are obligations issued or guaranteed by the U.S. government or any of its agencies or federally-chartered corporations referred to as instrumentalities. Some are direct obligations of the U.S. Treasury, such as Treasury bills, notes and bonds, and are supported by the full faith and credit of the United States. That means the U.S. government pledges its taxing power to make timely payments in interest and to repay principal on the obligation. Other U.S. government securities, such as pass-through certificates issued by the Government National Mortgage Association (Ginnie Mae), are also supported by the full faith and credit of the U.S. government. Some U.S. government securities are supported by the right of the issuer to borrow from the U.S. Treasury, such as obligations of Federal National Mortgage Corporation (Fannie Mae). Others may be supported only by the credit of the instrumentality, such as obligations of Federal Home Loan Mortgage Corporation (Freddie Mac). The Fund's investing in U.S. government securities does not mean that its share price or returns are guaranteed or backed by the U.S. government. |_| Bank Obligations. The Fund can invest in time deposits, certificates of deposit and bankers' acceptances. These investments must be: -- obligations of a domestic bank having total assets of at least $1 billion, or -- U.S. dollar-denominated obligations of a foreign bank with total assets of at least U.S. $1 billion. |_| Commercial Paper. Commercial paper is a short-term, unsecured promissory note of a domestic or foreign company. |_| Corporate Obligations. The Fund can invest in other short-term corporate debt obligations, besides commercial paper. |_| Other Money Market Obligations. The Fund can invest in other money market obligations that are subject to repurchase agreements or guaranteed as to their principal and interest by a domestic bank or by a corporation whose commercial paper may be purchased by the Fund. The bank must meet credit criteria set by the Fund's Board of Trustees. The Fund can buy other money market instruments that its Board of Trustees approves from time to time. They must be U.S. dollar-denominated short-term investments that the Manager has determined to have minimal credit risks. They also must be of "high quality" as determined by a national rating organization. To a limited extent the Fund may buy an unrated security that the Manager determines to have met those qualifications. The Fund can also purchase floating or variable rate demand notes, asset-backed securities, and bank loan participation agreements. The Fund's investments in them may be subject to restrictions adopted by the Board from time to time. |X| What are the Fund's Credit Quality and Maturity Standards? Debt instruments, including money market instruments, are subject to credit risk, which is the risk that the issuer might not make timely payments of interest on the security nor repay principal when it is due. The Fund may buy only those securities that meet standards set in the Investment Company Act for money market funds. The Fund's Board has adopted procedures to evaluate securities that are being considered for the Fund's portfolio and the Manager has the responsibility to implement those procedures when selecting investments for the Fund. In general, those procedures require that securities be rated in one of the two highest short-term rating categories of two national rating organizations. At least 95% of the Fund's assets must be invested in securities of issuers with the highest credit rating. No more than 5% of the Fund's assets can be invested in securities with the second highest credit rating. In some cases, the Fund can buy securities rated by one rating organization or unrated securities that the Manager judges to be comparable in quality to the two highest rating categories. The procedures also limit the percentage of the Fund's assets that can be invested in the securities of any one issuer (other than the U.S. government, its agencies and instrumentalities), to spread the Fund's investment risks. A security's maturity must not exceed 397 days. Finally, the Fund must maintain an average portfolio maturity of not more than 90 days, to reduce interest rate risks. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. |X| Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Manager might not always use all of the different types of techniques and investments described below. These techniques involve certain risks but are also subject to the Fund's credit and maturity standards. The Statement of Additional Information contains more information about some of these practices, including limitations on their use that are designed to reduce some of the risks. |X| Floating Rate/Variable Rate Notes. The Fund can purchase notes that have floating or variable interest rates. Variable rates are adjustable at stated periodic intervals. Floating rates are adjusted automatically according to a specified market index for such investments, such as the prime rate of a bank. If the maturity of a note is more than 397 days, the Fund can buy it if it has a demand feature. That feature must permit the Fund to recover the principal amount of the note on not more than thirty days' notice at any time, or at specified times not exceeding 397 days from the date of purchase. |X| Obligations of Foreign Banks and Foreign Branches of U.S. Banks. The Fund can invest in U.S. dollar-denominated securities of foreign banks having total assets at least equal to U.S. $1 billion. It can also buy U.S. dollar-denominated securities of foreign branches of U.S. banks. These securities have additional investment risks compared to obligations of domestic branches of U.S. banks. Risks that may affect the foreign bank's ability to pay its debt include: |_| political and economic developments in the country in which the bank or branch is located, |_| imposition of withholding taxes on interest income payable on the securities, |_| government seizure or nationalization of foreign deposits, |_| the establishment of exchange control regulations and |_| the adoption of other governmental restrictions that might limit the repayment of principal and/or payment of interest on those securities. Additionally, not all of the U.S. and state banking laws and regulations that apply to domestic banks and that are designed to protect depositors and investors apply to foreign branches of domestic banks. None of those U.S. and state regulations apply to foreign banks. |X| Bank Loan Participation Agreements. The Fund may invest in bank loan participation agreements. They represent an undivided interest in a loan made by the issuing bank in the proportion the Fund's interest bears to the total principal amount of the loan. In evaluating the risk of these investments, the Fund looks to the creditworthiness of the borrower that is obligated to make principal and interest payments on the loan. |X| Asset-Backed Securities. The Fund can invest in asset-backed securities. These are fractional interests in pools of consumer loans or other trade receivables, such as credit card or auto loan receivables, which are the obligations of a number of different parties. The income from the underlying pool is passed through to holders, such as the Fund. These securities may be supported by a credit enhancement, such as a letter of credit, a guarantee (by a bank or broker) or a preference right. However, the credit enhancement may apply only to a fraction of the security's value. If the issuer of the security has no security interest in the assets that back the pool, there is a risk that the Fund could lose money if the issuer defaults on its obligation to pay interest and repay the principal. |X| Repurchase Agreements. The Fund can enter into repurchase agreements. In a repurchase transaction, the Fund buys a security and simultaneously sells it to the vendor for delivery at a future date. The Fund's repurchase agreements must be fully collateralized. However, if the vendor fails to pay the resale price on the delivery date, the Fund might incur costs in disposing of the collateral and might experience losses if there is any delay in its ability to do so. There is no limit on the amount of the Fund's net assets that may be subject to repurchase agreements of 7 days or less. It cannot invest more than 10% of its net assets in repurchase agreements maturing in more than 7 days. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. Restricted securities may have a contractual limit on resale or may require registration under federal securities laws before they can be sold publicly. The Fund will not invest more than 10% of its net assets in illiquid or restricted securities. That limit may not apply to certain restricted securities that are eligible for resale to qualified institutional purchasers. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. Difficulty in selling a security may result in a loss to the Fund or additional costs. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Manager. The portfolio managers of the Fund are Arthur J. Zimmer and Carol E. Wolf. They are the persons principally responsible for the day-to-day management of the Fund's portfolio. Mr. Zimmer has had that responsibility since June 1998, and Ms.Wolf since July 1998. Each is also a Vice President of the Fund. Mr. Zimmer is a Senior Vice President and Ms. Wolf is a Vice President of the Manager. Each serves as an officer and portfolio manager for other Oppenheimer funds and has been an officer of the Manager since 1990. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.450% of the first $500 million of average annual net assets, 0.425% of the next $500 million, 0.400% of the next $500 million, and 0.375% of average annual net assets in excess of $1.5 billion. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.45% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy, and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling share of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The net asset value will normally remain at $1.00 per share. However, there are no guarantees that the Fund will be able to maintain a net asset value of $1.00 per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. Under a policy adopted by the Fund's Board of Trustees, the Fund uses the amortized cost method to value its securities to determine the Fund's net asset value. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no "name" designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to be subject to different expenses. This prospectus may not be used to offer or sell Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's prospectus that offers Class 2 shares. That prospectus may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc., by calling toll-free at 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company, generally by 9:30 a.m. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends and Taxes Dividends. The Fund intends to declare dividends from net investment income each regular business day and to pay those dividends monthly on a date selected by the Board of Trustees. To maintain a net asset value of $1.00 per share, the Fund might withhold dividends or make distributions from capital or capital gains. Daily dividends will not be declared or paid on newly purchased shares until Federal Funds are available to the Fund from the purchase payment for such shares. All dividends (and any capital gains distributions) will be reinvested automatically in additional Fund shares at net asset value for the participating insurance company's separate account (unless the participating insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund normally holds its securities to maturity and therefore will not usually pay capital gains distributions. Although the Fund does not seek capital gains, it could realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. Taxes. For a discussion of the tax status of a variable annuity contract or variable life insurance policy or other insurance investment product, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through variable annuity contracts, variable life insurance policies or other insurance company separate accounts, dividends paid by the Fund from net investment income and distributions (if any) of its net realized short-term or long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past 5 fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
FINANCIAL HIGHLIGHTS Year Ended December 31, 1998 1997 1996 1995 1994 ======================================================================================================================= Per Share Operating Data Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------------------------- Income from investment operations--net investment income and net realized gain .05 .05 .05 .06 .04 Dividends and distributions to shareholders (.05) (.05) (.05) (.06) (.04) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 ====== ====== ====== ====== ====== ======================================================================================================================= Total Return(1) 5.25% 5.31% 5.13% 5.62% 4.25% ======================================================================================================================= Ratios/Supplemental Data Net assets, end of period (in thousands) $151,799 $126,782 $129,719 $65,386 $89,671 - ----------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $137,633 $133,707 $99,263 $75,136 $90,264 - ----------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 5.12% 5.19% 5.01% 5.52% 4.18% Expenses 0.50% 0.48% 0.49% 0.51% 0.43%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total returns reflect changes in net investment income only. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. For More Information About Oppenheimer Money Fund/VA: The following additional information about the Fund is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0660.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Money Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Money Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical investment in shares of the Fund for each of the ten most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/89 9.56% 12/31/90 7.84% 12/31/91 6.18% 12/31/92 4.03% 12/31/93 3.16% 12/31/94 4.21% 12/31/95 5.62% 12/31/96 5.13% 12/31/97 5.32% 12/31/98 5.25% (OppenheimerFunds logo) Oppenheimer High Income Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer High Income Fund/VA is a mutual fund that seeks a high level of current income. The Fund invests primarily in lower-grade, high-yield debt securities. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks a high level of current income from investment in high-yield fixed income securities. What Does the Fund Invest In? The Fund invests mainly in a variety of high-yield fixed-income securities of domestic and foreign issuers. The Fund's investments typically include: o lower-grade, high-yield domestic and foreign corporate bonds and notes (these are the main focus of the Fund's portfolio), mortgage-related securities and asset-backed securities, preferred stocks, o "structured" notes, foreign government bonds and notes, and o "zero-coupon" and "step" bonds. The Fund can invest without limit in high-yield, lower grade fixed-income securities, commonly called "junk bonds." Lower-grade securities are below investment-grade securities, and are rated "Baa" by Moody's Investors Service or below "BBB" by Standard & Poor's or have comparable ratings by other nationally-recognized rating organizations (or, in the case of unrated securities, have comparable ratings assigned by the Fund's investment manager, OppenheimerFunds, Inc.). The Fund's foreign investments can include securities of issuers in developed markets as well as emerging markets, which have special risks. The Fund can also invest in loan participations and can use hedging instruments and certain derivative investments, primarily mortgage-related securities and "structured" notes, to try to increase income or to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio managers analyze the overall investment opportunities and risks in different market sectors, industries and countries. The portfolio managers' overall strategy is to build a broadly diversified portfolio of debt securities to help moderate the special risks of investing in lower-grade, high yield debt instruments. The portfolio managers currently focus on the factors below (some of which may vary in particular cases and may change over time), looking for: |_| Securities offering high current income, |_| Issuers in industries that are currently undervalued, |_| Issuers with strong cash flows, |_| Changes in the business cycle that might affect corporate profits. The Fund's diversification strategies, both with respect to securities issued by different companies and within different industries, are intended to reduce the volatility of the Fund's share prices while providing opportunities for high current income. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking high current income from a portfolio emphasizing lower-grade domestic and foreign debt securities. Those investors should be willing to assume the special risks of lower-grade debt securities. Since the Fund's income level will fluctuate, it is not designed for investors needing an assured level of current income. Also, the Fund does not seek capital appreciation. The Fund is designed as a long-term investment. However, the Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments in debt securities are subject to changes in their value from a number of factors. They include changes in general bond market movements in the U.S. and abroad (this is referred to as "market risk"), or the change in value of particular bonds because of an event affecting the issuer (this is known as "credit risk"). The Fund can also invest in foreign debt securities. Therefore, it will be subject to the risks of economic, political or other events that can affect the values of securities of issuers in particular foreign countries. These risks are heightened in the case of emerging market debt securities. Changes in interest rates can also affect debt securities prices (this is known as "interest rate risk"). These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Fund's investment Manager, OppenheimerFunds, Inc., tries to reduce risks by carefully researching securities before they are purchased, and in some cases by using hedging techniques. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of securities of any one issuer and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in the securities of any one foreign government or in the debt and equity securities of companies in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price and yield of the Fund will change daily based on changes in market prices of securities and market conditions, and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Credit Risk. Debt securities are subject to credit risk. Credit risk relates to the ability of the issuer of a security to make interest and principal payments on the security as they become due. If the issuer fails to pay interest, the Fund's income might be reduced, and if the issuer fails to repay principal, the value of that security and of the Fund's shares might be reduced. The Fund's investments in debt securities, particularly high-yield, lower-grade debt securities, are subject to risks of default. |_| Special Risks of Lower-Grade Securities. Because the Fund can invest without limit in securities below investment grade to seek high income and emphasizes these securities in its investment program, the Fund's credit risks are greater than those of funds that buy only investment-grade bonds. Lower-grade debt securities may be subject to greater market fluctuations and greater risks of loss of income and principal than investment-grade debt securities. Securities that are (or that have fallen) below investment grade are exposed to a greater risk that the issuers of those securities might not meet their debt obligations. These risks can reduce the Fund's share prices and the income it earns. |X| Interest Rate Risks. The values of debt securities, including government securities, are subject to change when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall, and they may sell at a discount from their face amount. The magnitude of these fluctuations will often be greater for longer-term debt securities than shorter-term debt securities. The Fund's share prices can go up or down when interest rates change because of the effect of the changes on the value of the Fund's investments in debt securities. |X| Risks of Foreign Investing. The Fund can invest its assets without limit in foreign debt securities and can buy securities of governments and companies in both developed markets and emerging markets. The Fund normally invests part of its assets in foreign securities. While foreign securities offer special investment opportunities, there are also special risks that can reduce the Fund's share prices and returns. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Currency rate changes can also affect the distributions the Fund makes from the income it receives from foreign securities as foreign currency values change against the U.S. dollar. Foreign investing can result in higher transaction and operating costs for the Fund. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. |X| Prepayment Risk. Prepayment risk occurs when the mortgages underlying a mortgage-related security are prepaid at a rate faster than anticipated (usually when interest rates fall) and the issuer of the security can prepay the principal prior to the security's maturity. Mortgage-related securities that are subject to prepayment risk, including the mortgage-related securities that the Fund buys, generally offer less potential for gains when prevailing interest rates decline, and have greater potential for loss than other debt securities when interest rates rise. The impact of prepayments on the price of a security may be difficult to predict and may increase the volatility of the price. The Fund might have to reinvest the proceeds of prepaid securities in new securities offering lower yields. Additionally, the Fund can buy mortgage-related securities at a premium. Accelerated prepayments on those securities could cause the Fund to lose the portion of its principal investment represented by the premium the Fund paid. |X| There are Special Risks in Using Derivative Investments. The Fund can use derivatives to seek increased income or to try to hedge investment risks. In general terms, a derivative investment is an investment contract whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures, interest rate swaps, structured notes and mortgage-related securities are examples of derivatives the Fund can use. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. How Risky is the Fund Overall? In the short term, the values of debt securities can fluctuate substantially because of interest rate changes. Foreign debt securities, particularly those of issuers in emerging markets, and high yield securities can be volatile, and the price of the Fund's shares can go up and down substantially because of events affecting foreign markets or issuers or events affecting the high yield market. The Fund's security diversification strategy may help cushion the Fund's shares prices from that volatility, but debt securities are subject to other credit and interest rate risks that can affect their values and the share prices of the Fund. The Fund generally has more risks than bond funds that focus on U. S. government securities and investment-grade bonds but may be less volatile than funds that focus solely on investments in a single foreign sector, such as emerging markets. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 from year to year for the last ten calendar years and by showing how the average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] ________________________ 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no name designation, and the performance shown is for that class. The other class of shares, Class 2 shares, is not offered in this Prospectus. For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 3.51%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 13.07% (1st Q '91) and the lowest return (not annualized) for a calendar quarter was -7.12% (3rd Q '98). Average Annual Total Returns for the periods ended 1 Year 5 Years 10 Years December 31, 1998 Oppenheimer High Income 0.31% 8.62% 12.71% Fund/VA Merrill Lynch High Yield 3.66%b 9.01% 11.08% Master Index The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests mainly in high yield corporate bonds, the Fund's performance is compared to the Merrill Lynch High Yield Master Index, an unmanaged index of U.S. corporate and government bonds that is a measure of the performance of the high-yield corporate bond market. However, it must be remembered that the index performance reflects the reinvestment of income but does not consider the effects of transaction costs. Also, the Fund may have investments that vary from the index. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more details about the Fund's investment policies and risks. A debt security is essentially a loan by the buyer to the issuer of the debt security. The issuer promises to pay back the principal amount of the loan and normally pays interest, at a fixed or variable rate, on the debt while it is outstanding. The debt securities the Fund buys may be rated by nationally recognized rating organizations or they may be unrated securities assigned an equivalent rating by the Manager. While the Fund's investments may be investment grade or below investment grade in credit quality, it is expected to invest mainly in lower-grade securities, commonly called "junk bonds." They typically offer higher yields than investment-grade bonds, because investors assume greater risks of default of these securities. The ratings definitions of the principal national rating organizations is included in Appendix A to the Statement of Additional Information. The Fund has no limit on the range of maturity of the debt securities it can buy, and therefore may hold obligations with short, medium or long-term maturities. However, longer term securities typically offer higher yields than shorter-term securities and therefore the Fund will focus on longer-term debt to seek higher income. However, longer-term securities fluctuate more in price when interest rates change than shorter-term securities. The Fund can invest some of its assets in other types of securities, including common stocks and other equity securities of foreign and U.S. companies. However, the Fund does not anticipate having significant investments in those types of securities as part of its normal portfolio strategy. |X| High-Yield, Lower-Grade Fixed-Income Securities of U.S. Issuers. There are no restrictions on the amount of the Fund's assets that can be invested in debt securities below investment grade. The Fund can invest in securities rated as low as "C" or "D", in unrated bonds or bonds which are in default at the time the Fund buys them. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they have some speculative characteristics. The Manager does not rely solely on ratings issued by rating organizations when selecting investments for the Fund. The Fund can buy unrated securities that offer high current income. The Manager may assign a rating to an unrated security that is equivalent to the rating of a rated security that the Manager believes offers comparable yields and risks. While investment-grade securities are subject to risks of non-payment of interest and principal, generally, higher yielding lower-grade bonds, whether rated or unrated, have greater risks than investment-grade securities. They may be subject to greater market fluctuations and risk of loss of income and principal than investment-grade securities. There may be less of a market for them and therefore they may be harder to sell at an acceptable price. There is a relatively greater possibility that the issuer's earnings may be insufficient to make the payments of interest and principal due on the bonds. These risks mean that the Fund may not achieve the expected income from lower-grade securities, and that the Fund's net asset value per share may be affected by declines in value of these securities. |X| CMOs and Mortgage-Backed Securities. The Fund can invest a substantial portion of its assets in mortgage-backed securities issued by private issuers, which do not offer the credit backing of U.S. government securities. Primarily these include multi-class debt or pass-through certificates secured by mortgage loans. They may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers. Private issuer mortgage-backed securities are subject to the credit risks of the issuers (as well as the interest rate risks and prepayment risks of CMOs, discussed above), although in some cases they may be supported by insurance or guarantees. |X| Mortgage-Related U.S. Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of collateralized mortgage obligations ("CMOs") and other "pass-through" mortgage securities. CMOs that are U.S. government securities have collateral to secure payment of interest and principal. They may be issued in different series each having different interest rates and maturities. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. government agency. The Fund can have substantial amounts of its assets invested in mortgage-related U.S. government securities. The prices and yields of CMOs are determined, in part, by assumptions about the cash flows from the rate of payments of the underlying mortgages. Changes in interest rates may cause the rate of expected prepayments of those mortgages to change. In general, prepayments increase when general interest rates fall and decrease when interest rates rise. If prepayments of mortgages underlying a CMO occur faster than expected when interest rates fall, the market value and yield of the CMO could be reduced. Additionally, the Fund may have to reinvest the prepayment proceeds in other securities paying interest at lower rates, which could reduce the Fund's yield. If interest rates rise rapidly, prepayments may occur at slower rates than expected, which could have the effect of lengthening the expected maturity of a short or medium-term security. That could cause its value to fluctuate more widely in response to changes in interest rates. In turn, this could cause the value of the Fund's shares to fluctuate more. |X| Asset-Backed Securities. The Fund can buy asset-backed securities, which are fractional interests in pools of loans collateralized by the loans or other assets or receivables. They are issued by trusts and special purpose corporations that pass the income from the underlying pool to the buyer of the interest. These securities are subject to the risk of default by the issuer as well as by the borrowers of the underlying loans in the pool. |X| Foreign Debt Securities. The Fund can buy debt securities issued by foreign governments and companies, as well as "supra-national" entities, such as the World Bank. The Fund will not invest 25% or more of its total assets in debt securities of any one foreign government or in debt securities of companies in any one industry. The Fund has no requirements as to the maturity range of the foreign debt securities it can buy, or as to the market capitalization range of the issuers of those securities. The Fund's foreign debt investments can be denominated in U.S. dollars or in foreign currencies. The Fund will buy foreign currency only in connection with the purchase and sale of foreign securities and not for speculation. |_| Special Risks of Emerging and Developing Markets. Securities of issuers in emerging and developing markets may offer special investment opportunities but present risks not found in more mature markets. Those securities may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of issuers in more developed markets. They may be very speculative. Settlements of trades may be subject to greater delays so that the Fund may not receive the proceeds of a sale of a security on a timely basis. These countries might have less developed trading markets and exchanges. Emerging market countries may have less developed legal and accounting systems, and investments may be subject to greater risks of government restrictions on withdrawing the sales proceeds of securities from the country. Economies of developing countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of stocks of local companies. |X| "Structured" Notes. The Fund can buy "structured" notes, which are specially-designed derivative debt investments. Their principal payments or interest payments are linked to the value of an index (such as a currency or securities index) or commodity. The terms of the instrument may be "structured" by the purchaser (the Fund) and the borrower issuing the note. The principal and/or interest payments depend on the performance of one or more other securities or indices, and the values of these notes will therefore fall or rise in response to the changes in the values of the underlying security or index. They are subject to both credit and interest rate risks and therefore the Fund could receive more or less than it originally invested when the notes mature, or it might receive less interest than the stated coupon payment if the underlying investment or index does not perform as anticipated. Their values may be very volatile and they may have a limited trading market, making it difficult for the Fund to sell its investment at an acceptable price. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. |X| Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. |X| Portfolio Turnover. The Fund may engage in short-term trading to try to achieve its objective and is expected to have a portfolio turnover rate over 100% annually. Portfolio turnover affects brokerage and transaction costs the Fund pays. The Financial Highlights table below shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Manager might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| U.S. Government Securities. The Fund can invest in securities issued or guaranteed by the U.S. Treasury or other government agencies or federally-chartered corporate entities referred to as "instrumentalities." These are referred to as "U.S. government securities" in this Prospectus. |_| U.S. Treasury Obligations. These include Treasury bills (which have maturities of one year or less when issued), Treasury notes (which have maturities of from one to ten years), and Treasury bonds (which have maturities of more than ten years). Treasury securities are backed by the full faith and credit of the United States as to timely payments of interest and repayments of principal. The Fund can also buy U. S. Treasury securities that have been "stripped" of their coupons by a Federal Reserve Bank, zero-coupon U.S. Treasury securities described below, and Treasury Inflation-Protection Securities ("TIPS"). |_| Obligations of U.S. Government Agencies or Instrumentalities. These include direct obligations and mortgage-related securities that have different levels of credit support from the U.S. government. Some are supported by the full faith and credit of the U.S. government, such as Government National Mortgage Association pass-through mortgage certificates (called "Ginnie Maes"). Some are supported by the right of the issuer to borrow from the U.S. Treasury under certain circumstances, such as Federal National Mortgage Association bonds ("Fannie Maes"). Others are supported only by the credit of the entity that issued them, such as Federal Home Loan Mortgage Corporation obligations ("Freddie Macs"). |X| Zero-Coupon and "Stripped" Securities. Some of the government and corporate debt securities the Fund buys are zero-coupon bonds that pay no interest. They are issued at a substantial discount from their face value. "Stripped" securities are the separate income or principal components of a debt security. Some CMOs or other mortgage-related securities may be stripped, with each component having a different proportion of principal or interest payments. One class might receive all the interest and the other all the principal payments. Zero-coupon and stripped securities are subject to greater fluctuations in price from interest rate changes than conventional interest-bearing securities. The Fund may have to pay out the imputed income on zero-coupon securities without receiving the actual cash currently. Interest-only securities are particularly sensitive to changes in interest rates. The values of interest-only mortgage-related securities are also very sensitive to prepayments of underlying mortgages. Principal-only securities are also sensitive to changes in interest rates. When prepayments tend to fall, the timing of the cash flows to these securities increases, making them more sensitive to changes in interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings at an acceptable price. The Fund can invest up to 50% of its total assets in zero-coupon securities issued by either the U.S. Treasury or companies. |X| Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation by a borrower. They are typically purchased from banks or dealers that have made the loan or are members of the loan syndicate. The loans may be to foreign or U.S. companies. The Fund does not invest more than 5% of its net assets in participation interests of any one borrower. They are subject to the risk of default by the borrower. If the borrower fails to pay interest or repay principal, the Fund can lose money on its investment. |X| Preferred Stock. Unlike common stock, preferred stock typically has a stated dividend rate. Preferred stock dividends may be cumulative (they remain a liability of the company until they are paid) or non-cumulative. When interest rates rise, the value of preferred stock having a fixed dividend rate tends to fall. The right to payment of dividends on preferred stock is generally subordinate to the rights of a corporation's debt securities. |X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can purchase securities on a "when-issued" basis and may purchase or sell securities on a "delayed-delivery" basis. These terms refer to securities that have been created and for which a market exists, but which are not available for immediate delivery. There might be a risk of loss to the Fund if the value of the security declines prior to the settlement date. No income accrues to the Fund on a when-issued security until the Fund receives the security on settlement of the trade. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In the broadest sense, exchange-traded options, futures contracts, structured notes, CMOs and other hedging instruments the Fund can use may be considered "derivative investments." In addition to using hedging instruments, the Fund can use other derivative investments because they offer the potential for increased income. Markets underlying securities and indices may move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, put and call options, forward contracts and options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund does not use hedging instruments for speculative purposes, and has limits on its use of them. The Fund is not required to use hedging instruments in seeking its goal. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. In writing a put, there is a risk that the Fund may be required to buy the underlying security at a disadvantageous price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Investments. For cash management purposes, the Fund may hold cash equivalents such as commercial paper, repurchase agreements, Treasury bills and other short-term U.S. government securities. In times of adverse or unstable market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. These would ordinarily be U. S. government securities, highly-rated commercial paper, bank deposits or repurchase agreements. To the extent the Fund invests defensively in these securities, it might not achieve its investment objective. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Managers. The portfolio managers of the Fund are Thomas P. Reedy and David P. Negri. They are the persons principally responsible for the day-to-day management of the Fund's portfolio, Mr. Reedy since January 1998 and Mr. Negri since May 1999. Both are Vice Presidents of the Fund, and Mr. Reedy is Vice President and Mr. Negri is Senior Vice President of the Manager. They also serve as officers and portfolio managers for other Oppenheimer funds. Mr. Negri has been employed by the Manager since June 1989, Mr. Reedy since 1993. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.74% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no "name" designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to be subject to different expenses and will likely have different share prices. This Prospectus may not be used to offer or sell Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's prospectus that offers Class 2 shares. That prospectus may be obtained without charge by contacting any participating insurance sponsor that offers Class 2 shares of the Funds as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc., by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income on an annual basis, and to pay those dividends in March on a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past 5 fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
Financial Highlights Year Ended December 31, 1998 1997 1996 1995 1994 ================================================================================================================ Per Share Operating Data Net asset value, beginning of period $11.52 $11.13 $10.63 $9.79 $11.02 - ---------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .95 .94 .97 .98 .94 Net realized and unrealized gain (loss) (.90) .37 .58 .94 (1.27) ------- - ------- ------- ------- ------ Total income (loss) from investment operations .05 1.31 1.55 1.92 (.33) - ---------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.25) (.91) (1.05) (1.08) (.66) Distributions from net realized gain (.30) (.01) -- -- (.24) ------- - -------- ------- ------- ------ Total dividends and distributions to shareholders (.55) (.92) (1.05) (1.08) (.90) - ---------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.02 $11.52 $11.13 $10.63 $9.79 ======= ======= ======= ======= ====== ================================================================================================================ Total Return, at Net Asset Value(1) 0.31% 12.21% 15.26% 20.37% (3.18)% ================================================================================================================ Ratios/Supplemental Data Net assets, end of period (in thousands) $328,563 $291,323 $191,293 $133,451 $95,698 - ---------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $322,748 $223,617 $157,203 $115,600 $101,096 - ---------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 8.65% 8.88% 9.18% 9.81% 9.15% Expenses 0.78% 0.82% 0.81% 0.81% 0.67% - ---------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 161.4% 167.6% 125.0% 107.1% 110.1%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $537,018,561 and $428,828,226, respectively. For More Information About Oppenheimer High Income Fund/VA: The following additional information about the Fund is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0640.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer High Income Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer High Income Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical $10,000 investment in shares of the Fund for each of the ten most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/89 4.84% 12/31/90 4.65% 12/31/91 33.91% 12/31/92 17.92% 12/31/93 26.34% 12/31/94 -3.18% 12/31/95 20.37% 12/31/96 15.25% 12/31/97 12.22% 12/31/98 0.31% (OppenheimerFunds logo) Oppenheimer Bond Fund/VA A Series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Bond Fund/VA is a mutual fund that seeks a high level of current income as its primary goal. As a secondary goal, the Fund seeks capital appreciation when consistent with its goal of high current income. The Fund invests mainly in investment grade debt securities. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objectives and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objectives and Investment Strategies What Are the Fund's Investment Objectives? The Fund's main objective is to seek a high level of current income. As a secondary objective, the Fund seeks capital appreciation when consistent with its primary objective. What Does the Fund Invest In? Normally, the Fund invests at least 65% of its total assets in investment-grade debt securities, U.S. Government securities and money market instruments. The investment-grade debt securities the Fund invests in can include the following types of obligations, which in general are referred to as "bonds": o short-, medium- and long-term foreign and U.S. government bonds and notes, o domestic and foreign corporate debt obligations, o collateralized mortgage obligations (CMOs), o other mortgage-related securities and asset-backed securities, o participation interests in loans, o "structured" notes, and o other debt obligations. The Fund's investments in U.S. government securities include securities issued or guaranteed by the U.S. government or its agencies or federally-chartered corporate entities referred to as "instrumentalities." These include mortgage-related U.S. government securities and CMOs. There is no set percentage allocation of the Fund's assets among the types of securities the Fund buys to meet the 65% investment requirement, but currently the Fund focuses mainly on U.S. government securities, CMOs, and investment-grade debt securities to do so because they currently offer higher yields than money market instruments. However, if market conditions change, the Fund's portfolio managers may change the relative allocation of the Fund's assets. The Fund has no limitations on the range of maturities of the debt securities in which it can invest and therefore may hold bonds with short-, medium- or long-term maturities. The Fund's investments in debt securities can include "zero coupon" securities and securities that have been "stripped" of their interest coupons. The Fund can invest up to 35% of its total assets in high yield debt securities and other debt securities that are below investment grade (commonly referred to as "junk bonds") and other investments such as preferred stock. The Fund can also use hedging instruments and certain derivative investments, primarily CMOs and "structured" notes, to try to enhance income or to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio managers analyze the overall investment opportunities and risks in different sectors of the debt security markets by focusing on business cycle analysis and relative values between the corporate and government sectors. The portfolio managers' overall strategy is to build a broadly diversified portfolio of debt securities. The portfolio managers currently focus on the factors below (some of which may vary in particular cases and may change over time), looking for: |_| High current income from different types of corporate and government debt securities, |_| Investment-grade securities, primarily to help reduce credit risk, |_| Broad portfolio diversification to help reduce the volatility of the Fund's share prices, |_| Relative values among the debt securities market sectors. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking high current income from a fund that invests mainly in investment-grade debt securities, but which can also hold below-investment-grade securities to seek higher income. Those investors should be willing to assume the credit risks of a fund that typically invests a significant amount of its assets in debt securities and the changes in share prices that can occur when interest rates rise. Since the Fund's income level will fluctuate, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. They include changes in general bond market movements in the U.S. and abroad (this is referred to as "market risk", or the change in value of particular bonds because of an event affecting the issuer (this is known as "credit risk"). Changes in interest rates can also affect securities prices (this is known as "interest rate risk"). These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Fund's investment Manager, OppenheimerFunds, Inc., tries to reduce risks by carefully researching securities before they are purchased, and in some cases by using hedging techniques. The Fund attempts to reduce its exposure to credit risks by limiting its investments in below-investment grade securities, as explained above. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of the securities of any one issuer and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in the securities of any one foreign government or in the debt and equity securities of companies in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price and yield of the Fund will change daily based on changes in market prices of securities and market conditions, and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Credit Risk. Debt securities are subject to credit risk. Credit risk relates to the ability of the issuer of a security to make interest and principal payments on the security as they become due. If the issuer fails to pay interest, the Fund's income might be reduced, and if the issuer fails to repay principal, the value of that security and of the Fund's shares might be reduced. While the Fund's investments in U.S. government securities are subject to little credit risk, debt securities issued by domestic and foreign corporations and by foreign governments are subject to risks of default. Securities that are (or that have fallen) below investment grade are exposed to a greater risk that the issuers of those securities might not meet their debt obligations. Those risks can reduce the Fund's share prices and the income it earns. |_| Special Risks of Lower-Grade Securities. Because the Fund can invest up to 35% of its total assets in securities below investment grade to seek higher income, the Fund's credit risks are greater than those of funds that buy only investment grade securities. Lower-grade debt securities may be subject to greater market fluctuations and greater risks of loss of income and principal than investment-grade debt securities. Securities that are (or that have fallen) below investment grade are exposed to a greater risk than the issuers of those securities might not meet their debt obligations. Those risks can reduce the Fund's share prices and the income it earns. |X| Interest Rate Risks. The values of debt securities, including U.S. government securities prior to maturity, are subject to change when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall, and they may sell at a discount from their face amount. The magnitude of these fluctuations will often be greater for longer-term debt securities than shorter-term debt securities. However, interest rate changes may have different effects on the values of mortgage-related securities because of prepayment risks, discussed below. The Fund's share prices can go up or down when interest rates change because of the effect of the changes on the value of the Fund's investments in debt securities. |X| Prepayment Risk. Prepayment risk occurs when the mortgages underlying a mortgage-related security are prepaid at a rate faster than anticipated (usually when interest rates fall) and the issuer of a security can prepay the principal prior to the security's maturity. Mortgage-related securities that are subject to prepayment risk, including the CMOs and other mortgage-related securities that the Fund buys, generally offer less potential for gains when prevailing interest rates decline, and have greater potential for loss when interest rates rise. The impact of prepayments on the price of a security may be difficult to predict and may increase the volatility of the price. Additionally, the Fund may buy mortgage-related securities at a premium. Accelerated prepayments on those securities could cause the Fund to lose the portion of its principal investment represented by the premium the Fund paid. |X| Risks of Foreign Investing. The Fund can invest its assets without limit in foreign debt securities and can buy securities of governments and companies in both developed markets and emerging markets. While foreign securities offer special investment opportunities, there are also special risks that can reduce the Fund's share prices and returns. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Currency rate changes can also affect the distributions the Fund makes from the income it receives from foreign securities as foreign currency values change against the U.S. dollar. Foreign investing can result in higher transaction and operating costs for the Fund. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. |X| There are Special Risks in Using Derivative Investments. The Fund can use derivatives to seek increased income or to try to hedge investment risks. In general terms, a derivative investment is an investment contract whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures, interest rate swaps, structured notes and CMOs are examples of derivatives the Fund can use. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. How Risky is the Fund Overall? Debt securities are subject to credit and interest rate risks that can affect their values and the share prices of the Fund. Prepayment risks of mortgage-backed securities can cause the Fund to reinvest the proceeds of its investments in lower-yielding securities. The Fund generally has more risks than bond funds that focus on U.S. government securities but the Fund's emphasis on investment-grade securities may make its share prices less volatile than high yield bond funds or funds that focus on foreign bonds. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 from year to year for the last ten calendar years and by showing how the average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was -0.32%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 6.49% (2nd Q '89) and the lowest return (not annualized) for a calendar quarter was -1.90% (1st Q '94). Average Annual Total Returns for the periods ended 1 Year 5 Years 10 Years December 31, 1998 Oppenheimer Bond 6.80% 7.01% 9.28% Fund/VA Lehman Brothers Corporate 8.47% 7.74% 9.86% Bond Index The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests primarily in investment grade corporate and government debt securities, the Fund's performance is compared to the Lehman Brothers Corporate Bond Index, an unmanaged index of non-convertible investment grade corporate debt of U.S. issuers that is a measure of the general domestic bond market. However, it must be remembered that the index performance reflects the reinvestment of income but does not consider the effects of transaction costs. Also, the Fund may have investments that vary from the index. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. A debt security is essentially a loan by the buyer to the issuer of the debt security. The issuer promises to pay back the principal amount of the loan and normally pays interest, at a fixed or variable rate, on the debt while it is outstanding. The debt securities the Fund buys may be rated by nationally recognized rating organizations or they may be unrated securities assigned an equivalent rating by the Manager. While the Fund's investments may be above or below investment grade in credit quality, the Fund invests primarily in investment-grade debt securities. However, the Fund can invest up to 35% of its net assets in below investment-grade debt securities, commonly called 'junk bonds.' ______________ 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no class name designation, and the performance shown is for that class. The other class of shares, Class 2, is not offered in this Prospectus. They typically offer higher yields than investment-grade bonds, because investors assume the greater risks of default of those securities. The ratings definitions of the principal national rating organizations is included in Appendix A to the Statement of Additional Information. Investment-grade debt securities are those rated in one of the four highest categories by Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch IBCA, Inc. or other national rating organizations. They can also be unrated or "split-rated" (rated as investment grade by one rating organization but below investment grade by another), if determined by the Manager to be of comparable quality to rated investment-grade securities. The Fund is not obligated to dispose of securities when issuers are in default or if the rating of the security is reduced below investment grade. The Fund can invest some of its assets in other types of securities, including common stocks, preferred stocks, and other equity securities of foreign and U.S. companies. However, the Fund does not anticipate having significant investments in those types of securities as part of its normal portfolio strategy. The Fund could pursue its secondary objective of capital appreciation by investing in securities convertible into common stock. Convertible securities might allow the Fund to participate in the increase in value of the issuer's underlying common stock, by exercising the conversion right. Normally the Fund would not hold the common stock for investment, although it can hold common stock as part of the value of its net assets that is not normally expected to be invested in debt securities. Typically, convertible securities also pay income until they are converted. There may be other investment strategies that could offer the Fund opportunities for capital appreciation, such as investing in defaulted securities, but these are not expected to be a significant part of the Fund's investment program. U.S. Government Securities. The Fund can invest in securities issued or guaranteed by the U.S. Treasury or other government agencies or federally-chartered corporate entities referred to as "instrumentalities." These are referred to as "U.S. government securities" in this Prospectus. |X| U.S. Treasury Obligations. These include Treasury bills (which have maturities of one year or less when issued), Treasury notes (which have maturities of from one to ten years when issued), and Treasury bonds (which have maturities of more than ten years when issued). Treasury securities are backed by the full faith and credit of the United States as to timely payments of interest and repayments of principal. The Fund can also buy U. S. Treasury securities that have been "stripped" of their coupons by a Federal Reserve Bank, zero-coupon U.S. Treasury securities described below, and Treasury Inflation-Protection Securities ("TIPS"). |X| Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities. These include direct obligations and mortgage-related securities that have different levels of credit support from the U.S. government. Some are supported by the full faith and credit of the U.S. government, such as Government National Mortgage Association pass-through mortgage certificates (called "Ginnie Maes"). Some are supported by the right of the issuer to borrow from the U.S. Treasury under certain circumstances, such as Federal National Mortgage Association bonds ("Fannie Maes"). Others are supported only by the credit of the entity that issued them, such as Federal Home Loan Mortgage Corporation obligations ("Freddie Macs"). |_| Mortgage-Related U.S. Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of collateralized mortgage obligations ("CMOs") and other "pass-through" mortgage securities. CMOs that are U.S. government securities have collateral to secure payment of interest and principal. They may be issued in different series each having different interest rates and maturities. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. government agency. The Fund can have substantial amounts of its assets invested in mortgage-related U.S. government securities. The prices and yields of CMOs are determined, in part, by assumptions about the cash flows from the rate of payments of the underlying mortgages. Changes in interest rates may cause the rate of expected prepayments of those mortgages to change. In general, prepayments increase when general interest rates fall and decrease when interest rates rise. If prepayments of mortgages underlying a CMO occur faster than expected when interest rates fall, the market value and yield of the CMO could be reduced. Additionally, the Fund may have to reinvest the prepayment proceeds in other securities paying interest at lower rates, which could reduce the Fund's yield. If interest rates rise rapidly, prepayments may occur at slower rates than expected, which could have the effect of lengthening the expected maturity of a short or medium-term security. That could cause its value to fluctuate more widely in response to changes in interest rates. In turn, this could cause the value of the Fund's shares to fluctuate more. The prices of longer-term debt securities tend to fluctuate more than those of shorter-term debt securities. That volatility will affect the Fund's share prices. High-Yield, Lower-Grade Debt Securities. The Fund can purchase a variety of lower-grade, high-yield debt securities of U.S. and foreign issuers, including bonds, debentures, notes, preferred stocks, loan participation interests, structured notes, asset-backed securities, among others, to seek high current income. These securities are sometimes called "junk bonds." The Fund has no requirements as to the maturity of the debt securities it can buy, or as to the market capitalization range of the issuers of those securities. Up to 35% of the Fund's assets can be invested in debt securities below investment grade under normal market conditions. Lower-grade debt securities are those rated below "Baa" by Moody's Investors Service, Inc. or lower than "BBB" by Standard & Poor's Rating Service or that have similar ratings by other nationally-recognized rating organizations. The Fund can invest in securities rated as low as "C" or "D", in unrated bonds or bonds which are in default at the time the Fund buys them. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they have some speculative characteristics. The Manager does not rely solely on ratings issued by rating organizations when selecting investments for the Fund. The Fund can buy unrated securities that offer high current income. The Manager may assign a rating to an unrated security that is equivalent to the rating of a rated security that the Manager believes offers comparable yields and risks. While investment-grade securities are subject to risks of non-payment of interest and principal, in general higher-yielding lower-grade bonds, whether rated or unrated, have greater risks than investment-grade securities. They may be subject to greater market fluctuations and risk of loss of income and principal than investment-grade securities. There may be less of a market for them and therefore they may be harder to sell at an acceptable price. There is a relatively greater possibility that the issuer's earnings may be insufficient to make the payments of interest and principal due on the bonds. These risks mean that the Fund may not achieve the expected income from lower-grade securities, and that the Fund's net asset value per share may be affected by declines in value of these securities. |X| Private-Issuer Mortgage-Backed Securities. The Fund can invest a substantial portion of its assets in mortgage-backed securities issued by private issuers, which do not offer the credit backing of U.S. government securities. Primarily these include multi-class debt or pass-through certificates secured by mortgage loans. They may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers. Private issuer mortgage-backed securities are subject to the credit risks of the issuers (as well as the interest rate risks and prepayment risks of CMOs that are U.S. government securities, discussed above), although in some cases they may be supported by insurance or guarantees. |X| Asset-Backed Securities. The Fund can buy asset-backed securities, which are fractional interests in pools of loans collateralized by the loans or other assets or receivables. They are issued by trusts and special purpose corporations that pass the income from the underlying pool to the buyer of the interest. These securities are subject to the risk of default by the issuer as well as by the borrowers of the underlying loans in the pool. Foreign Debt Securities. The Fund can buy debt securities issued by foreign governments and companies, as well as "supra-national" entities, such as the World Bank. They can include bonds, debentures, and notes, including derivative investments called "structured" notes, described below. The Fund will not invest 25% or more of its total assets in debt securities of any one foreign government or in debt securities of companies in any one industry. The Fund has no requirements as to the maturity range of the foreign debt securities it can buy, or as to the market capitalization range of the issuers of those securities. Foreign government debt securities might not be supported by the full faith and credit of the issuing government. The Fund's foreign debt investments can be denominated in U.S. dollars or in foreign currencies. The Fund will buy foreign currency only in connection with the purchase and sale of foreign securities and not for speculation. |X| Special Risks of Emerging and Developing Markets. Securities of issuers in emerging and developing markets may offer special investment opportunities but present risks not found in more mature markets. Those securities may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of issuers in more developed markets. Settlements of trades may be subject to greater delays so that the Fund may not receive the proceeds of a sale of a security on a timely basis. These investments may be very speculative. These countries might have less developed trading markets and exchanges. Emerging market countries may have less developed legal and accounting systems and investments may be subject to greater risks of government restrictions on withdrawing the sales proceeds of securities from the country. Economies of developing countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of stocks of local companies. The Fund can buy "Brady Bonds," which are U.S.-dollar denominated debt securities collateralized by zero-coupon U.S. Treasury securities. They are typically issued by emerging markets countries and are considered speculative securities with higher risks of default. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. Portfolio Turnover. The Fund may engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage and transaction costs the Fund pays. The Financial Highlights table below shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Fund might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Zero-Coupon and "Stripped" Securities. Some of the government and corporate debt securities the Fund buys are zero-coupon bonds that pay no interest. They are issued at a substantial discount from their face value. "Stripped" securities are the separate income or principal components of a debt security. Some CMOs or other mortgage-related securities may be stripped, with each component having a different proportion of principal or interest payments. One class might receive all the interest and the other all the principal payments. Zero-coupon and stripped securities are subject to greater fluctuations in price from interest rate changes than conventional interest-bearing securities. The Fund may have to pay out the imputed income on zero-coupon securities without receiving the actual cash currently. Interest-only securities are particularly sensitive to changes in interest rates. The values of interest-only mortgage-related securities are also very sensitive to prepayments of underlying mortgages. Principal-only securities are also sensitive to changes in interest rates. When prepayments tend to fall, the timing of the cash flows to these securities increases, making them more sensitive to changes in interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings at an acceptable price. The Fund can invest up to 50% of its total assets in zero-coupon securities issued by either the U.S. Treasury or companies. |X| Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation by a borrower. They are typically purchased from banks or dealers that have made the loan or are members of the loan syndicate. The loans may be to foreign or U.S. companies. The Fund does not invest more than 5% of its net assets in participation interests of any one borrower. They are subject to the risk of default by the borrower. If the borrower fails to pay interest or repay principal, the Fund can lose money on its investment. |X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can purchase securities on a "when-issued" basis and may purchase or sell securities on a "delayed-delivery" basis. These terms refer to securities that have been created and for which a market exists, but which are not available for immediate delivery. There might be a risk of loss to the Fund if the value of the security declines prior to the settlement date. No income accrues to the Fund on a when-issued security until the Fund receives the security on settlement of the trade. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In the broadest sense, exchange-traded options, futures contracts, structured notes, CMOs and other hedging instruments the Fund can use may be considered "derivative investments." In addition to using hedging instruments, the Fund can use other derivative investments because they offer the potential for increased income. Markets underlying securities and indices may move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |_| "Structured" Notes. The Fund can buy "structured" notes, which are specially-designed derivative debt investments. Their principal payments or interest payments are linked to the value of an index (such as a currency or securities index) or commodity. The terms of the instrument may be "structured" by the purchaser (the Fund) and the borrower issuing the note. The principal and/or interest payments depend on the performance of one or more other securities or indices, and the values of these notes will therefore fall or rise in response to the changes in the values of the underlying security or index. They are subject to both credit and interest rate risks and therefore the Fund could receive more or less than it originally invested when the notes mature, or it might receive less interest than the stated coupon payment if the underlying investment or index does not perform as anticipated. Their values may be very volatile and they may have a limited trading market, making it difficult for the Fund to sell its investment at an acceptable price. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, put and call options, forward contracts and options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund does not use hedging instruments for speculative purposes, and has limits on its use of them. The Fund is not required to use hedging instruments in seeking its goal. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. In writing a put, there is a risk that the Fund may be required to buy the underlying security at a disadvantageous price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Investments. For cash management purposes, the Fund may hold cash equivalents such as commercial paper, repurchase agreements, Treasury bills and other short-term U.S. government securities. In times of adverse or unstable market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. These would ordinarily be U. S. government securities, highly-rated commercial paper, bank deposits or repurchase agreements. To the extent the Fund invests defensively in these securities, it might not achieve its primary investment objective, high current income. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets forth the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Managers. The portfolio managers of the Fund are David P. Negri and John S. Kowalik. They have been the persons principally responsible for the day-to-day management of the Fund's portfolio, in Mr. Negri's case since January 1990 and in Mr. Kowalik's case since July 1998. Each is a Vice President of the Fund and Senior Vice President of the Manager. Each serves as an officer and portfolio manager for other Oppenheimer funds. Mr. Negri has been employed as a portfolio manager by the Manager since July 1988. Mr. Kowalik joined the Manager in July 1998 and was previously Managing Director and Senior Portfolio Manager at Prudential Global Advisers (from 1989 to June 1998). |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for its last fiscal year ended March 31, 1998, was 0.72% of the Fund's average annual net assets. -- Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. -- At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. -- Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class name designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to have different expenses and share prices. This Prospectus may not be used to offer or sell Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's Prospectus that offers Class 2 shares. That Prospectus, when available, may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc. by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income, if any, on an annual basis, and to pay those dividends in March on a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. 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.
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994 ================================================================================================================================ PER SHARE OPERATING DATA Net asset value, beginning of period $11.91 $11.63 $11.84 $10.78 $11.65 - -------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .72 .76 .69 .72 .76 Net realized and unrealized gain (loss) .07 .28 (.15) 1.07 (.98) ------ - ------ ------ ------ ------ Total income (loss) from investment operations .79 1.04 .54 1.79 (.22) - -------------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.20) (.72) (.74) (.73) (.62) Distributions from net realized gain (.18) (.04) (.01) -- (.03) ------ - ------ ------ ------ ------ Total dividends and distributions to shareholders (.38) (.76) (.75) (.73) (.65) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.32 $11.91 $11.63 $11.84 $10.78 ====== ====== ====== ====== ====== ================================================================================================================================ TOTAL RETURN, AT NET ASSET VALUE(1) 6.80% 9.25% 4.80% 17.00% (1.94)% ================================================================================================================================ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $655,543 $520,078 $426,439 $211,232 $135,067 - -------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $586,242 $449,760 $296,253 $170,929 $121,884 - -------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 6.31% 6.72% 6.72% 6.91% 7.30% Expenses 0.74% 0.78% 0.78% 0.80% 0.57% - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 75.8% 116.9% 82.3% 79.4% 35.1%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $523,613,491 and $403,984,377, respectively. For More Information About Oppenheimer Bond Fund/VA: The following additional information about Oppenheimer Bond Fund/VA is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0630.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Bond Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Bond Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical $10,000 investment in shares of the Fund for each of the ten most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/89 13.32% 12/31/90 7.92% 12/31/91 17.63% 12/31/92 6.50% 12/31/93 13.04% 12/31/94 -1.94% 12/31/95 17.00% 12/31/96 4.80% 12/31/97 9.26% 12/31/98 6.80% (OppenheimerFunds logo) Oppenheimer Strategic Bond Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Strategic Bond Fund/VA is a mutual fund that seeks a high level of current income principally derived from interest on debt securities. The Fund invests mainly in three market sectors: debt securities of foreign government and companies, U.S. government securities, and lower-rated high yield securities of U.S. companies. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks a high level of current income principally derived from interest on debt securities and seeks to enhance that income by writing covered call option on debt securities. What Does the Fund Invest In? The Fund invests mainly in debt securities of issuers in three market sectors: foreign governments and companies, U.S. government securities and lower-grade high-yield securities of U.S. companies. Those debt securities typically include: o short-, medium- and long-term foreign and U.S. government bonds and notes, o collateralized mortgage obligations (CMOs), o other mortgage-related securities and asset-backed securities, o participation interests in loans, o "structured" notes, o lower-grade, high-yield domestic and foreign corporate debt obligations, and o "zero-coupon" or "stripped" securities. Under normal market conditions, the Fund invests in each of those three market sectors. However, the Fund is not obligated to do so, and the amount of its assets in each of the three sectors will vary over time. The Fund can invest up to 100% of its assets in any one sector at any time, if the Fund's investment Manager, OppenheimerFunds, Inc., believes that in doing so the Fund can achieve its objective without undue risk. The Fund's foreign investments can include debt securities of issuers in developed markets as well as emerging markets, which have special risks. The Fund can also use hedging instruments and certain derivative investments, primarily CMOs and "structured" notes, to try to enhance income or to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio managers analyze the overall investment opportunities and risks in individual national economies. The portfolio managers' overall strategy is to build a broadly diversified portfolio of debt securities to help moderate the special risks of investing in high yield debt instruments and foreign securities. The managers may try to take advantage of the lack of correlation of price movements that may occur among the three sectors from time to time. The portfolio managers currently focus on the factors below (some of which may vary in particular cases and may change over time), looking for: |_| Securities offering high current income, |_| Overall diversification for the portfolio by seeking securities whose markets and prices tend to move in different directions, |_| Relative values among the three major market sectors in which the Fund invests. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking high current income from a fund that ordinarily will have substantial investments in both domestic and foreign debt securities. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund that invests in debt securities, particularly high-yield and foreign securities, which have special risks. Since the Fund's income level will fluctuate, it is not designed for investors needing an assured level of current income. Also, the Fund does not seek capital appreciation. The Fund is designed as a long-term investment for investors seeking an investment with an overall sector diversification strategy. However, the Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. They include changes in general bond market movements in the U.S. and abroad (this is referred to as "market risk"), or the change in value of particular bonds because of an event affecting the issuer (this is known as "credit risk"). The Fund can focus significant amounts of its investments in foreign debt securities. Therefore, it will be subject to the risks that economic, political or other events can have on the values of securities of issuers in particular foreign countries. These risks are heightened in the case of emerging market debt securities. Changes in interest rates can also affect securities prices (this is known as "interest rate risk"). These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Manager tries to reduce risks by carefully researching securities before they are purchased, and in some cases by using hedging techniques. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of the securities of any one issuer and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in the securities of any one foreign government or in the debt and equity securities of companies in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price and yield of the Fund will change daily based on changes in market prices of securities and market conditions, and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Credit Risk. Debt securities are subject to credit risk. Credit risk relates to the ability of the issuer of a security to make interest and principal payments on the security as they become due. If the issuer fails to pay interest, the Fund's income might be reduced, and if the issuer fails to repay principal, the value of that security and of the Fund's shares might be reduced. While the Fund's investments in U.S. government securities are subject to little credit risk, the Fund's other investments in debt securities, particularly high-yield, lower-grade debt securities, are subject to risks of default. |_| Special Risks of Lower-Grade Securities. Because the Fund can invest without limit in securities below investment grade to seek high current income, the Fund's credit risks are greater than those of funds that buy only investment-grade bonds. Lower-grade debt securities may be subject to greater market fluctuations and greater risks of loss of income and principal than investment-grade debt securities. Securities that are (or that have fallen) below investment grade are exposed to a greater risk that the issuers of those securities might not meet their debt obligations. These risks can reduce the Fund's share prices and the income it earns. |X| Risks of Foreign Investing. The Fund can invest its assets without limit in foreign debt securities and can buy securities of governments and companies in both developed markets and emerging markets. The Fund normally invests significant amounts of its assets in foreign securities. While foreign securities offer special investment opportunities, there are also special risks that can reduce the Fund's share prices and returns. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Currency rate changes can also affect the distributions the Fund makes from the income it receives from foreign securities as foreign currency values change against the U.S. dollar. Foreign investing can result in higher transaction and operating costs for the Fund. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. |_| Special Risks of Emerging and Developing Markets. Securities of issuers in emerging and developing markets may offer special investment opportunities but present risks not found in more mature markets. Those securities may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of issuers in more developed markets. Settlements of trades may be subject to greater delays so that the Fund may not receive the proceeds of a sale of a security on a timely basis. These countries might have less developed trading markets and exchanges. Emerging market countries may have less developed legal and accounting systems and investments may be subject to greater risks of government restrictions on withdrawing the sales proceeds of securities from the country. Economies of developing countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of stocks of local companies. These investments may be substantially more volatile than debt securities of issuers in the U.S. and other developed countries and may be very speculative. |X| Interest Rate Risks. The prices of debt securities, including U.S. government securities, are subject to change when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall, and they may sell at a discount from their face amount. The magnitude of these fluctuations will often be greater for longer-term debt securities than shorter-term debt securities. The Fund's share prices can go up or down when interest rates change because of the effect of the changes on the value of the Fund's investments in debt securities. |X| Prepayment Risk. Prepayment risk occurs when the mortgages underlying a mortgage-related security are prepaid at a rate faster than anticipated (usually when interest rates rise) and the issuer of the security can prepay the principal prior to the security's maturity. Mortgage-related securities that are subject to prepayment risk, including the CMOs and other mortgage-related securities that the Fund buys, generally offer less potential for gains when prevailing interest rates decline, and have greater potential for loss than other debt securities when interest rates rise. The impact of prepayments on the price of a security may be difficult to predict and may increase the volatility of the price. The Fund might have to reinvest the proceeds of prepaid securities in new securities offering lower yields. Additionally, the Fund can buy mortgage-related securities at a premium. Accelerated prepayments on those securities could cause the Fund to lose the portion of its principal investment represented by the premium the Fund paid. |X| There are Special Risks in Using Derivative Investments. The Fund can use derivatives to seek increased income or to try to hedge investment risks. In general terms, a derivative investment is an investment contract whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures, interest rate swaps, structured notes and CMOs are examples of derivatives the Fund can use. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. How Risky is the Fund Overall? In the short term, the values of debt securities can fluctuate substantially because of interest rate changes. Foreign debt securities, particularly those of issuers in emerging markets, and high yield securities can be volatile, and the price of the Fund's shares can go up and down substantially because of events affecting foreign markets or issuers or events affecting the high yield market. The Fund's sector and security diversification strategy may help cushion the Fund's shares prices from that volatility, but debt securities are subject to other credit and interest rate risks that can affect their values and the share prices of the Fund. The Fund generally has more risks than bond funds that focus on U. S. government securities and investment-grade bonds but may be less volatile than funds that focus solely on investments in a single foreign sector, such as emerging markets. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 from year to year since the Fund's inception and by showing how the average annual total returns of the Fund's shares compare to those of broad-based market indices. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 0.14%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 5.90% ( 2nd Q '95) and the lowest return (not annualized) for a calendar quarter was -3.70% (1st Q '98). Average Annual Total Returns for the periods ended 1 Year 5 Years Life of Fund* December 31, 1998 Oppenheimer Strategic 2.90% 6.83% 6.79% Bond Fund/VA Lehman Brothers Aggregate 8.69% 7.27% 7.25% Bond Index Salomon Brothers World 15.31% 7.85% 7.87% Government Bond Index *The Fund's inception date was 5/3/93. The "life of class" index performance is shown from 4/30/93. The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests in a variety of domestic and foreign corporate and government debt securities, the Fund's performance is compared to the Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S. corporate and government bonds, and to the Salomon Brothers World Government Bond Index, an unmanaged index of debt securities of major foreign governments. However, it must be remembered that the index performance reflects the reinvestment of income but does not consider the effects of transaction costs. Also, the Fund may have investments that vary from the index. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. _______________ 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no class name designation, and the performance shown is for that class. The other class of shares, Class 2, is not offered in this Prospectus. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. At times the Fund might emphasize investments in one or two sectors because of the Manager's evaluation of the opportunities for high current income from debt securities in those sectors relative to other sectors. A debt security is essentially a loan by the buyer to the issuer of the debt security. The issuer promises to pay back the principal amount of the loan and normally pays interest, at a fixed or variable rate, on the debt while it is outstanding. The debt securities the Fund buys may be rated by nationally recognized rating organizations or they may be unrated securities assigned an equivalent rating by the Manager. The Fund's investments may be investment grade or below investment grade in credit quality and the Fund can invest without limit in below investment-grade debt securities, commonly called "junk bonds." These typically offer higher yields than investment grade bonds, because investors assume greater risks of default of these securities. The ratings definitions of the principal national rating organizations is included in Appendix A to the Statement of Additional Information. The Fund can invest some of its assets in other types of securities, including common stocks and other equity securities of foreign and U.S. companies. However, the Fund does not anticipate having significant investments in those types of securities as part of its normal portfolio strategy. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. U.S. Government Securities. The Fund can invest in securities issued or guaranteed by the U.S. Treasury or other government agencies or federally-chartered corporate entities referred to as "instrumentalities." These are referred to as "U.S. government securities" in this Prospectus. |X| U.S. Treasury Obligations. These include Treasury bills (which have maturities of one year or less when issued), Treasury notes (which have maturities of from one to ten years when issued), and Treasury bonds (which have maturities of more than ten years when issued). Treasury securities are backed by the full faith and credit of the United States as to timely payments of interest and repayments of principal. The Fund can also buy U. S. Treasury securities that have been "stripped" of their coupons by a Federal Reserve Bank, zero-coupon U.S. Treasury securities described below, and Treasury Inflation-Protection Securities ("TIPS"). |X| Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities. These include direct obligations and mortgage-related securities that have different levels of credit support from the U.S. government. Some are supported by the full faith and credit of the U.S. government, such as Government National Mortgage Association pass-through mortgage certificates (called "Ginnie Maes"). Some are supported by the right of the issuer to borrow from the U.S. Treasury under certain circumstances, such as Federal National Mortgage Association bonds ("Fannie Maes"). Others are supported only by the credit of the entity that issued them, such as Federal Home Loan Mortgage Corporation obligations ("Freddie Macs"). |_| Mortgage-Related U.S. Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of collateralized mortgage obligations ("CMOs") and other "pass-through" mortgage securities. CMOs that are U.S. government securities have collateral to secure payment of interest and principal. They may be issued in different series each having different interest rates and maturities. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. government agency. The Fund can have substantial amounts of its assets invested in mortgage-related U.S. government securities. The prices and yields of CMOs are determined, in part, by assumptions about the cash flows from the rate of payments of the underlying mortgages. Changes in interest rates may cause the rate of expected prepayments of those mortgages to change. In general, prepayments increase when general interest rates fall and decrease when interest rates rise. If prepayments of mortgages underlying a CMO occur faster than expected when interest rates fall, the market value and yield of the CMO could be reduced. When interest rates rise rapidly, if prepayments occur more slowly than expected, a short- or medium-term CMO can in effect become a long-term security, subject to greater fluctuations in value. These prepayment risks can make the prices of CMOs very volatile when interest rates change. The prices of longer-term debt securities tend to fluctuate more than those of shorter-term debt securities. That volatility will affect the Fund's share prices. High-Yield, Lower-Grade Debt Securities of U.S. Issuers. The Fund can purchase a variety of lower-grade, high-yield debt securities of U.S. issuers, including bonds, debentures, notes, preferred stocks, loan participation interests, structured notes, asset-backed securities, among others, to seek high current income. These securities are sometimes called "junk bonds." The Fund has no requirements as to the maturity of the debt securities it can buy, or as to the market capitalization range of the issuers of those securities. There are no restrictions on the amount of the Fund's assets that can be invested in debt securities below investment grade. Lower-grade debt securities are those rated below "Baa" by Moody's Investors Service, Inc. or lower than "BBB" by Standard & Poor's Rating Service or that have similar ratings by other nationally-recognized rating organizations. The Fund can invest in securities rated as low as "C" or "D", in unrated bonds or bonds which are in default at the time the Fund buys them. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they have some speculative characteristics. The Manager does not rely solely on ratings issued by rating organizations when selecting investments for the Fund. The Fund can buy unrated securities that offer high current income. The Manager may assign a rating to an unrated security that is equivalent to the rating of a rated security that the Manager believes offers comparable yields and risks. While investment-grade securities are subject to risks of non-payment of interest and principal, in general, higher-yielding lower-grade bonds, whether rated or unrated, have greater risks than investment-grade securities. They may be subject to greater market fluctuations and risk of loss of income and principal than investment-grade securities. There may be less of a market for them and therefore they may be harder to sell at an acceptable price. There is a relatively greater possibility that the issuer's earnings may be insufficient to make the payments of interest and principal due on the bonds. These risks mean that the Fund may not achieve the expected income from lower-grade securities, and that the Fund's net asset value per share may be affected by declines in value of these securities. |X| Private-Issuer Mortgage-Backed Securities. The Fund can invest a substantial portion of its assets in mortgage-backed securities issued by private issuers, which do not offer the credit backing of U.S. government securities. Primarily these include multi-class debt or pass-through certificates secured by mortgage loans. They may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers. Private issuer mortgage-backed securities are subject to the credit risks of the issuers (as well as the interest rate risks and prepayment risks of CMOs, discussed above), although in some cases they may be supported by insurance or guarantees. |X| Asset-Backed Securities. The Fund can buy asset-backed securities, which are fractional interests in pools of loans collateralized by the loans or other assets or receivables. They are issued by trusts and special purpose corporations that pass the income from the underlying pool to the buyer of the interest. These securities are subject to the risk of default by the issuer as well as by the borrowers of the underlying loans in the pool. Foreign Debt Securities. The Fund can buy debt securities issued by foreign governments and companies, as well as "supra-national" entities, such as the World Bank. They can include bonds, debentures, and notes, including derivative investments called "structured" notes, described below. The Fund will not invest 25% or more of its total assets in debt securities of any one foreign government or in debt securities of companies in any one industry. The Fund has no requirements as to the maturity range of the foreign debt securities it can buy, or as to the market capitalization range of the issuers of those securities. The Fund's foreign debt investments can be denominated in U.S. dollars or in foreign currencies. The Fund will buy foreign currency only in connection with the purchase and sale of foreign securities and not for speculation. Foreign government debt securities might not be supported by the full faith and credit of the issuing government. The Fund can buy "Brady Bonds", which are U.S.-dollar denominated debt securities collateralized by zero-coupon U.S. Treasury securities. They are typically issued by emerging markets countries and are considered speculative securities with higher risks of default. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. |X| Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. |X| Portfolio Turnover. The Fund can engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage and transaction costs the Fund pays. The Financial Highlights table at the end of this Prospectus shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Manager might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Zero-Coupon and "Stripped" Securities. Some of the government and corporate debt securities the Fund buys are zero-coupon bonds that pay no interest. They are issued at a substantial discount from their face value. "Stripped" securities are the separate income or principal components of a debt security. Some CMOs or other mortgage-related securities may be stripped, with each component having a different proportion of principal or interest payments. One class might receive all the interest and the other all the principal payments. Zero-coupon and stripped securities are subject to greater fluctuations in price from interest rate changes than conventional interest-bearing securities. The Fund may have to pay out the imputed income on zero-coupon securities without receiving the actual cash currently. Interest-only securities are particularly sensitive to changes in interest rates. The values of interest-only mortgage-related securities are also very sensitive to prepayments of underlying mortgages. Principal-only securities are also sensitive to changes in interest rates. When prepayments tend to fall, the timing of the cash flows to these securities increases, making them more sensitive to changes in interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings at an acceptable price. The Fund can invest up to 50% of its total assets in zero-coupon securities issued by either the U.S. Treasury or companies. |X| Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation by a borrower. They are typically purchased from banks or dealers that have made the loan or are members of the loan syndicate. The loans may be to foreign or U.S. companies. The Fund does not invest more than 5% of its net assets in participation interests of any one borrower. They are subject to the risk of default by the borrower. If the borrower fails to pay interest or repay principal, the Fund can lose money on its investment. |X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can purchase securities on a "when-issued" basis and may purchase or sell securities on a "delayed-delivery" basis. These terms refer to securities that have been created and for which a market exists, but which are not available for immediate delivery. There might be a risk of loss to the Fund if the value of the security declines prior to the settlement date. No income accrues to the Fund on a when-issued security until the Fund receives the security on settlement of the trade. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In the broadest sense, exchange-traded options, futures contracts, structured notes, CMOs and other hedging instruments the Fund can use may be considered "derivative investments." In addition to using hedging instruments, the Fund can use other derivative investments because they offer the potential for increased income. Markets underlying securities and indices may move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |_| "Structured" Notes. The Fund can buy "structured" notes, which are specially-designed derivative debt investments, their principal payments or interest payments are linked to the value of an index (such as a currency or securities index) or commodity. The terms of the instrument may be "structured" by the purchaser (the Fund) and the borrower issuing the note. The principal and/or interest payments depend on the performance of one or more other securities or indices, and the values of these notes will therefore fall or rise in response to the changes in the values of the underlying security or index. They are subject to both credit and interest rate risks and therefore the Fund could receive more or less than it originally invested when the notes mature, or it might receive less interest than the stated coupon payment if the underlying investment or index does not perform as anticipated. Their values may be very volatile and they may have a limited trading market, making it difficult for the Fund to sell its investment at an acceptable price. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, put and call options, forward contracts and options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund does not use hedging instruments for speculative purposes, and has limits on its use of them. The Fund is not required to use hedging instruments in seeking its goal, other than writing covered call options when deemed appropriate by the Manager. Currently, the Fund does not write call options to a significant extent. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. In writing a put, there is a risk that the Fund may be required to buy the underlying security at a disadvantageous price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Investments. For cash management purposes, the Fund may hold cash equivalents such as commercial paper, repurchase agreements, Treasury bills and other short-term U.S. government securities. In times of adverse or unstable market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. These would ordinarily be U. S. government securities, highly-rated commercial paper, bank deposits or repurchase agreements. To the extent the Fund invests defensively in these securities, it might not achieve its investment objective. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets forth the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Manager. The portfolio managers of the Fund are David P. Negri and Arthur P. Steinmetz. They have been the persons principally responsible for the day-to-day management of the Fund's portfolio since its inception in May 1993. Both are Vice Presidents of the Fund and Senior Vice Presidents of the Manager. They also serve as officers and portfolio managers for other Oppenheimer funds. Mr. Steinmetz has been employed by the Manager since 1986, and Mr. Negri, since 1989. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.74% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class name designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to have different expenses and share prices. This Prospectus may not be used to offer or sell Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's Prospectus that offers Class 2 shares. That Prospectus, when available, may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc. by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income, if any, on an annual basis and to pay those dividends in March on a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past 5 fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994 ============================================================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $5.12 $5.09 $4.91 $4.60 $5.12 - ----------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .39 .39 .38 .38 .35 Net realized and unrealized gain (loss) (.24) .04 .19 .30 (.54) ----- - ----- ----- ----- ----- Total income (loss) from investment operations .15 .43 .57 .68 (.19) - ----------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.09) (.39) (.39) (.37) (.32) Distributions from net realized gain (.06) (.01) -- -- (.01) ----- - ----- ----- ----- ----- Total dividends and distributions to shareholders (.15) (.40) (.39) (.37) (.33) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.12 $5.12 $5.09 $4.91 $4.60 ===== ===== ===== ===== ===== ============================================================================================================================= TOTAL RETURN, AT NET ASSET VALUE(1) 2.90% 8.71% 12.07% 15.33% (3.78)% ============================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $279,200 $207,839 $118,716 $60,098 $20,320 - ----------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $250,227 $159,934 $ 82,604 $37,698 $15,389 - ----------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 8.17% 8.23% 8.48% 9.32% 8.36% Expenses 0.80% 0.83% 0.85% 0.85% 0.87% - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 133.7% 149.7% 144.3% 87.0% 136.6%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $358,275,325 and $301,159,735, respectively. For More Information About Oppenheimer Strategic Bond Fund/VA: The following additional information about Oppenheimer Strategic Bond Fund/VA is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0265.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Strategic Bond Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Strategic Bond Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical $10,000 investment in shares of the Fund for each of the five most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/94 -3.70% 12/31/95 15.33% 12/31/96 12.07% 12/31/97 8.71% 12/31/98 2.90% (OppenheimerFunds logo) Oppenheimer Aggressive Growth Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Aggressive Growth Fund/VA is a mutual fund that seeks capital appreciation by investing in "growth-type" companies. The Fund invests mainly in common stocks. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks capital appreciation by investing in "growth-type" companies. What Does the Fund Invest In? The Fund invests mainly in equity securities, such as common stocks, and can invest in other equity securities, such as preferred stocks and securities convertible into common stock. It invests primarily in U.S. companies, but can also buy foreign stocks. The Fund emphasizes investments in companies that the Fund's investment Manager, OppenheimerFunds, Inc., believes have potential for increased stock prices relative to the overall stock market. Growth companies can include established companies entering a growth cycle in their business, as well as newer companies. The Fund can invest in securities of issuers of all market capitalization ranges, but currently focuses on stocks of "large capitalization" issuers (which have a market capitalization of more than $5 billion). The Fund can also use hedging instruments and certain derivative investments to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio manager looks for high-growth companies using a "bottom-up" stock selection process. The "bottom-up" approach focuses on fundamental analysis of individual issuers before considering overall economic, market or industry trends. The stock selection process includes analysis of other business and economic factors that might contribute to the company's stock appreciation. The portfolio manager also looks for companies with revenues growing at above-average rates that might support and sustain above-average earnings, and companies whose revenue growth is primarily driven by strength in unit volume sales. While this process and the inter-relationship of the factors used may change over time, and its implementation may vary in particular cases, the portfolio manager currently searches primarily for stocks of companies having the following characteristics: |_| What the portfolio manager believes to be a high rate of sustainable earnings growth; |_| Undiscovered and undervalued emerging growth characteristics; |_| Innovate management and strong leadership positions in unique market niches; |_| An expectation of better-than-anticipated earnings or positive earnings forecasts. If the portfolio manager discerns a slowdown in the company's internal revenue growth or earnings growth or a negative movement in the company's fundamental economic condition, he will consider selling that stock if there are other investment alternatives that offer what he believes to be better appreciation possibilities. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking capital growth in their investment over the long term. Those investors should be willing to assume the greater risks of short-term shares price fluctuations that are typical for an aggressive growth fund focusing on common stock investments. The Fund does not seek current income and it is not designed for investors needing assured levels of current income or preservation of capital. The Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. They include changes in general stock market movements (this is referred to as "market risk"). There may be events or changes affecting particular industries that might be emphasized in the Fund's portfolio (this is referred to as "industry risk") or the change in value of particular stocks because of an event affecting the issuer. These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Manager tries to reduce risks by carefully researching securities before they are purchased. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of the stock of any one company and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price of the Fund will change daily based on changes in market prices of securities and market conditions, and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Risks of Investing in Stocks. Stocks fluctuate in price, and their short-term volatility at times may be great. Because the Fund currently focuses its investments primarily in common stocks and other equity securities for capital appreciation, the value of the Fund's portfolio will be affected by changes in the stock markets. Market risk will affect the Fund's net asset value per share, which will fluctuate as the values of the Fund's portfolio securities change. A variety of factors can affect the price of a particular stocks and the prices of individual stocks do not all move in the same direction uniformly or at the same time. Different stock markets may behave differently from each other. Stocks of growth companies may provide greater opportunities for capital appreciation but may be more volatile than other stocks. Additionally, stocks of issuers in a particular industry may be affected by changes in economic conditions that affect that industry more than others, or by availability of basic resources or supplies, or other events. To the extent that the Fund has greater emphasis on investments in a particular industry, its share values may fluctuate in response to events affecting that industry. Other factors can affect a particular stock's price, such as poor earnings reports by the issuer, loss of major customers, major litigation against the issuer, or changes in government regulations affecting the issuer. The Fund invests in securities of large companies buy also invests in small and medium-size companies, which may have more volatile stock prices than large companies. |X| Risks in Using Derivative Investments. The Fund can use derivatives to seek increased returns or to try to hedge investment risks. In general terms, a derivative investment is one whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures, and forward contracts are examples of derivatives the Fund can use. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. How Risky is the Fund Overall? In the short term, stock markets can be volatile, and the price of the Fund's shares can go up and down substantially. The Fund generally does not use income-oriented investments to help cushion the Fund's total return from changes in stock prices, except for defensive purposes. The Fund is an aggressive investment vehicle, designed for investors willing to assume greater risks in the hope of achieving greater gains. In the short-term the Fund may be less volatile than small-cap and emerging markets stock funds, but it may be subject to greater fluctuations in its share prices than funds that focus on both stocks and bonds. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 from year to year for the last ten calendar years and by showing how the average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] ___________________ 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no class name designation, and the performance shown is for that class. The other class of shares, Class 2, is not offered in this Prospectus. For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 9.70%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 24.70% (4th Q '98) and the lowest return (not annualized) for a calendar quarter was -23.25% (3rd Q '98). Average Annual Total Returns for the periods ended 1 Year 5 Years 10 Years December 31, 1998 Oppenheimer Aggressive 12.36% 13.06% 16.12% Growth Fund/VA S&P 500 Index 28.60% 24.05% 19.19% The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests primarily in stocks, the Fund's performance is compared to the S&P 500 Index, an unmanaged index of equity securities that is a measure of the general domestic stock market. However, it must be remembered that the index performance reflects the reinvestment of income but does not consider the effects of transaction costs. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. |X| Stock Investments. The Fund invests in securities issued by companies that the Manager believes have growth potential. Growth companies can be new or established companies that may be developing new products or services, that have relatively favorable prospects, or that are expanding into new and growing markets. Current examples include companies in the fields of telecommunications, biotechnology, computer software, and new consumer products. Growth companies may be providing new products or services that can enable them to capture a dominant or important market position. They may have a special area of expertise or the capability to take advantage of changes in demographic factors in a more profitable way than larger, more established companies. Growth companies tend to retain a large part of their earnings for research, development or investment in capital assets. Therefore, they might not emphasize paying dividends, and may not pay any dividends for some time. They are selected for the Fund's portfolio because the Manager believes the price of the stock will increase over the long term, relative to the overall stock market. |_| Cyclical Opportunities. The Fund might also seek to take advantage of changes in the business cycle by investing in companies that are sensitive to those changes if the Manager believes they have growth potential. For example, when the economy is expanding, companies in the consumer durables and technology sectors might benefit and present long-term growth opportunities. The Fund focuses on seeking growth over the long term, but could seek to take tactical advantage of short-term market movements or events affecting particular issuers or industries. |_| Other Equity Securities. While the Fund emphasizes investments in common stocks, it can also buy preferred stocks, warrants and securities convertible into common stock. Although many convertible securities are debt securities, the Manager considers some of them to be "equity equivalents" because of the conversion feature, and in that case their rating has less impact on the investment decision than in the case of other debt securities. Nevertheless, convertible debt securities are subject to credit risk (the risk that the issuer will not make timely payments in interest and principal) and interest rate risk (the risk that the value of the security will fall if interest rates rise). |_| Industry Focus. At times, the Fund may increase the relative emphasis of its investment in a particular industry. Stocks of issuers in a particular industry are subject to changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others. To the extent that the Fund has greater emphasis on investments in a particular industry, its share values may fluctuate in response to events affecting that industry. To some extent that risk may be limited by the Fund's policy of not concentrating 25% or more of its assets in investments in any one industry. While the Fund emphasizes investments in common stocks, it may also buy preferred stocks and securities convertible into common stock. While many convertible securities are debt securities, the Manager considers some of them to be "equity equivalents" because of the conversion feature and in those cases their rating has less impact on the investment decision than in the case of other debt securities. Nevertheless, convertible debt securities are subject to both "credit risk" (the risk that the issuer will not pay interest or repay principal in a timely manner) and "interest rate risk" (the risk that prices of the securities will be affected inversely by changes in prevailing interest rates). If the Fund buys convertible securities (or other debt securities), it will focus primarily on investment-grade securities which pose less credit risk than lower-grade debt securities. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. |X| Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. |X| Portfolio Turnover. The Fund can engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage costs the Fund pays. The Financial Highlights table below shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Fund might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Investing in Small, Unseasoned Companies. The Fund can invest without limit in small, unseasoned companies. These are companies that have been in operation less than three years, including the operations of any predecessors. These securities may have limited liquidity, which means that the Fund may not be able to sell them quickly at an acceptable price. Their prices may be very volatile, especially in the short-term. |X| Foreign Investing. The Fund can buy securities in any country, including developed countries and emerging markets. The Fund limits its investments in foreign securities to not more than 25% of its net assets, and it normally does not expect to invest substantial amounts of its assets in foreign stocks. |_| Special Risks of Foreign Investing. While foreign securities offer special investment opportunities, there are also special risks. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. Securities in underdeveloped countries may be more difficult to sell and their prices may be more volatile than securities of issuers in developed markets. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In the broadest sense, exchange-traded options, futures contracts, and other hedging instruments the Fund might use may be considered "derivative investments." In addition to using hedging instruments, the Fund can use other derivative investments because they offer the potential for increased principal value. Markets underlying securities and indices might move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, put and call options, forward contracts and options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund is not required to use hedging to seek its objective. The Fund has limits on its use of hedging instruments and does not use them for speculative purposes. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Instruments. In times of unstable or adverse market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. Generally, they would be cash equivalents (such as commercial paper) money market instruments, short-term debt securities, U.S. government securities, or repurchase agreements. They could include other investment-grade debt securities. The Fund might also hold these types of securities pending the investment of proceeds from the sale of Fund share or portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests defensively in these securities, it might not achieve its investment objective of capital appreciation. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets forth the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Manager. The portfolio manager of the Fund is Bruce L. Bartlett. He is a Vice President of the Fund and a Senior Vice President of the Manager. He has been the person principally responsible for the day-to-day management of the Fund's portfolio since April, 1998. Mr. Bartlett serves as portfolio manager and Vice President of other Oppenheimer funds. Prior to joining the Manager in 1995, Mr. Bartlett was a Vice President and Senior Portfolio Manager at First of America Investment Corp. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $700 million, and 0.58% of average annual net assets over $1.5 billion. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.69% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class name designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to have different expenses and share prices. This Prospectus may not be used to offer Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's Prospectus that offers Class 2 shares. That Prospectus, when available, may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc. by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income, if any, on an annual basis, and to pay those dividends in March or a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past 5 fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994 ============================================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $40.96 $38.71 $34.21 $25.95 $31.64 - ------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) (.05) .10 .09 .11 .10 Net realized and unrealized gain (loss) 5.09 4.01 6.59 8.29 (2.22) ------ - ------ ------ ------ ------ Total income (loss) from investment operations 5.04 4.11 6.68 8.40 (2.12) - ------------------------------------------------------------------------------------------------------------------------------ Dividends and distributions to shareholders: Dividends from net investment income (.10) (.09) (.11) (.09) (.04) Distributions from net realized gain (1.07) (1.77) (2.07) (.05) (3.53) ------ - ------ ------ ------ ------ Total dividends and distributions to shareholders (1.17) (1.86) (2.18) (.14) (3.57) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $44.83 $40.96 $38.71 $34.21 $25.95 ====== ====== ====== ====== ====== ============================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) 12.36% 11.67% 20.22% 32.52% (7.59)% ============================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,077,960 $877,807 $617,392 $325,404 $185,774 - ------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 954,848 $753,852 $467,080 $240,730 $153,832 - ------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: Net investment income (loss) (0.12)% 0.31% 0.32% 0.47% 0.50% Expenses 0.71% 0.73% 0.75% 0.78% 0.57% - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate(2) 79.8% 87.6% 100.1% 125.5% 96.5%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $781,979,929 and $705,990,510, respectively. For More Information About Oppenheimer Aggressive Growth Fund/VA: The following additional information about Oppenheimer Aggressive Growth Fund/VA is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0620.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Aggressive Growth Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Aggressive Growth Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical $10,000 investment in shares of the Fund for each of the ten most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/89 27.57% 12/31/90 -16.82% 12/31/91 54.72% 12/31/92 15.42% 12/31/93 27.32% 12/31/94 -7.59% 12/31/95 32.52% 12/31/96 20.23% 12/31/97 11.67% 12/31/98 12.36% (OppenheimerFunds logo) Oppenheimer Capital Appreciation Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Capital Appreciation Fund/VA is a mutual fund that seeks capital appreciation as its goal. The Fund invests mainly in common stocks of well-known, established companies. Prior to May 1, 1999, this Fund was named "Oppenheimer Growth Fund". Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks capital appreciation by investing in securities of well-known established companies. What Does the Fund Invest In? The Fund invests mainly in common stocks of established and well-known U.S. companies. The Fund can buy other equity securities, such as preferred stocks and securities convertible into common stock. The Fund can buy securities of issuers in foreign countries, buy typically does not hold them to a substantial degree. The Fund can invest in any country, but it emphasizes investments in the United States and other developed markets. Well-known and established companies the Fund focuses on generally are companies that have a history of earnings and dividends and are issued by seasoned companies, having an operating history of at least five years, including any predecessors. While the Fund can invest in securities of issues of all market capitalization ranges, the well known, established companies the Fund's investment Manager, OppenheimerFunds, Inc. usually emphasizes for the Fund are categorized as "large capitalization" issuers (having a market capitalization of $5 billion or more). Current income is a secondary consideration in the selection of the Fund's portfolio securities. The Fund can also use hedging instruments and certain derivative investments to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio manager looks primarily for companies with high growth potential using fundamental analysis of a company's financial statements and management structure, and analysis of the company's operations and product development, as well as the industry of which the issuer is part. In seeking broad diversification of the Fund's portfolio, the portfolio manager looks for stocks that are reasonably priced in relation to overall stock market valuations. The portfolio manager currently focuses on the factors below (which may vary in particular cases and may change over time), looking for: |_| Companies in market sectors that are market leaders, |_| Companies with relatively stable or established businesses in established markets, that are in or entering into a growth cycle. |_| Companies with a history of above-average earnings growth. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking capital appreciation in their investment over the long term, from investments in common stocks of well-known companies. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund focusing on stock investments. Since the Fund's income level will fluctuate and will likely be small, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments in stocks are subject to changes in their value from a number of factors. They include changes in general stock market movements (this is referred to as "market risk"), or the change in value of particular stocks because of an event affecting the issuer. At times, the Fund might increase the relative emphasis of its investments in a particular industry. If it does, it may be subject to the risks that economic, political or other events can have a negative effect on the values of securities of issuers in that industry (this is referred to as "industry risk"). These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Manager tries to reduce risks by carefully researching securities before they are purchased. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of the stock of any one company and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price of the Fund will change daily based on changes in market prices of securities and market conditions and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Risks of Investing in Stocks. Stocks fluctuate in price, and their short-term volatility at times may be great. Because the Fund currently invests primarily in common stocks for capital appreciation, the value of the Fund's portfolio will be affected by changes in the stock markets. Market risk will affect the Fund's net asset value per share, which will fluctuate as the values of the Fund's portfolio securities change. A variety of factors can affect the price of a particular stocks and the prices of individual stocks do not all move in the same direction uniformly or at the same time. Different stock markets may behave differently from each other. Additionally, stocks of issuers in a particular industry may be affected by changes in economic conditions that affect that industry more than others, or by changes in government regulations, availability of basic resources or supplies, or other events. To the extent that the Fund has greater emphasis on investments in a particular industry, its share values may fluctuate in response to events affecting that industry. Other factors can affect a particular stock's price, such as poor earnings reports by the issuer, loss of major customers, major litigation against the issuer, or changes in government regulations of large companies, but can also invest in small and medium-size companies, which may have more volatile stock prices than large companies. How Risky is the Fund Overall? In the short term, stock markets can be volatile, and the price of the Fund's shares can go up and down substantially. The Fund generally does not use income-oriented investments to a great extent to help cushion the Fund's share price from stock market volatility, except for defensive purposes. Because it focuses on larger companies, the Fund generally may be less volatile than funds focusing on investments in small-cap stocks, but the Fund may have greater risk of volatility than funds that invest in both stocks and fixed income securities. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 from year to year for the last ten calendar years and by showing how the average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 6.55%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the periods shown in the bar chart, the highest return (not annualized) for a calendar quarter was 26.75% (4th Q '98) and the lowest return (not annualized) for a calendar quarter was -16.41% (3rd Q '98). Average Annual Total Returns for the periods ended 1 Year 5 Years 10 Years December 31, 1998 Oppenheimer Capital 24.00% 22.10% 16.85% Appreciation Fund/VA S&P 500 Index 28.60% 24.05% 19.19% The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests primarily in stocks, the Fund's performance is compared to the S&P 500 Index, an unmanaged index of equity securities that is a measure of the general domestic stock market. However, it must be remembered that the index performance reflects the reinvestment of income but does not consider the effects of transaction costs. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no class name designation, and the performance shown is for that class. The other class of shares, Class 2, is not offered in this Prospectus. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. |X| Stock Investments. The types of growth companies the Manager focuses on are larger, more established growth companies. Growth companies may be companies that are developing new products or services, such as companies in the technology sector, or they may be expanding into new markets for their products, such as the energy sector. Growth companies tend to retain a large part of their earnings for research, development or investment in capital assets. Therefore, they do not tend to emphasize paying dividends, and may not pay any dividends for some time. They are selected for the Fund's portfolio because the Manager believes the price of the stock will increase over time. |_| Cyclical Opportunities. The Fund may also seek to take advantage of changes in the business cycle by investing in companies that are sensitive to those changes if the Manager believes they have growth potential. For example, when the economy is expanding, companies in the consumer durables and technology sectors might benefit and present long-term growth opportunities. The Fund might sometimes seek to take tactical advantage of short-term market movements or events affecting particular issuers or industries. |_| Industry Focus. At times, the Fund may increase the relative emphasis of its investment in a particular industry. Stocks of issuers in a particular industry are subject to changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others. To the extent that the Fund has greater emphasis on investments in a particular industry, its share values may fluctuate in response to events affecting that industry. To some extent that risk may be limited by the Fund's policy of not concentrating 25% or more of its assets in investments in any one industry. While the Fund emphasizes investments in common stocks, it can also buy preferred stocks and securities convertible into common stock. While many convertible securities are debt securities, the Manager considers some of them to be "equity equivalents" because of the conversion feature and in those cases their rating has less impact on the investment decision than in the case of other debt securities. Nevertheless, convertible debt securities are subject to both "credit risk" (the risk that the issuer will not pay interest or repay principal in a timely manner) and "interest rate risk" (the risk that prices of the securities will be affected inversely by changes in prevailing interest rates). If the Fund buys convertible securities (or other debt securities), it will focus primarily on investment-grade securities which pose less credit risk than lower-grade debt securities. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. |X| Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. |X| Portfolio Turnover. The Fund may engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage costs the Fund pays. The Financial Highlights table at the end of this Prospectus shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Fund might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In general terms, a derivative investment is one whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. |_| There are Special Risks in Using Derivative Investments. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. In the broadest sense, exchange-traded options, futures contracts, and other hedging instruments the Fund might use may be considered "derivative investments." In addition to using hedging instruments, the Fund might use other derivative investments because they offer the potential for increased principal value. Markets underlying securities and indices might move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, forward contracts and put and call options, including options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund does not currently use hedging extensively and is not required to do so to seek its objective. The Fund has limits on its use of hedging instruments and currently does not use them for speculative purposes. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Investments. For cash management purposes, the Fund can hold cash equivalents such as commercial paper, repurchase agreements, Treasury bills and other short-term U.S. government securities. In times of adverse or unstable market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. These would ordinarily be U. S. government securities, highly-rated commercial paper, bank deposits or repurchase agreements. To the extent the Fund invests defensively in these securities, it might not achieve its investment objective. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Manager. The portfolio manager of the Fund is Jane Putnam. She is a Vice President of the Fund and the Manager. She has been the person principally responsible for the day-to-day management of the Fund's portfolio since May, 1994. Ms. Putnam also serves as an officer and portfolio manager for other Oppenheimer funds. Before joining the manager in 1994, she was a portfolio manager and equity research analyst for Chemical Bank. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.72% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class name designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to have different expenses and share prices. This Prospectus may not be used to offer Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's Prospectus that offers Class 2 shares. That Prospectus, when available, may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc. by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income, if any, on an annual basis, and to pay those dividends in March on a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past 5 fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994 ================================================================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $32.44 $27.24 $23.55 $17.68 $17.70 - --------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .13 .25 .15 .25 .22 Net realized and unrealized gain (loss) 7.28 6.62 5.46 6.10 (.05) - ------ ------ ------ ------ ------ Total income from investment operations 7.41 6.87 5.61 6.35 .17 - --------------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.24) (.15) (.25) (.22) (.15) Distributions from net realized gain (2.94) (1.52) (1.67) (.26) (.04) - ------ ------ ------ ------ ------ Total dividends and distributions to shareholders (3.18) (1.67) (1.92) (.48) (.19) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $36.67 $32.44 $27.24 $23.55 $17.68 ====== ====== ====== ====== ====== ================================================================================================================================= TOTAL RETURN, AT NET ASSET VALUE(1) 24.00% 26.68% 25.20% 36.65% 0.97% ================================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $768,550 $493,906 $285,920 $117,710 $63,283 - --------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $609,246 $390,447 $152,466 $ 88,803 $59,953 - --------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 0.50% 1.02% 1.08% 1.46% 1.38% Expenses 0.75% 0.75% 0.81%(2) 0.79% 0.58% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(3) 55.7% 66.0% 65.4% 58.2% 53.8%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The expense ratio was 0.79% net of the voluntary reimbursement by the Manager. 3. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $478,348,867 and $297,133,286, respectively. For More Information About Oppenheimer Capital Appreciation Fund/VA: The following additional information about Oppenheimer Capital Appreciation Fund is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. The Reports refer to the Fund as "Oppenheimer Growth Fund" (its name prior to May 1, 1999). How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0610.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Capital Appreciation Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Capital Appreciation Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical $10,000 investment in shares of the Fund for each of the ten most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/89 23.59% 12/31/90 -8.21% 12/31/91 25.54% 12/31/92 14.53% 12/31/93 7.25% 12/31/94 0.97% 12/31/95 36.66% 12/31/96 25.20% 12/31/97 26.69% 12/31/98 24.00% (OppenheimerFunds logo) Oppenheimer Small Cap Growth Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Small Cap Growth Fund/VA is a mutual fund that seeks capital appreciation as its goal. The Fund invests mainly in common stocks of companies with market capitalization less than $1 billion. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks capital appreciation. What Does the Fund Invest In? The Fund invests mainly in common stocks, but can buy other equity securities, such as preferred stocks and securities convertible into common stock. The Fund invests primarily in securities of companies with market capitalization less than $1 billion that the Fund's investment Manager, OppenheimerFunds, Inc., believes have favorable growth prospectus. The Fund is not required to sell a security if the issuers market capitalization grows above $1 billion. The Fund can also buy securities of issuers having a market capitalization over $1 billion, but does not expect to do so to a significant degree. The Fund can invest in any country, including countries with developed or emerging markets, but currently emphasizes investments in the U.S. and other developed markets. While these stocks may be traded on stock exchanges, in many cases the Fund buys over-the-counter securities, which has special risks. The Fund can also use hedging instruments and certain derivative investments to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio managers look primarily for companies with high growth potential using fundamental analysis of a company's financial statements and management structure, and analysis of the company's operations and product development, as well as the industry of which the issuer is part. The portfolio managers also evaluate research on particular industries, market trends and general economic conditions. In seeking broad diversification of the Fund's portfolio, the portfolio managers currently focus on the factors below (which may vary in particular cases and may change over time), looking for: |_| Companies with small capitalizations, that is, $1 billion or less, |_| Companies with management that has a proven ability to handle growth, |_| Companies that self-finance expansion rather than adding to their debt, |_| Companies with accelerating earnings and sustainable earnings growth, and |_| Companies with innovative products or services. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking capital growth in their investment over the long term, from a fund that invests in small-cap stocks. Those investors should be willing to assume the greater risks of short-term share price fluctuations that are typical for an aggressive fund focusing on small-cap stocks. Since the Fund does not invest for income and the income from its investments will likely be small, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. Investments in stocks can be volatile and are subject to changes in general stock market movements (this is referred to as "market risk"). There may be events or changes affecting particular industries that might have a relatively greater weighting in the Fund's portfolio (this is referred to as "industry risk") or the change in value of a particular stock because of an event affecting the issuer. Stocks of growth companies may provide greater opportunities for capital appreciation but may be more volatile than other stocks. That volatility is likely to be even greater for small-cap companies. The Fund can also buy foreign securities that have special risks not associated with investments in domestic securities, such as the effects of currency fluctuations on relative prices. These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Fund's Manager, tries to reduce risks by carefully researching securities before they are purchased. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of the stock of any one company and by not investing too great a percentage of the Fund's assets in any one company. Also, the Fund does not concentrate 25% or more of its assets in investments in any one industry. However, changes in the overall market prices of securities can occur at any time. The share price of the Fund will change daily based on changes in market prices of securities and market conditions, and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Risks of Investing in Stocks. Because the Fund invests primarily in common stocks of small-cap growth companies, the value of the Fund's portfolio will be affected by changes in the stock market and the special economic and other factors that might primarily affect the prices of small cap stocks. Market risk will affect the Fund's net asset value per share, which will fluctuate as the values of the Fund's portfolio securities change. The prices of individual stocks do not all move in the same direction uniformly or at the same time. Different stock markets may behave differently from each other. Other factors can affect a particular stock's price, such as poor earnings reports by the issuer, loss of major customers, major litigation against the issuer, or changes in government regulations affecting the issuer or its industry. To the extent that the Fund increases the relative emphasis of its portfolio investments in a particular industry, its share values may fluctuate in response to events affecting that industry. |X| Special Risks of Small-Cap Stocks. The Fund focuses its investments on securities of companies having a market capitalization of up to $1 billion, which can include both established and newer companies. While newer emerging growth companies might offer greater opportunities for capital appreciation than larger, more established companies, they involve substantially greater risks of loss and price fluctuations than larger, more-established issuers. Small-cap companies may have limited product lines or markets for their products, limited access to financial resources and less depth in management skill than larger, more established companies. Their stocks may be less liquid than those of larger issuers. That means the Fund could have greater difficulty selling a security of a small cap issuer at an acceptable price, especially in periods of market volatility. That factor increases the potential for losses to the Fund. Also, it may take a substantial period of time before the Fund realizes a gain on an investment in a small-cap company, if it realizes any gain at all. Because of the special risks associated with investments in small, unseasoned issuers which are companies that have been in operation less than three years, (including the operations of any predecessors) the Fund intends to limit these investments to not more than 20% of total assets. How Risky is the Fund Overall? In the short term, the markets for small-cap stocks can be volatile, and the price of the Fund's shares can go up and down substantially. The Fund generally does not use income-oriented investments to help cushion the Fund's total return from changes in stock prices, except for defensive purposes. The Fund is a very aggressive investment vehicle, designed for investors willing to assume greater risks in the hope of achieving greater gains, and its share price is likely to fluctuate more than the price of shares of Funds emphasizing large-cap stocks. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance Because the Fund commenced operations on May 1, 1998, calendar year performance information for 1998 is not included in this Prospectus. To obtain the Fund's current total returns, you can contact the Transfer Agent at the telephone number on the Back Cover. Please remember that the Fund's total returns do not consider the effect of charges imposed by the insurance company separate accounts that invest in the Fund. If those charges were included, the returns would be less. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. |X| Small-Cap Stock Investments. The Fund emphasizes investments in equity securities of small companies that the Manager believes have growth potential. Small-cap growth companies tend to be companies that may be developing new products or services, that have relatively favorable prospects, or that are expanding into new and growing markets. Current examples include companies in the fields of telecommunications, biotechnology, computer software, and new consumer products. While they include established companies that are entering a growth cycle, they also include newer companies. Emerging growth companies may be providing new products or services that can enable them to capture a dominant or important market position. They may have a special area of expertise or the capability to take advantage of changes in demographic factors in a more profitable way than larger, more established companies. Growth companies tend to retain a large part of their earnings for research, development or investment in capital assets. Therefore, they do not tend to emphasize paying dividends, and may not pay any dividends for some time. They are selected for the Fund's portfolio because the Manager believes the price of the stock will increase over the long term. |_| Cyclical Opportunities. The Fund focuses on seeking growth over the long term but might also seek to take advantage of changes in the business cycle by investing in companies that are sensitive to those changes, if the Manager believes they have growth potential. For example, when the economy is expanding, companies in the consumer durables and technology sectors might benefit and present long-term growth opportunities. There is the risk that those securities can lose value when the issuer or industry is out of phase in the business cycle. |_| Industry Focus. At times, the Fund may increase the relative emphasis of its investments in a particular industry. Stocks of issuers in a particular industry might be affected by changes in economic conditions or by changes in government regulations, availability of basic resources or supplies, or other events that affect that industry more than others. To the extent that the Fund has a greater emphasis on investments in a particular industry, its share values may fluctuate in response to events affecting that industry. To some extent that risk may be limited by the Fund's policy of not concentrating 25% or more of its assets in investments in any one industry. |_| Other Equity Securities. While the Fund emphasizes investments in common stocks, it may also buy preferred stocks and securities convertible into common stock. While some convertible securities are debt securities, the Manager considers some of them to be "equity equivalents" because of the conversion feature and in that case their rating has less impact on the investment decision than in the case of other debt securities. Nevertheless, convertible securities are subject to both "credit risk" (the risk that the issuer will not pay interest or repay principal in a timely manner) and "interest rate risk" (the risk that the prices of the securities will be affected inversely by changes in prevailing interest rates). If the Fund buys convertible securities (or other debt securities) it will focus primarily on investment-grade securities, which pose less credit risk than lower-grade debt securities. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. |X| Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. |X| Portfolio Turnover. The Fund may engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage costs the Fund pays. The Financial Highlights table at the end of this Prospectus shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Manager might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Risks of Foreign Investing. The Fund can invest in foreign securities, although most of the small cap stocks the Fund holds are issued by domestic companies. The Fund currently emphasizes investments in U.S. companies and does not expect its investments in foreign securities to exceed 25% of its net assets. While foreign securities offer special investment opportunities, there are also special risks. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. The Fund can use derivatives to seek increased returns or to try to hedge investment risks, although it does not do so currently to a significant degree. In general terms, a derivative investment is one whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures, and forward contracts are examples of derivatives the Fund can use. |_| There are Special Risks in Using Derivative Investments. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. Markets underlying securities and indices might move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, forward contracts, and put and call options, including options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund does not currently use hedging extensively and is not required to do so to seek its objective. The Fund has limits on its use of hedging instruments and currently does not use them to a significant degree. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Forward contracts can be used to try to manage foreign currency risks on the Fund's foreign investments. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Investments. For cash management purposes, the Fund can hold cash equivalents such as commercial paper, repurchase agreements, Treasury bills and other short-term U.S. government securities. In times of adverse or unstable market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. These would ordinarily be U. S. government securities, highly-rated commercial paper, bank deposits or repurchase agreements. To the extent the Fund invests defensively in these securities, it might not achieve its investment objective. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Managers. The Portfolio Managers of the Fund are Jay W. Tracey, III and Alan Gilston. They have been the persons principally responsible for the day-to-day management of the Fund since its inception in May 1998, and are Vice Presidents of the Fund and of the Manager. They also serve as officers and portfolio managers of other Oppenheimer funds. Mr. Tracey had been a portfolio manager since October 1991, and then was as a Managing Director of Buckingham Capital Management from February through September 1994, at which time he rejoined the Manager. Prior to joining the Manager in September 1997, Mr. Gilston was a Vice President and portfolio manager for Schroeder Capital Management International, Inc. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.75% of the Fund's average annual net assets. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class name designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to have different expenses and share prices. This Prospectus may not be used to offer Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's Prospectus that offers Class 2 shares. That Prospectus, when available, may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc. by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income, if any, on an annual basis, and to pay those dividends in March on a date selected by the Board of Trustees. the Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions) will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance since its inception. Certain information reflects financial results for a single Fund share. The total return in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
Financial Highlights Period Ended December 31, 1998(1) ================================================================================ Per Share Operating Data Net asset value, beginning of period $10.00 - -------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.02) Net realized and unrealized gain (loss) (.38) ------- Total loss from investment operations (.40) - -------------------------------------------------------------------------------- Net asset value, end of period $ 9.60 ======= ================================================================================ Total Return, at Net Asset Value(2) (4.00)% ================================================================================ Ratios/Supplemental Data Net assets, end of period (in thousands) $994 - -------------------------------------------------------------------------------- Average net assets (in thousands) $441 - -------------------------------------------------------------------------------- Ratios to average net assets: Net investment loss (0.79)%(3) Expenses 0.87%(3) - -------------------------------------------------------------------------------- Portfolio turnover rate(4) 61.4% 1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. 2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 3. Annualized. 4. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $1,023,289 and $242,621, respectively.
For More Information About Oppenheimer Small Cap Growth Fund/VA: The following additional information about Oppenheimer Small Cap Growth Fund/VA is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0297.001.0599 Printed on recycled paper. (OppenheimerFunds logo) Oppenheimer Global Securities Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Global Securities Fund/VA is a mutual fund that seeks long-term capital appreciation by investing a substantial portion of assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. It invests mainly in common stocks of U.S. and foreign issuers. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks long-term capital appreciation by investing a substantial portion of assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. What Does the Fund Invest In? The Fund invests mainly in common stocks, and can also buy other equity securities, including preferred stocks and securities convertible into common stock. The Fund buys securities of issuers in the U.S. and foreign countries. The Fund can invest without limit in foreign securities and can invest in any country, including countries with developed or emerging markets. However, the Fund's investment Manager, OppenheimerFunds, Inc., currently emphasizes investments in developed markets. The Fund has no requirements to allocate its investments in any set percentages in any particular countries, but normally will invest in at least three countries (one of which may be the United States). Typically the Fund invests in a number of different countries. The Fund can invest in securities of issuers in any market capitalization range. The Fund can also use hedging instruments and certain derivative investments to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio manager looks primarily for foreign and U.S. companies with high growth potential, using fundamental analysis of a company's financial statements and management structure, and analysis of the company's operations and product development, as well as the industry of which the issuer is part. In seeking broad diversification of the Fund's portfolio, the portfolio manager considers overall and relative economic conditions in U.S. and foreign markets, and seeks broad diversification in different countries to help moderate the special risks of foreign investing. The portfolio manager currently focuses on the factors below (which may vary in particular cases and may change over time), looking for: |_| Companies of small-, medium- and large-capitalization ranges worldwide, |_| Stocks to provide growth opportunities, |_| Companies with strong competitive positions and high demand for their products or services. In applying these and other selection criteria, the portfolio manager considers the effect of worldwide trends on the growth of various business sectors. The trends, or global "themes," currently employed include technological change, demographic/geopolitical change, and changing resource needs. The Fund does not invest a fixed or specific amount of its assets in any one sector, and these themes and this strategy may change over time. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking capital growth in their investment over the long term, from a fund that normally has substantial investments in foreign securities. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund focusing on stock investments and investments in foreign securities. Since the Fund does not invest with the goal of seeking income, and its current income will likely be small, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. They include changes in general stock market movements (this is referred to as "market risk"),or the change in value of particular stocks because of an event affecting the issuer. The Fund expects to have substantial amounts of its investments in foreign securities. Therefore, it will be subject to the risks that economic, political or other events can have on the values of securities of issuers in particular foreign countries. These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Manager tries to reduce risks by carefully researching securities before they are purchased. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of the stock of any one company and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price of the Fund will change daily based on changes in market prices of securities and market conditions and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Risks of Investing in Stocks. Stocks fluctuate in price, and their short-term volatility at times may be great. Because the Fund currently focuses its investments primarily on common stocks for capital appreciation, the value of the Fund's portfolio will be affected by changes in the stock markets. Market risk will affect the Fund's net asset value per share, which will fluctuate as the values of the Fund's portfolio securities change. A variety of factors can affect the price of a particular stock, and the prices of individual stocks do not all move in the same direction uniformly or at the same time. Different stock markets may behave differently from each other. Additionally, stocks of issuers in a particular industry may be affected by changes in economic conditions that affect that industry more than others, or by changes in government regulations, availability of basic resources or supplies, or other events. To the extent that the Fund has greater emphasis on investments in a particular industry using its "global themes" strategy, its share values may fluctuate in response to events affecting that industry. Other factors can affect a particular stock's price, such as poor earnings reports by the issuer, loss of major customers, major litigation against the issuer, or changes in government regulations affecting the issuer. The Fund can invest in securities of large companies and also small and medium-size companies, which may have more volatile stock prices than large companies. |X| Risks of Foreign Investing. The Fund expects to invest substantial amounts of its assets in foreign securities. While foreign securities offer special investment opportunities, there are also special risks. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. |X| There are Special Risks in Using Derivative Investments. The Fund can use derivatives to seek increased returns or to try to hedge investment risks. In general terms, a derivative investment is one whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures, and forward contracts are examples of derivatives. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. How Risky is the Fund Overall? In the short term, domestic and foreign stock markets can be volatile, and the price of the Fund's shares can go up and down substantially. The Fund does not seek income from debt securities to try to reduce the volatility of its share prices. The Fund generally may be less volatile than funds focusing on investments in emerging markets or small-cap stocks, but the Fund has greater risks than funds that focus solely on large-cap domestic stocks or stocks and bonds. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 from year to year for the full calendar years since the Fund's inception and by showing how the average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. ___________________ 1The Fund has two classes of shares. This Prospectus offers only the class of shares that has no class name designation, and the performance shown is for that class. The other class of shares, Class 2, is not offered in this Prospectus. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 3.50%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 22.83% (4th Q '98) and the lowest return (not annualized) for a calendar quarter was -15.62% (3rd Q '98). Average Annual Total Returns for the periods ended 1 Year 5 Years Life of Fund* December 31, 1998 Oppenheimer Global 14.11% 9.67% 12.49% Securities Fund/VA MSCI World Index 24.80% 16.19% 14.26% *The Fund's inception date was 11/20/90. The "life of class" index performance is shown from 11/30/90. The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests in U.S. and foreign stocks, the Fund's performance is compared to the Morgan Stanley Capital International World Index, an unmanaged index of equity securities listed on stock exchanges of 20 foreign countries and the U.S. However, it must be remembered that the index performance does not consider the effects of transaction costs. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. |X| Stock Investments. The Fund invests in securities issued by domestic or foreign companies that the Manager believes have appreciation potential. The Fund invests primarily in a diversified portfolio of common stocks (and may buy other equity securities) of issuers that may be of small, medium or large size. Equity securities include common stocks, preferred stocks and securities convertible into common stock. Although many convertible securities are debt securities, the Manager considers some convertible securities to be "equity equivalents" because of the conversion feature and in that case their rating has less impact on the investment decision than in the case of other debt securities. Nevertheless, convertible debt securities are subject to both "credit risk" (the risk that the issuer will not pay interest or repay principal in a timely manner) and "interest rate risk" (the risk that prices of the security will be affected inversely by changes in prevailing interest rates). If the Fund buys convertible securities, it will focus primarily on investment-grade securities. |_| Cyclical Opportunities. The Fund may also seek to take advantage of changes in the business cycle by investing in companies that are sensitive to those changes if the Manager believes they have growth potential. For example, when the economy is expanding, companies in the consumer durables and technology sectors might benefit and present long-term growth opportunities. The Fund might sometimes seek to take tactical advantage of short-term market movements or events affecting particular issuers or industries. |_| Industry Focus. At times, the Fund may increase the relative emphasis of its investments in a particular industry. Stocks of issuers in a particular industry are subject to changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others. To the extent that the Fund has greater emphasis on investments in a particular industry, its share values may fluctuate in response to events affecting that industry. To some extent that risk may be limited by the Funds' policy of not concentrating 25% or more of its assets in investments in any one industry. |X| Special Risks of Emerging and Developing Markets. Securities of issuers in emerging and developing markets may offer special investment opportunities, but present risks not found in more mature markets. Those securities may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of issuers in more developed markets. Settlements of trades may be subject to greater delays so that the Fund might not receive the proceeds of a sale of a security on a timely basis. These investments may be very speculative. These countries might have less developed trading markets and exchanges. Emerging market countries may have less developed legal and accounting systems and investments may be subject to greater risks of government restrictions on withdrawing the sale proceeds of securities from the country. Economics of developing countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of stocks of local companies. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. |X| Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's investment objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. |X| Portfolio Turnover. The Fund may engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage costs the Fund pays. The Financial Highlights table at the end of this Prospectus shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Fund might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In the broadest sense, exchange-traded options, futures contracts, and other hedging instruments the Fund might use may be considered "derivative investments." In addition to using hedging instruments, the Fund can use other derivative investments because they offer the potential for increased income and principal value. Markets underlying securities and indices might move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |X| Hedging. The Fund can buy and sell certain kinds of forward contracts, futures contracts, and put and call options, including options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund is not required to hedge to seek its objective. The Fund has limits on its use of hedging instruments and does not use them for speculative purposes. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Forward contracts can be used to try to manage foreign currency risks on the Fund's foreign investments. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. In writing a put, there is a risk that the Fund may be required to buy the underlying security at a disadvantageous price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Investments. For cash management purposes, the Fund can hold cash equivalents such as commercial paper, repurchase agreements, Treasury bills and other short-term U.S. government securities. In times of adverse or unstable market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. These would ordinarily be U. S. government securities, highly-rated commercial paper, bank deposits or repurchase agreements. To the extent the Fund invests defensively in these securities, it might not achieve its investment objective. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Manager. The portfolio manager of the Fund is William L. Wilby. He is a Vice President of the Fund and a Senior Vice President of the Manager. He has been the person principally responsible for the day-to-day management of the Fund's portfolio since its inception in December, 1995. Mr. Wilby also serves as an officer and portfolio manager for other Oppenheimer funds. Prior to joining the Manager in 1993, he was an international investment strategist at Brown Brothers Harriman & Co. and before that a Managing Director and Portfolio Manager at AIG Global Investors. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.68% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund"s net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class name designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to have different expenses and share prices. This Prospectus may not be used to offer Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's Prospectus that offers Class 2 shares. That Prospectus, when available, may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc. by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income, if any, on an annual basis, and to pay those dividends in March on a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past 5 fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
FINANCIAL HIGHLIGHTS YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994 ================================================================================================================================ PER SHARE OPERATING DATA Net asset value, beginning of period $21.37 $17.67 $15.00 $15.09 $16.30 - -------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .24 .25 .15 .12 .04 Net realized and unrealized gain (loss) 2.64 3.68 2.52 .19 (.96) ------ - ------ ------ ------ ------ Total income (loss) from investment operations 2.88 3.93 2.67 .31 (.92) - -------------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.46) (.23) -- -- (.04) Distributions from net realized gain (1.72) -- -- (.40) (.25) ------ - ------ ------ ------ ------ Total dividends and distributions to shareholders (2.18) (.23) -- (.40) (.29) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $22.07 $21.37 $17.67 $15.00 $15.09 ====== ====== ====== ====== ====== ================================================================================================================================ TOTAL RETURN, AT NET ASSET VALUE(1) 14.11% 22.42% 17.80% 2.24% (5.72)% ================================================================================================================================ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,135,029 $959,110 $582,080 $360,979 $297,842 - -------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,055,123 $802,389 $466,750 $332,336 $214,545 - -------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 1.22% 1.51% 1.09% 0.86% 0.54% Expenses 0.74% 0.76% 0.81% 0.89% 0.91% - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 80.9% 67.1% 89.9% 131.3% 70.4%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $786,354,899 and $769,035,230, respectively.> For More Information About Oppenheimer Global Securities Fund/VA: The following additional information about Oppenheimer Global Securities Fund/VA is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0485.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Global Securities Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Global Securities Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical $10,000 investment in shares of the Fund for each of the eight most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/91 3.39% 12/31/92 -7.11% 12/31/93 70.32% 12/31/94 -5.72% 12/31/95 2.24% 12/31/96 17.80% 12/31/97 22.42% 12/31/98 14.11% (OppenheimerFunds logo) Oppenheimer Multiple Strategies Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Multiple Strategies Fund/VA is a mutual fund that seeks a total investment return, which includes current income and capital appreciation in the value of its shares. The Fund allocates its investments among common stocks, debt securities, and "money market" instruments. Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund seeks a high total investment return, which includes current income and capital appreciation in the value of its shares. What Does the Fund Invest In? The Fund's investment Manager, OppenheimerFunds, Inc., uses a variety of different types of securities and investment strategies to seek the Fund's objective: o Equity securities, such as common stocks, preferred stocks and securities convertible into common stock, of issuers in the U.S. and foreign countries, o Debt securities, such as bonds and notes issued by domestic and foreign companies (which can include lower-grade, high-yield securities), securities issued or guaranteed by the U.S. government and its agencies and instrumentalities including mortgage-related securities (these are referred to as "U.S. government securities"), and debt obligations of foreign governments, o Money market instruments, which are obligations that have a maturity of 13 months or less, including short-term U.S. government securities, corporate and bank debt obligations and commercial paper, and o Hedging instruments, such as put and call options, foreign currency forward contracts, futures and certain derivative investments to try to enhance income or to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for the Fund, the Fund's portfolio managers use different investment styles to carry out an asset allocation strategy that seeks broad diversification across asset classes. They normally maintain a balanced mix of equity securities on the one hand, and debt securities and money market instruments on the other, although the Fund has no requirements to weight the portfolio holdings in a fixed proportion. Therefore, the portfolio's mix of equity securities, debt securities and money market instruments will change over time. The debt securities in the portfolio normally include a mix of U.S. government securities, high-yield corporate bonds and foreign government bonds, to seek current income. The relative amounts of those types of debt securities in the portfolio will change over time, because those sectors of the bond markets generally react differently to changing economic environments. The portfolio managers employ both "growth" and "value" styles in selecting equity securities. They use fundamental analysis of a company's financial statements and management structure, analysis of the company's operations and product development, as well as the industry of which the issuer is part. Value investing seeks issuers that are temporarily out of favor or undervalued in the market by various measures, such as the stock's price/earnings ratio. Growth investing seeks issuers that the Manager believes have possibilities for increases in their stock prices because of strong earnings growth compared to the market, the development of new products or services or other favorable economic factors. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking high total return from their investment over the long term, from a fund employing a variety of investments and investment styles in a diversified portfolio. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund with significant investments in stocks and foreign securities. Since the Fund's income level will fluctuate, it is not designed for investors needing an assured level of current income, and the Fund is not a complete investment program. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. They include changes in general stock and bond market movements (this is referred to as "market risk"), or the change in value of particular stocks or bonds because of an event affecting the issuer (in the case of bonds, this is known as "credit risk"). High-yield, lower-grade bonds (commonly called "junk bonds") are subject to greater credit risks than investment-grade securities. The Fund can have a significant amount of its assets invested in foreign securities. Therefore, it will be subject to the risks of economic, political or other events that can affect the values of securities of issuers in particular foreign countries. Changes in interest rates can also affect stock and bond prices (this is known as "interest rate risk"). These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Manager tries to reduce risks by carefully researching securities before they are purchased, and in some cases by using hedging techniques. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of the stock of any one company and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price of the Fund will change daily based on changes in market prices of securities and market conditions and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Risks of Investing in Stocks. Stocks fluctuate in price, and their short-term volatility at times can be great. The value of the Fund's portfolio therefore will be affected by changes in the stock markets. Market risk will affect the Fund's net asset value per share, which will fluctuate as the values of the Fund's portfolio securities change. A variety of factors can affect the price of a particular stock, and the prices of individual stocks do not all move in the same direction uniformly or at the same time. Different stock markets may behave differently from each other. Additionally, stocks of issuers in a particular industry may be affected by changes in economic conditions that affect that industry more than others, or by changes in government regulations, availability of basic resources or supplies, or other events. Other factors can affect a particular stock's price, such as poor earnings reports by the issuer, loss of major customers, major litigation against the issuer, or changes in government regulations affecting the issuer. The Fund can invest in securities of large companies and also small and medium-size companies, which may have more volatile stock prices than large companies. |X| Risks of Foreign Investing. The Fund can buy securities issued by companies or governments in any country, including developed and underdeveloped countries. Although there are no limits on the amounts it can invest in foreign securities, normally the Fund does not expect to invest more than 35% of its assets in foreign securities. While foreign securities offer special investment opportunities, there are also special risks that can reduce the Fund's share price and returns. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. Foreign government debt securities may not be backed by the full faith and credit of the issuing government. |_| Special Risks of Emerging and Developing Markets. Securities of issuers in emerging and developing markets may offer special investment opportunities, but present risks not found in more mature markets. Those securities may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of issuers in more developed markets. Settlements of trades may be subject to greater delays so that the Fund might not receive the proceeds of a sale of a security on a timely basis. These investments may be very speculative. These countries might have less developed trading markets and exchanges. Emerging market countries may have less developed legal and accounting systems and investments may be subject to greater risks of government restrictions on withdrawing the sales proceeds of securities from the country. Economies of developing countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of stocks of local companies. |X| Credit Risk. Debt securities are subject to credit risk. Credit risk relates to the ability of the issuer of a security to make interest and principal payments on the security as they become due. If the issuer fails to pay interest, the Fund's income might be reduced and if the issuer fails to repay principal, the value of that security and of the Fund's shares might be reduced. While the Fund's investments in U.S. government securities are subject to little credit risk, the Fund's other investments in debt securities, particularly high-yield lower-grade debt securities, are subject to risks of default. |_| Special Risks of Lower-Grade Securities. Because the Fund can invest in securities below investment-grade to seek high income, the Fund's credit risks are greater than those of funds that buy only investment-grade bonds. Lower-grade debt securities (commonly called "junk bonds") may be subject to greater market fluctuations and greater risks of loss of income and principal than investment-grade debt securities. Securities that are (or that have fallen) below investment grade are exposed to a greater risk that the issuers of those securities might not meet their debt obligations. These risks can reduce the Fund's share prices and the income it earns. |X| Interest Rate Risks. The prices of debt securities, including U.S. government securities, are subject to change when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall. The magnitude of these fluctuations will often be greater for longer-term debt securities than shorter-term debt securities. The Fund's share prices can go up or down when interest rates change because of the effect of the changes on the value of the Fund's investments in debt securities. |X| Prepayment Risk. Prepayment risk occurs when the mortgages underlying a mortgage-related security are prepaid at a rate faster than anticipated (usually when interest rates fall) and the issuer of the security can prepay the principal prior to the security's maturity. Mortgage-related securities that are subject to prepayment risk, including the CMOs and other mortgage-related securities that the Fund can buy, generally offer less potential for gains when prevailing interest rates decline, and have greater potential for loss than other debt securities when interest rates rise. The impact of prepayments on the price of a security may be difficult to predict and may increase the volatility of the price. The Fund might have to reinvest the proceeds of prepaid securities in new securities offering lower yields. Additionally, the Fund can buy mortgage-related securities at a premium. Accelerated prepayments on those securities could cause the Fund to lose the portion of its principal investment represented by the premium the Fund paid. If interest rates rise rapidly, prepayments might occur at slower rates than expected, which could have the effect of lengthening the expected maturity of a short or medium-term security. That could cause its value to fluctuate more widely in response to changes in interest rates. In turn, this could cause the value of the Fund's shares to fluctuate more. |X| There Are Special Risks in Using Derivative Investments. The Fund can use derivatives to seek increased returns or to try to hedge investment risks. In general terms, a derivative investment is an investment contract whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures, CMOs, and structured notes are examples of derivatives the Fund can use. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. How Risky is the Fund Overall? In the short term, domestic and foreign stock markets can be volatile, and the price of the Fund's shares will go up and down in response to those changes. The Fund's income-oriented investments may help cushion the Fund's total return from changes in stock prices, but debt securities are subject to credit and interest rate risks. The Fund may be less volatile than funds that focus only on stock investments, but has more risks than funds that focus solely on investment grade bonds. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 from year to year for the last ten calendar years and by showing how the average annual total returns of the Fund's shares compare to those of broad-based market indices. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 1.62%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 11.22% (4th Q '98) and the lowest return (not annualized) for a calendar quarter was -10.46% (3rdh Q '98). Average Annual Total Returns for the periodS ended December 31, 1998 1 Year 5 Years 10 Years Oppenheimer Multiple 6.66% 11.43% 11.22% Strategies Fund/VA S&P 500 Index 28.60% 24.05% 19.19% Lehman Bros.Aggregate Bond 8.69% 7.27% 9.26% Index The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate account that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests in stocks, the Fund's performance is compared to the Standard & Poor's 500 Index, an unmanaged index of U.S. equity securities that is a measure of the general domestic stock market. Because the Fund also invests in debt securities, the Fund also compares its performance to the Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S. corporate, government and mortgage-backed securities that is a measure of the domestic bond market. However, it must be remembered that the index performance reflects the reinvestment of income but does not consider the effects of transaction costs. Also, the Fund may have investments that vary from the indices. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if funds have the same portfolio managers and/or similar names. _________________ 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no class name designation, and the performance shown is for that class. The other class of shares, Class 2, is not offered in this Prospectus. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. At times the Fund may focus more on investing for capital appreciation with less emphasis on income. At other times, for example when stock markets are less stable, the Fund may increase the relative emphasis of its portfolio in income-seeking investments, such as bonds and money market instruments. In seeking broad diversification of the Fund's portfolio over asset classes, issuers and economies, the portfolio managers consider overall and relative economic conditions in U.S. and foreign markets. They seek broad diversification by investing in different countries to help moderate the special risks of investing in foreign securities and lower-grade, high-yield debt securities. The Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. Stock and Other Equity Investments. The Fund can invest in equity securities of issuers that may be of small, medium or large size, to seek capital growth. Equity securities include common stocks, preferred stocks and securities convertible into common stock. Although some convertible securities are a type of debt security, the Manager considers some of those convertible securities to be "equity equivalents" because of the conversion feature. In that case, their rating has less impact on the investment decision than in the case of other debt securities. The Fund invests in securities issued by domestic or foreign companies that the Manager believes have appreciation potential or that are undervalued. The Fund's equity investments may be exchange-traded or over-the-counter securities. Over-the-counter securities may have less liquidity than exchange-traded securities, and stocks of companies with smaller capitalization have greater risk of volatility than stocks of larger companies. The Fund limits its investments in securities of small, unseasoned issuers to not more than 5% of its net assets. Debt Securities. The Fund can also invest in debt securities, such as U.S. government securities, foreign government securities, and foreign and domestic corporate bonds, notes and debentures, for their income possibilities. The debt securities the Fund buys may be rated by nationally recognized rating organizations or they may be unrated securities assigned a rating by the Manager. The Fund's investments may be investment grade or below investment grade in credit quality. The Manager does not rely solely on ratings by rating organizations in selecting debt securities but evaluates business and economic factors affecting an issuer as well. The Fund's foreign debt investments can be denominated in U.S. dollars or in foreign currencies and can include "Brady Bonds." Those are U.S. dollar-denominated debt securities collateralized by zero-coupon U.S. Treasury securities. They are typically issued by governments of emerging market countries and are considered speculative securities with higher risks of default. The Fund will buy foreign currency only in connection with the purchase and sale of foreign securities and not for speculation. |X| U.S. Government Securities. The Fund can invest in securities issued or guaranteed by the U.S. Treasury or other U.S. government agencies or federally-chartered corporate entities referred to as "instrumentalities". These are referred to as "U.S. government securities" in this Prospectus. They can include collateralized mortgage obligations (CMOs) and other mortgage-related securities. Mortgage-related securities are subject to additional risks of unanticipated prepayments of the underlying mortgages, which can affect the income stream to the Fund from those securities as well as their values. |_| U.S. Treasury Obligations. These include Treasury bills (having maturities of one year or less when issued), Treasury notes (having maturities of from one to ten years), and Treasury bonds (having maturities of more than ten years when issued). Treasury securities are backed by the full faith and credit of the United States as to timely payments of interest and repayment of principal. The Fund can buy U. S. Treasury securities that have been "stripped" of their interest coupons by a Federal Reserve Bank, zero-coupon U.S. Treasury securities described below, and Treasury Inflation-Protection Securities ("TIPS"). Although not rated, Treasury obligations have little credit risk but prior to their maturity are subject to interest rate risk. |_| Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities. These include direct obligations and mortgage-related securities that have different levels of credit support from the U.S. government. Some are supported by the full faith and credit of the U.S. government, such as Government National Mortgage Association pass-through mortgage certificates (called "Ginnie Maes"). Some are supported by the right of the issuer to borrow from the U.S. Treasury under certain circumstances, such as Federal National Mortgage Association bonds ("Fannie Maes"). Others are supported only by the credit of the entity that issued them, such as Federal Home Loan Mortgage Corporation obligations ("Freddie Macs"). These have relatively little credit risk. |_| Mortgage-Related U.S. Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of collateralized mortgage obligations ("CMOs") and other "pass-through mortgage securities. CMOs that are U.S. government securities have collateral to secure payment of interest and principal. They may be issued in different series each having different interest rates and maturities. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. government agency. The prices and yields of CMOs are determined, in part, by assumptions about the cash flows from the rate of payments of the underlying mortgages. Changes in interest rates may cause the rate of expected prepayments of those mortgages to change. In general, prepayments increase when general interest rates fall and decrease when interest rates rise. If prepayments of mortgages underlying a CMO occur faster than expected when interest rates fall, the market value and yield of the CMO could be reduced. Additionally, the Fund may have to reinvest the prepayment proceeds in other securities paying interest at lower rates, which could reduce the Fund's yield. When interest rates rise rapidly and if prepayments occur more slowly than expected, a short- or medium-term CMO can in effect become a long-term security, subject to greater fluctuations in value. These prepayment risks can make the prices of CMOs very volatile when interest rates change. The prices of longer-term debt securities tend to fluctuate more than those of shorter-term debt securities. That volatility will affect the Fund's share prices. |X| Private-Issuer Mortgage-Backed Securities. The Fund can invest in mortgage-backed securities issued by private issuers, which do not offer the credit backing of U.S. government securities. Primarily these would include multi-class debt or pass-through certificates secured by mortgage loans. They may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers. Private issuer mortgage-backed securities are subject to the credit risks of the issuers (as well as the interest rate risks and prepayment risks of CMOs, discussed above), although in some cases they may be supported by insurance or guarantees. |X| Asset-Backed Securities. The Fund can buy asset-backed securities, which are fractional interests in pools of loans collateralized by loans or other assets or receivables. They are issued by trusts and special purpose corporations that pass the income from the underlying pool to the buyer of the interest. These securities are subject to the risk of default by the issuer as well as by the borrowers of the underlying loans in the pool. |X| High-Yield, Lower-Grade Debt Securities. The Fund can invest without limit in lower-grade, high yield debt securities, including bonds, debentures, notes, preferred stocks, loan participation interests, structured notes, asset-backed securities, among others, to seek current income. These securities are sometimes called "junk bonds." The Fund has no requirements as to the maturity of the debt securities it can buy, or as to the market capitalization range of the issuers of those securities. Lower-grade debt securities are those rated below "Baa" by Moody's Investors Service or lower than "BBB" by Standard & Poor's or that have similar ratings by other nationally-recognized rating organizations. The Fund can invest in securities rated as low as "C" or "D" or which are in default at the time the Fund buys them. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they have some speculative characteristics. While investment-grade securities are subject to risks of non-payment of interest and principal, in general high-yield lower-grade bonds, whether rated or unrated, have greater risks than investment-grade securities. There may be less of a market for them and therefore they may be harder to sell at an acceptable price. The special risks these securities are subject to mean that the Fund may not achieve the expected income from them and that the Fund's net asset value per share may be affected by declines in value of these securities. Money Market Instruments. The Fund can invest in money market instruments, which are debt obligations having a remaining maturity of 13 months or less. They include short-term certificates of deposit, bankers' acceptances, commercial paper (including variable amount master demand notes), U.S. Government obligations, and other debt instruments (including bonds) issued by corporations. These securities may have variable or floating interest rates. The Fund's investments in commercial paper in general will be limited to paper in the top two rating categories of Standard & Poor's, Moody's or other national rating organizations. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. Portfolio Turnover. The Fund can engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage costs the Fund pays. The Financial Highlights table below shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Fund might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Bank Loan Participation Agreements. The Fund can invest in bank loan participation agreements. They provide the Fund an undivided interest in a loan made by the issuing bank in the proportion the Fund's interest bears to the total principal amount of the loan. In evaluating the risk of these investments, the Manager looks to the creditworthiness of the borrower that is obligated to make principal and interest payments on the loan. Not more than 5% of the Fund's net assets can be invested in participation interests of any one borrower. |X| Repurchase Agreements. The Fund can enter into repurchase agreements. In a repurchase transaction, the Fund buys a security and simultaneously sells it to the vendor for delivery at a future date. Repurchase agreements must be fully collateralized. However, if the vendor fails to pay the resale price on the delivery date, the Fund could incur costs in disposing of the collateral and might experience losses if there is any delay in its ability to do so. There is no limit on the amount of the Fund's net assets that may be subject to repurchase agreements of 7 days or less. |X| Zero-Coupon and "Stripped" Securities. Some of the U.S. government debt securities the Fund buys are zero-coupon bonds that pay no interest. They are issued at a substantial discount from their face value. "Stripped" securities are the separate income or principal components of a debt security. Some CMOs or other mortgage-related securities may be stripped, with each component having a different proportion of principal or interest payments. One class might receive all the interest and the other all the principal payments. Zero-coupon and stripped securities are subject to greater fluctuations in price from interest rate changes than conventional interest-bearing securities. The Fund may have to pay out the imputed income on zero-coupon securities without receiving the actual cash currently. Interest-only securities are particularly sensitive to changes in interest rates. The values of interest-only mortgage related securities are also very sensitive to prepayments of underlying mortgages. Principal-only securities are also sensitive to changes in interest rates. When prepayments tend to fall, the timing of the cash flows to these securities increases, making them more sensitive to changes in interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings at an acceptable price. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In the broadest sense, exchange-traded options, futures contracts, mortgage-related securities and other hedging instruments the Fund can use may be considered "derivative investments." In addition to using hedging instruments, the Fund may use other derivative investments because they offer the potential for increased income and principal value. Markets underlying securities and indices may move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, forward contracts and put and call options, including options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund is not required to use hedging instruments to seek its objective. The Fund does not use hedging instruments for speculative purposes, and has limits on its use of them. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Forward contracts can be used to try to manage foreign currency risks on the Fund's foreign investments. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. In writing a put, there is a risk that the Fund may be required to buy the underlying security at a disadvantageous price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets forth the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Manager. The Fund's management team includes three portfolio managers. Each is a Vice President of the Fund. They are the persons principally responsible for the day-to-day management of the Fund's portfolio. Richard H. Rubinstein, who is a Senior Vice President of the Manager, has been a portfolio manager of the Fund since April 1991. John Doney and Michael Levine, who are both Vice Presidents of the Manager, have been portfolio managers of the Fund since May 1999 and August 1998, respectively. Each serves as an officer and manager of other Oppenheimer funds. Prior to joining the Manager in June 1994, Mr. Levine was a portfolio manager and research associate for Amas Securities, Inc. Mr. Rubinstein has been a portfolio manager of the Manager since June 1990 and Mr. Doney since June 1992. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.72% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. -- At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. -- Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class name designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to have different expenses and share prices. This prospectus may not be used to offer or sell Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Fund's prospectus that offers Class 2 shares. That prospectus may be obtained without charge by contacting any participating insurance company that offers Class 2 shares of the Fund as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc., by calling toll-free at 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income on an annual basis, and to pay those dividends in March on a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
Financial Highlights Year Ended December 31, 1998 1997 1996 1995 1994 ================================================================================================================== Per Share Operating Data Net asset value, beginning of period $17.01 $15.63 $14.55 $12.91 $13.88 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .71 .62 .72 .66 .63 Net realized and unrealized gain (loss) .42 1.95 1.45 2.00 (.90) ----- - ----- ----- ------ ------ Total income (loss) from investment operations 1.13 2.57 2.17 2.66 (.27) - ------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.16) (.61) (.74) (.65) (.60) Distributions from net realized gain (.93) (.58) (.35) (.37) (.10) ------ - ------ ------ ------ ------ Total dividends and distributions to shareholders (1.09) (1.19) (1.09) (1.02) (.70) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $17.05 $17.01 $15.63 $14.55 $12.91 ====== ====== ====== ====== ====== ================================================================================================================== Total Return, at Net Asset Value(1) 6.66% 17.22% 15.50% 21.36% (1.95)% ================================================================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $622,333 $637,545 $484,285 $381,263 $292,067 - ------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $640,131 $564,369 $428,277 $344,745 $279,949 - ------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: Net investment income 4.05% 3.86% 4.89% 4.81% 4.90% Expenses 0.76% 0.75% 0.77% 0.77% 0.56% - ------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate(2) 42.5% 41.9% 40.3% 39.0% 31.4%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $235,924,766 and $252,937,156, respectively. For More Information About Oppenheimer Multiple Strategies Fund/VA: The following additional information about Oppenheimer Multiple Strategies Fund/VA is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0670.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Multiple Strategies Fund/VA (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Multiple Strategies Fund/VA (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical $10,000 investment in shares of the Fund for each of the ten most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/89 15.76% 12/31/90 -1.90% 12/31/91 17.48% 12/31/92 8.99% 12/31/93 15.95% 12/31/94 -1.95% 12/31/95 21.36% 12/31/96 15.50% 12/31/97 17.22% 12/31/98 6.66% (OppenheimerFunds logo) Oppenheimer Main Street Growth & Income Fund/VA A series of Oppenheimer Variable Account Funds Prospectus dated May 1, 1999 Oppenheimer Main Street Growth & Income Fund/VA is a mutual fund that seeks high total return, which includes growth in the value of its shares as well as current income, from equity and debt securities. The Fund invests mainly in common stocks of U.S. companies. Prior to May 1, 1999, this Fund was named "Oppenheimer Growth & Income Fund". Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this Prospectus and explains how to select shares of the Fund as an investment under that insurance product. This Prospectus contains important information about the Fund's objective, its investment policies, strategies and risks. Please read this Prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this Prospectus is accurate or complete. It is a criminal offense to represent otherwise. Contents About the Fund The Fund's Objective and Investment Strategies Main Risks of Investing in the Fund The Fund's Past Performance About the Fund's Investments How the Fund is Managed Investing in the Fund How to Buy and Sell Shares Dividends, Capital Gains and Taxes Financial Highlights About the Fund The Fund's Objective and Investment Strategies What Is the Fund's Investment Objective? The Fund's objective is to seek high total return (which includes growth in the value of its shares as well as current income) from equity and debt securities. What Does the Fund Invest In? The Fund invests mainly in common stocks of U.S. companies, and can also invest in other equity securities such as preferred stocks and securities convertible into common stocks. Although the Fund does not have any requirements as to the capitalization of issuers in which it invests, the Fund's investment Manager, OppenheimerFunds, Inc., currently emphasizes the stocks of large-capitalization companies in the Fund's portfolio. At times, the Fund may increase the relative emphasis of its investments in small-cap and mid-cap stocks. While the Fund can buy foreign securities and debt securities such as bonds and notes, currently it does not emphasize those investments. The Fund can also use hedging instruments and certain derivative investments to try to manage investment risks. These investments are more fully explained in "About the Fund's Investments," below. |X| How Does the Manager Decide What Securities to Buy or Sell? In selecting securities for purchase or sale by the Fund, the Fund's portfolio managers use an investment process that combines quantitative models, fundamental research about particular securities and individual judgment. While this process and the inter-relationship of the factors used may change over time and its implementation may vary in particular cases, in general the selection process involves the use of: Multi-factor quantitative models: These include a group of "top-down" models that analyze data such as relative valuations, relative price trends, interest rates and the shape of the yield curve. These help direct portfolio emphasis by market capitalization (small, mid, or large), industries, and value or growth styles. A group of "bottom up" models helps to rank stocks in a universe typically including 2000 stocks, selecting stocks for relative attractiveness by analyzing fundamental stock and company characteristics. o Fundamental research: The portfolio managers use internal research and analysis by other market analysts, with emphasis on current company news and industry-related events. o Judgment: The portfolio is then continuously rebalanced by the portfolio managers, using all of the tools described above. Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking high total return from their investment over the long term. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund with significant investments in stocks. Since the Fund's income level will fluctuate, it is not designed for investors needing an assured level of current income. Main Risks of Investing in the Fund All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. They include changes in general stock and bond market movements (this is referred to as "market risk"), or the change in value of particular stocks or bonds because of an event affecting the issuer (in the case of bonds, this is known as "credit risk"). At times, the Fund may increase the relative emphasis of its investments in a particular industry compared to the weighting of that industry in the S&P 500 Index, which the Fund uses as a performance benchmark. Therefore, it may be subject to the risks that economic, political or other events can have a negative effect on the values of securities of issuers in that industry (this is referred to as "industry risk"). Changes in interest rates can also affect bond prices (this is known as "interest rate risk"). These risks collectively form the risk profile of the Fund, and can affect the value of the Fund's investments, its investment performance and its price per share. These risks mean that you can lose money by investing in the Fund. When you redeem your shares, they may be worth more or less than what you paid for them. The Manager tries to reduce risks by carefully researching securities before they are purchased. The Fund attempts to reduce its exposure to market risks by diversifying its investments, that is, by not holding a substantial percentage of stock of any one company and by not investing too great a percentage of the Fund's assets in any one issuer. Also, the Fund does not concentrate 25% or more of its investments in any one industry. However, changes in the overall market prices of securities and the income they pay can occur at any time. The share price of the Fund will change daily based on changes in market prices of securities and market conditions and in response to other economic events. There is no assurance that the Fund will achieve its investment objective. |X| Risks of Investing in Stocks. Stocks fluctuate in price, and their short-term volatility at times may be great. Because the Fund currently emphasizes investments in common stocks, the value of the Fund's portfolio will be affected by changes in the stock markets. Market risk will affect the Fund"s net asset value per share, which will fluctuate as the values of the Fund's portfolio securities change. A variety of factors can affect the price of a particular stock and the prices of individual stocks do not all move in the same direction uniformly or at the same time. Different stock markets may behave differently from each other. In particular, because the Fund currently intends to focus its investments in stocks of U.S. issuers, it will be affected primarily to changes in U.S. stock markets. Additionally, stocks of issuers in a particular industry may be affected by changes in economic conditions that affect that industry more than others, or by changes in government regulations, availability of basic resources or supplies, or other events. Other factors can affect a particular stock's price, such as poor earnings reports by the issuer, loss of major customers, major litigation against the issuer, or changes in government regulations affecting the issuer. The Fund can change the relative emphasis of its investment focus from time to time on small and medium-size companies (having a market capitalization of less than $5 billion), which may have more volatile stock prices than large companies. How Risky is the Fund Overall? In the short term, stock markets can be volatile, and the price of the Fund's shares will go up and down in response to those changes. The Fund's income-oriented investments, if any, may help cushion the Fund's total return from changes in stock prices, but debt securities are subject to credit and interest rate risks and are not the main focus of the Fund. The Fund may be less volatile than funds that focus only on small-cap, foreign or sector stock investments, but may be more volatile than funds that place more emphasis on debt securities, particularly on investment grade bonds. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's Past Performance The bar chart and table below show one measure of the risks of investing in the Fund, by showing changes in the Fund's performance1 for the full calendar year since the Fund's inception and by showing how the average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. Annual Total Returns (as of 12/31 each year) [See appendix to prospectus for data in bar chart showing annual total returns] For the period from 1/1/99 through 3/31/99, the Fund's cumulative return (not annualized) was 3.87%. Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would be less than those shown. During the period shown in the bar chart, the highest return (not annualized) for a calendar quarter was 19.28% ( 4th Q '98) and the lowest return (not annualized) for a calendar quarter was -22.38% ( 3rd Q '98). Average Annual Total Returns for the periods ended 1 Year Life of Fund* December 31, 1998 Oppenheimer Main Street 4.70% 27.00% Growth & Income Fund/VA S&P 500 Index 28.60% 28.61% *The Fund's inception date was 7/5/95. The "life of class" index performance is shown from 6/30/95. The Fund's returns in the table measure the performance of a hypothetical account without deducting charges imposed by the separate accounts that invest in the Fund and assume that all dividends and capital gains distributions have been reinvested in additional shares. Because the Fund invests mainly in stocks, the Fund's performance is compared to the Standard & Poor's 500 Index, an unmanaged index of U.S. equity securities. However, it must be remembered that the index performance reflects the reinvestment of income but does not consider the effects of capital gains or transaction costs. Also, the Fund may have investments that vary from the index. _____________________ 1 The Fund has two classes of shares. This Prospectus offers only the class of shares that has no class name designation, and the performance shown is for that class. The other class of shares, Class 2, is not offered in this Prospectus. The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names. About the Fund's Investments The Fund's Principal Investment Policies. The allocation of the Fund's portfolio among the different types of permitted investments will vary over time based upon the evaluation of economic and market trends by the Manager. The Fund's portfolio might not always include all the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks. |X| Stock and Other Equity Investments. The Fund invests mainly in common stocks. It can also buy other equity securities. Equity securities include common stocks, preferred stocks and securities convertible into common stock. Although some convertible securities are a type of debt security, the Manager considers some of those convertible securities to be "equity equivalents" because of the conversion feature and their rating has less impact on the investment decision than in the case of other debt securities. The Fund invests in securities issued by companies that the Manager believes have appreciation potential. The Fund"s equity investments may be exchange-traded or over-the-counter securities. Over-the-counter securities may have less liquidity than exchange-traded securities, and stocks of companies with smaller capitalization have greater risk of volatility than stocks of larger companies. |X| Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act that apply to publicly-sold mutual funds. Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance. Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can change non-fundamental investment policies without shareholder approval, although significant changes will be described in amendments to this Prospectus. Fundamental policies are those that cannot be changed without the approval of a majority of the Fund's outstanding voting shares. The Fund's objective is a fundamental policy. Investment restrictions that are fundamental policies are listed in the Statement of Additional Information. An investment policy is not fundamental unless this Prospectus or the Statement of Additional Information says that it is. Portfolio Turnover. The Fund can engage in short-term trading to try to achieve its objective. Portfolio turnover affects brokerage costs the Fund pays. The Financial Highlights table at the end of this Prospectus shows the Fund's portfolio turnover rates during prior fiscal years. Other Investment Strategies. To seek its objective, the Fund can also use the investment techniques and strategies described below. The Fund might not always use all of the different types of techniques and investments described below. These techniques involve certain risks, although some are designed to help reduce investment or market risks. |X| Debt Securities. The Fund can also invest in debt securities, such as U.S. government securities, foreign government securities, and foreign and domestic corporate bonds, notes and debentures, for their income possibilities. Currently the Fund does not invest a significant percentage of its assets in debt securities, although their relative emphasis in the portfolio may change if the Manager believes they offer opportunities to increase the Fund's total return. The debt securities the Fund buys may be rated by nationally recognized rating organizations or they may be unrated securities assigned a rating by the Manager. The Fund's investments may be above or below investment grade in credit quality. The Manager does not rely solely on ratings by rating organizations in selecting debt securities but evaluates business and economic factors affecting an issuer as well. |X| Risks of Foreign Investing. The Fund can buy securities issued by companies or governments in any country, including developed and underdeveloped countries. There are no limits on the amounts it can invest in foreign securities, but the Fund currently does not expect to have substantial investments in foreign securities. While foreign securities offer special investment opportunities, there are also special risks. The change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. Foreign issuers are not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in governmental economic or monetary policy in the U.S. or abroad, or other political and economic factors. |_| Interest Rate Risks. The values of debt securities are subject to change when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall. The magnitude of these fluctuations will typically be greater for longer-term debt securities than shorter-term debt securities. The Fund's share prices can go up or down when interest rates change because of the effect of the changes on the value of the Fund's investments in debt securities. |_| Credit Risk. Debt securities are subject to credit risk. Credit risk relates to the ability of the issuer of a security to make interest and principal payments on the security as they become due. If the issuer fails to pay interest, the Fund's income might be reduced and if the issuer fails to repay principal, the value of that security and of the Fund's shares might be reduced. While the Fund's investments in U.S. government securities are subject to little credit risk, the Fund's other investments in debt securities are subject to risks of default. |_| U.S. Government Securities. The Fund can invest in securities issued or guaranteed by the U.S. Treasury or other U.S. government agencies or federally-chartered corporate entities referred to as "instrumentalities". These are referred to as "U.S. government securities" in this Prospectus. Although not rated, Treasury obligations have little credit risk but prior to their maturity are subject to interest rate risk. |X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can purchase securities on a "when-issued" basis and may purchase or sell securities on a "delayed-delivery" basis. These terms refer to securities that have been created and for which a market exists, but which are not available for immediate delivery. There might be a loss to the Fund if the value of the security declines prior to the settlement date. No income accrues to the Fund on a when-issued security until the Fund receives the security on settlement of the trade. |X| Illiquid and Restricted Securities. Investments may be illiquid because there is no active trading market for them, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. The Fund will not invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. |X| Derivative Investments. The Fund can invest in a number of different kinds of "derivative" investments. In general terms, a derivative investment is an investment contract whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. In the broadest sense, exchange-traded options, futures contracts, mortgage-related securities and other hedging instruments the Fund can use may be considered "derivative investments." In addition to using hedging instruments, the Fund may use other derivative investments because they offer the potential for increased income and principal value. |X| There Are Special Risks in Using Derivative Investments. If the issuer of the derivative does not pay the amount due, the Fund can lose money on the investment. Also, the underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager expected it to perform. If that happens, the Fund's share price could decline or the Fund could get less income than expected. The Fund has limits on the amount of particular types of derivatives it can hold. However, using derivatives can cause the Fund to lose money on its investment and/or increase the volatility of its share prices. Markets underlying securities and indices may move in a direction not anticipated by the Manager. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks the Fund could realize less principal or income from the investment than expected. Certain derivative investments held by the Fund may be illiquid. |X| Hedging. The Fund can buy and sell certain kinds of futures contracts, put and call options, forward contracts and options on futures and broadly-based securities indices. These are all referred to as "hedging instruments." The Fund is not required to use hedging instruments to seek its objective. The Fund does not use hedging instruments for speculative purposes, and has limits on its use of them. The Fund could buy and sell options, futures and forward contracts for a number of purposes. It might do so to try to manage its exposure to the possibility that the prices of its portfolio securities may decline, or to establish a position in the securities market as a temporary substitute for purchasing individual securities. It might do so to try to manage its exposure to changing interest rates. Options trading involves the payment of premiums and has special tax effects on the Fund. There are also special risks in particular hedging strategies. For example, if a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required to sell the investment at the call price and will not be able to realize any profit if the investment has increased in value above the call price. In writing a put, there is a risk that the Fund may be required to buy the underlying security at a disadvantageous price. If the Manager used a hedging instrument at the wrong time or judged market conditions incorrectly, the strategy could reduce the Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments or if it could not close out a position because of an illiquid market. Temporary Defensive Investments. In times of unstable market or economic conditions, the Fund can invest up to 100% of its assets in temporary defensive investments. Generally they would be U.S. government securities, highly-rated commercial paper, bank deposits or repurchase agreements. The Fund may also hold these types of securities pending the investment of proceeds from the sale of Fund shares or portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests defensively in these securities, it may not achieve its investment objective of high total return. Year 2000 Risks. Because many computer software systems in use today cannot distinguish the year 2000 from the year 1900, the markets for securities in which the Fund invests could be detrimentally affected by computer failures beginning January 1, 2000. Failure of computer systems used for securities trading could result in settlement and liquidity problems for the Fund and other investors. That failure could have a negative impact on handling securities trades, pricing and accounting services. Data processing errors by government issuers of securities could result in economic uncertainties, and those issuers might incur substantial costs in attempting to prevent or fix such errors, all of which could have a negative effect on the Fund's investments and returns. The Manager, the Distributor and the Transfer Agent have been working on necessary changes to their computer systems to deal with the year 2000 and expect that their systems will be adapted in time for that event, although there cannot be assurance of success. Additionally, the services they provide depend on the interaction of their computer systems with those of insurance companies with separate accounts that invest in the Fund, brokers, information services, the Fund's Custodian and other parties. Therefore, any failure of the computer systems of those parties to deal with the year 2000 might also have a negative effect on the services they provide to the Fund. The extent of that risk cannot be ascertained at this time. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. How the Fund Is Managed The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Board of Trustees, under an Investment Advisory Agreement that states the Manager's responsibilities. The Agreement sets the fees paid by the Fund to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business. The Manager has operated as an investment adviser since 1959. The Manager (including subsidiaries) currently manages investment companies, including other Oppenheimer funds, with assets of more than $100 billion as of March 31, 1999, and with more than 4 million shareholder accounts. The Manager is located at Two World Trade Center, 34th Floor, New York, New York 10048-0203. |X| Portfolio Managers. The portfolio managers of the Fund are Charles Albers and Nikolaos Monoyios, who are also Vice Presidents of the Fund. They have been responsible for the day-to-day management of the Fund's portfolio since May 1, 1999. Mr. Albers is a Senior Vice President of the Manager and Mr. Monoyios is a Vice President of the Manager. Prior to joining the Manager in April, 1998, they were portfolio managers at Guardian Investor Services (from 1972 and 1979, respectively), the investment management subsidiary of The Guardian Life Insurance Company. |X| Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its last fiscal year ended December 31, 1998, was 0.74% of the Fund's average annual net assets. |X| Possible Conflicts of Interest. The Fund offers its shares to separate accounts of different insurance companies that are not affiliated with each other, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment. The Fund's Board has procedures to monitor the portfolio for possible conflicts to determine what action should be taken. If a conflict occurs, the Board might require one or more participating insurance company separate accounts to withdraw their investments in the Fund. That could force the Fund to sell securities at disadvantageous prices, and orderly portfolio management could be disrupted. Also, the Board might refuse to sell shares of the Fund to a particular separate account, or could terminate the offering of the Fund's shares if required to do so by law or if it would be in the best interests of the shareholders of the Fund to do so. Investing in the Fund How to Buy and Sell Shares How Are Shares Purchased? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option for that variable life insurance policy, variable annuity or other investment product. The Fund reserves the right to refuse any purchase order when the Manager believes it would be in the Fund's best interests to do so. Information about your investment in the Fund through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Fund should be given to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. |X| At What Price Are Shares Sold? Shares are sold at their offering price, which is the net asset value per share. The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The net asset value per share is determined as of the close of The New York Stock Exchange on each day that the exchange is open for trading (referred to in this Prospectus as a "regular business day"). The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some days. All references to time in this Prospectus mean "New York time." The net asset value per share is determined by dividing the value of the Fund's net assets attributable to a class of shares by the number of shares of that class that are outstanding. The Fund's Board of Trustees has established procedures to value the Fund's securities to determine the Fund's net asset value, in general based on market values. The Board has adopted special procedures for valuing illiquid and restricted securities and securities for which market values cannot be readily obtained. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments might change significantly on days when shares of the Fund cannot be purchased or redeemed. The offering price that applies to an order from a participating insurance company is based on the next calculation of the net asset value per share that is made after the insurance company (as the Fund's designated agent to receive purchase orders) receives a purchase order from its contract owners to purchase Fund shares on a regular business day, provided that the Fund receives the order from the insurance company, generally by 9:30 A.M. on the next regular business day at the offices of its Transfer Agent in Denver, Colorado. |X| Classes of Shares. The Fund offers two different classes of shares. The class of shares offered by this Prospectus has no class "name" designation. The other class is designated as Class 2. The different classes of shares represent investments in the same portfolio of securities but are expected to be subject to different expenses and will likely have different share prices. This prospectus may not be used to offer or sell Class 2 shares. A description of the Service Plans that affect only Class 2 shares of the Fund is contained in the Prospectus that offers Class 2 shares. That prospectus may be obtained without charge when Class 2 shares are offered by contacting any participating insurance sponsor that offers Class 2 shares of the Funds as an investment for its separate accounts. You can also obtain a copy from OppenheimerFunds Distributor, Inc., by calling toll-free 1-888-470-0861. How Are Shares Redeemed? As with purchases, only the participating insurance companies that hold Fund shares in their separate accounts for the benefit of variable annuity contracts, variable life insurance policies or other investment products can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company. The share price that applies to a redemption order is the next net asset value per share that is determined after the participating insurance company (as the Fund's designated agent) receives a redemption request on a regular business day from its contract or policy holder, provided that the Fund receives the order from the insurance company by 9:30 A.M. the next regular business day at the office of its Transfer Agent in Denver, Colorado. The Fund normally sends payment by Federal Funds wire to the insurance company's account the day after the Fund receives the order (and no later than 7 days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Dividends, Capital Gains and Taxes Dividends. The Fund intends to declare dividends separately for each class of shares from net investment income on an annual basis, and to pay those dividends in March on a date selected by the Board of Trustees. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends. All dividends (and any capital gains distributions will be reinvested automatically in additional Fund shares at net asset value for the account of the participating insurance company (unless the insurance company elects to have dividends or distributions paid in cash). Capital Gains. The Fund may realize capital gains on the sale of portfolio securities. If it does, it may make distributions out of any net short-term or long-term capital gains in March of each year. The Fund may make supplemental distributions of dividends and capital gains following the end of its fiscal year. There can be no assurance that the Fund will pay any capital gains distributions in a particular year. Taxes. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, dividends paid by the Fund from net investment income and distributions (if any) of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. This information is only a summary of certain federal income tax information about an investment in Fund shares. You should consult with your tax advisor or your participating insurance company representative about the effect of an investment in the Fund under your contract or policy. Financial Highlights The Financial Highlights Table is presented to help you understand the Fund's financial performance since inception. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available on request.
Financial Highlights Year Ended December 31, 1998 1997 1996 1995(1) ======================================================================================================== Per Share Operating Data Net asset value, beginning of period $20.58 $16.37 $12.51 $10.00 - -------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income .13 .19 .14 .01 Net realized and unrealized gain .92 4.91 3.91 2.52 ------ - ------ ------- ------ Total income from investment operations 1.05 5.10 4.05 2.53 - ------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.05) (.17) (.14) (.02) Distributions from net realized gain (1.10) (.72) (.05) -- ------ - ------ ------- ------ Total dividends and distributions to shareholders (1.15) (.89) (.19) (.02) - -------------------------------------------------------------------------------------------------------- Net asset value, end of period $20.48 $20.58 $16.37 $12.51 ====== ====== ====== ====== ======================================================================================================== Total Return, at Net Asset Value(2) 4.70% 32.48% 32.51% 25.25% ======================================================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $ 308,353 $ 155,368 $ 47,009 $ 4,288 - ------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 234,306 $ 94,906 $ 21,562 $ 1,809 - ------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 0.74% 1.15% 1.41% 0.50%(3) Expenses 0.79% 0.83% 1.00% 2.07%(3) - ------------------------------------------------------------------------------------------------------- Portfolio turnover rate(4) 85.7% 78.5% 112.6% 23.7%
1. For the period from July 5, 1995 (commencement of operations) to December 31, 1995. 2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 3. Annualized. 4. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $287,405,235 and $199,780,365, respectively. For More Information About Oppenheimer Main Street Growth & Income Fund/VA: The following additional information about Oppenheimer Main Street Income & Growth Fund/VA is available without charge upon request: Statement of Additional Information This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this Prospectus (which means it is legally part of this Prospectus). Annual and Semi-Annual Reports Additional information about the Fund's investments and performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. The report refers to the Fund as "Oppenheimer Growth & Income Fund" (its name prior to May 1, 1999). How to Get More Information: You can request the Statement of Additional Information, the Annual and Semi-Annual Reports, and other information about the Fund: By Telephone: Call OppenheimerFunds Services toll-free: 1-888-470-0861 By Mail: Write to: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270 You can also obtain copies of the Statement of Additional Information and other Fund documents and reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009. No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer. SEC File No. 811-4108 PR0650.001.0599 Printed on recycled paper. Appendix to Prospectus of Oppenheimer Main Street Growth & Income Fund (a series of Oppenheimer Variable Account Funds) Graphic material included in the Prospectus of Oppenheimer Main Street Growth & Income Fund (the "Fund") under the heading "Annual Total Return (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical investment in shares of the Fund for each of the three most recent calendar years, without deducting separate account expenses. Set forth below are the relevant data that will appear on the bar chart: Calendar Year Ended Annual Total Returns 12/31/96 32.51% 12/31/97 32.48% 12/31/98 4.70% Oppenheimer Variable Account Funds 6803 S. Tucson Way, Englewood, Colorado 80112 1-888-470-0861 Statement of Additional Information dated May 1, 1999 OPPENHEIMER VARIABLE ACCOUNT FUNDS (the "Trust") is an investment company consisting of ten separate Funds (the "Funds"): Oppenheimer Money Fund/VA Oppenheimer High Income Fund/VA Oppenheimer Bond Fund/VA Oppenheimer Strategic Bond Fund/VA Oppenheimer Aggressive Growth Fund/VA Oppenheimer Capital Appreciation Fund/VA Prior to May 1, 1999, this Fund was named "Oppenheimer Growth Fund." Oppenheimer Small Cap Growth Fund/VA Oppenheimer Global Securities Fund/VA Oppenheimer Multiple Strategies Fund/VA Oppenheimer Main Street Growth & Income Fund/VA Prior to May 1, 1999, this Fund was named "Oppenheimer Growth & Income Fund." Shares of the Funds are sold to provide benefits under variable life insurance policies and variable annuity contracts and other insurance company separate accounts, as described in the Prospectuses for the Funds and for the insurance products you have selected. This Statement of Additional Information is not a Prospectus. This document contains additional information about the Funds and the Trust, and supplements information in the Funds' Prospectuses dated May 1, 1999. It should be read together with the Prospectuses. You can obtain a Prospectus by writing to the Funds' Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free number shown above. Contents Page About the Funds Additional Information About the Funds' Investment Policies and Risks The Funds' Investment Policies Other Investment Techniques and Strategies Investment Restrictions How the Funds are Managed Organization and History Trustees and Officers The Manager Brokerage Policies of the Funds Distribution and Service Plans Performance of the Funds About Your Account How To Buy and Sell Shares Dividends, Capital Gains and Taxes Additional Information About the Funds Financial Information About the Funds Independent Auditors' Report Financial Statements Appendix A: Ratings Definitions Appendix B: Industry Classifications Appendix C: Major Shareholders ABOUT THE FUNDS Additional Information About the Funds' Investment Policies and Risks The investment objective, the principal investment policies and the main risks of the Funds are described in the Prospectus. This Statement of Additional Information contains supplemental information about those policies and risks and the types of securities that the Funds' investment Manager, OppenheimerFunds, Inc., can select for the Funds. Additional information is also provided about the strategies that each Fund may use to try to achieve its objective. The full name of each Fund is shown on the cover page, after which the word "Oppenheimer" is omitted from these names to conserve space. The Funds' Investment Policies. The composition of the Funds' portfolio and the techniques and strategies that the Manager uses in selecting portfolio securities will vary over time. The Funds are not required to use all of the investment techniques and strategies described below at all times in seeking their goals. They may use some of the special investment techniques and strategies at some times or not at all. In selecting securities for the Funds' portfolios, the Manager evaluates the merits of particular securities primarily through the exercise of its own investment analysis. That process may include, among other things, evaluation of the issuer's historical operations, prospects for the industry of which the issuer is part, the issuer's financial condition, its pending product developments and business (and those of competitors), the effect of general market and economic conditions on the issuer's business, and legislative proposals that might affect the issuer. The Funds are categorized by the types of investment they make. Capital Appreciation Fund/VA, Aggressive Growth Fund/VA, Small Cap Growth Fund/VA and Global Securities Fund/VA can be categorized as "Equity Funds." High Income Fund/VA, Bond Fund/VA, and Strategic Bond Fund/VA can be categorized as "Fixed Income Funds." Multiple Strategies Fund/VA and Main Street Growth & Income Fund/VA share the investment characteristics (and certain of the Investment Policies) of both the Equity Funds and the Fixed Income Funds, depending upon the allocations determined from time to time by their portfolio managers. Money Fund's/VA investment policies are explained separately; however, discussion below about investment restrictions, repurchase agreements, illiquid securities and loans of portfolio securities also apply to Money Fund/VA. |X| Investments in Equity Securities. The Equity Funds focus their investments in equity securities, which include common stocks, preferred stocks, rights and warrants, and securities convertible into common stock. Certain equity securities may be selected not only for their appreciation possibilities but because they may provide dividend income. Small-cap growth companies may offer greater opportunities for capital appreciation than securities of large, more established companies. However, these securities also involve greater risks than securities of larger companies. Securities of small capitalization issuers may be subject to greater price volatility in general than securities of large-cap and mid-cap companies. Therefore, to the degree that a Fund has investments in smaller capitalization companies at times of market volatility, that Fund's share price may fluctuate more. Those investments may be limited to the extent the Manager believes that such investments would be inconsistent with the goal of preservation of principal. |_| Growth Companies. The Equity Funds in particular may invest in securities of "growth" companies. Growth companies are those companies that the Manager believes are entering into a growth cycle in their business, with the expectation that their stock will increase in value. They may be established companies as well as newer companies in the development stage. Growth companies may have a variety of characteristics that in the Manager's view define them as "growth" issuers. They may be generating or applying new technologies, new or improved distribution techniques or new services. They may own or develop natural resources. They may be companies that can benefit from changing consumer demands or lifestyles, or companies that have projected earnings in excess of the average for their sector or industry. In each case, they have prospects that the Manager believes are favorable for the long term. The portfolio managers of the Funds look for growth companies with strong, capable management sound financial and accounting policies, successful product development and marketing and other factors. |_| Value Investing. In selecting equity investments, the portfolio managers for the Equity Funds in particular may from time to time use a value investing style. In using a value approach, the portfolio managers seek stock and other equity securities that appear to be temporarily undervalued, by various measures, such as price/earnings ratios, rather than seeking stocks of "growth" issuers. This approach is subject to change and might not necessarily be used in all cases. Value investing seeks stocks having prices that are low in relation to their real worth or future prospects, in the hope that a Fund will realize appreciation in the value of its holdings when other investors realize the intrinsic value of the stock. Using value investing requires research as to the issuer's underlying financial condition and prospects. Some of the measures that can be used to identify these securities include, among others: |_| Price/Earnings ratio, which is the stock's price divided by its earnings per share. A stock having a price/earnings ratio lower than its historical range, or the market as a whole or that of similar companies may offer attractive investment opportunities. |_| Price/book value ratio, which is the stock price divided by the book value of the company per share, which measures the company's stock price in relation to its asset value. |_| Dividend Yield is measured by dividing the annual dividend by the stock price per share. |_| Valuation of Assets, which compares the stock price to the value of the company's underlying assets, including their projected value in the marketplace and liquidation value. |_| Convertible Securities. While convertible securities are a form of debt security, in many cases their conversion feature (allowing conversion into equity securities) causes them to be regarded by the Manager more as "equity equivalents." As a result, the rating assigned to the security has less impact on the Manager's investment decision with respect to convertible securities than in the case of non-convertible fixed income securities. Convertible securities are subject to the credit risks and interest rate risks described below in "Debt Securities." To determine whether convertible securities should be regarded as "equity equivalents," the Manager examines the following factors: (1) whether, at the option of the investor, the convertible security can be exchanged for a fixed number of shares of common stock of the issuer, (2) whether the issuer of the convertible securities has restated its earnings per share of common stock on a fully diluted basis (considering the effect of conversion of the convertible securities), and (3) the extent to which the convertible security may be a defensive "equity substitute," providing the ability to participate in any appreciation in the price of the issuer's common stock. |_| Rights and Warrants. The Funds may invest in warrants or rights. They do not expect that their investments in warrants and rights will exceed 5% of their total assets. Warrants basically are options to purchase equity securities at specific prices valid for a specific period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants, but normally have a short duration and are distributed directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer. |X| Investments in Bonds and Other Debt Securities. The Fixed Income Funds in particular can invest in bonds, debentures and other debt securities to seek current income as part of its investment objective. The Funds' debt investments can include investment-grade and non-investment-grade bonds (commonly referred to as "junk bonds"). Investment-grade bonds are bonds rated in one of the four highest categories by Moody's Investors Service, Inc., Standard & Poor's Corporation, Fitch IBCA, Inc., Duff & Phelps, Inc., or that have comparable ratings by another nationally-recognized rating organization, or if unrated or split-rated, determined by the Manager to be of comparable quality. In making investments in debt securities, the Manager may rely to some extent on the ratings of ratings organizations or it may use its own research to evaluate a security's credit-worthiness. |_| U.S. Government Securities. The Funds can buy securities issued or guaranteed by the U.S. government or its agencies and instrumentalities. Securities issued by the U.S. Treasury are backed by the full faith and credit of the U.S. government and are subject to very little credit risk. Obligations of U.S. government agencies or instrumentalities (including mortgage-backed securities) may or may not be guaranteed or supported by the "full faith and credit" of the United States. Some are backed by the right of the issuer to borrow from the U.S. Treasury; others, by discretionary authority of the U.S. government to purchase the agencies' obligations; while others are supported only by the credit of the instrumentality. If a security is not backed by the full faith and credit of the United States, the owner of the security must look principally to the agency issuing the obligation for repayment and may not be able to assert a claim against the United States in the event that the agency or instrumentality does not meet its commitment. A Fund will invest in securities of U.S. government agencies and instrumentalities only when the Manager is satisfied that the credit risk with respect to the agency or instrumentality is minimal. |_| Special Risks of Lower-Grade Securities. Because lower-rated securities tend to offer higher yields than investment grade securities, a Fund may invest in lower grade securities if the Manager is trying to achieve greater income (and, in some cases, the appreciation possibilities of lower-grade securities may be a reason they are selected for a Fund's portfolio). Some of the special credit risks of lower-grade securities are discussed in the Prospectus. There is a greater risk that the issuer may default on its obligation to pay interest or to repay principal than in the case of investment-grade securities. The issuer's low creditworthiness may increase the potential for its insolvency. An overall decline in values in the high yield bond market is also more likely during a period of a general economic downturn. An economic downturn or an increase in interest rates could severely disrupt the market for high yield bonds, adversely affecting the values of outstanding bonds as well as the ability of issuers to pay interest or repay principal. In the case of foreign high yield bonds, these risks are in addition to the special risk of foreign investing discussed in the Prospectus and in this Statement of Additional Information. While securities rated "Baa" by Moody's or 'BBB" by Standard & Poor's or Duff & Phelps are investment-grade and are not regarded as junk bonds, those securities may be subject to special risks, and have some speculative characteristics. Definitions of the debt security ratings categories of Moody's, Standard & Poor's, Fitch IBCA and Duff & Phelps are included in Appendix A to this Statement of Additional Information. |X| Asset-Backed Securities. Asset-backed securities are fractional interests in pools of assets, typically accounts receivable or consumer loans. They are issued by trusts or special-purpose corporations. They are similar to mortgage-backed securities, described below, and are backed by a pool of assets that consist of obligations of individual borrowers. The income from the pool is passed through to the holders of participation interest in the pools. The pools may offer a credit enhancement, such as a bank letter of credit, to try to reduce the risks that the underlying debtors will not pay their obligations when due. However, the enhancement, if any, might not be for the full par value of the security. If the enhancement is exhausted and any required payments of interest or repayments of principal are not made, that Fund could suffer losses on its investment or delays in receiving payment. The value of an asset-backed security is affected by changes in the market's perception of the asset backing the security, the creditworthiness of the servicing agent for the loan pool, the originator of the loans, or the financial institution providing any credit enhancement, and is also affected if any credit enhancement has been exhausted. The risks of investing in asset-backed securities are ultimately related to payment of consumer loans by the individual borrowers. As a purchaser of an asset-backed security, the Fund would generally have no recourse to the entity that originated the loans in the event of default by a borrower. The underlying loans are subject to prepayments, which may shorten the weighted average life of asset-backed securities and may lower their return, in the same manner as in the case of mortgage-backed securities and CMOs, described below. Unlike mortgage-backed securities, asset-backed securities typically do not have the benefit of a security interest in the underlying collateral. |X| Mortgage-Related Securities. Mortgage-related securities are a form of derivative investment collateralized by pools of commercial or residential mortgages. Pools of mortgage loans are assembled as securities for sale to investors by government agencies or entities or by private issuers. These securities include collateralized mortgage obligations ("CMOs"), mortgage pass-through securities, stripped mortgage pass-through securities, interests in real estate mortgage investment conduits ("REMICs") and other real-estate related securities. Mortgage-related securities that are issued or guaranteed by agencies or instrumentalities of the U.S. government have relatively little credit risk (depending on the nature of the issuer) but are subject to interest rate risks and prepayment risks, as described in the Prospectus. As with other debt securities, the prices of mortgage-related securities tend to move inversely to changes in interest rates. The Fixed Income Funds can buy mortgage-related securities that have interest rates that move inversely to changes in general interest rates, based on a multiple of a specific index. Although the value of a mortgage-related security may decline when interest rates rise, the converse is not always the case. In periods of declining interest rates, mortgages are more likely to be prepaid. Therefore, a mortgage-related security's maturity can be shortened by unscheduled prepayments on the underlying mortgages. Therefore, it is not possible to predict accurately the security's yield. The principal that is returned earlier than expected may have to be reinvested in other investments having a lower yield than the prepaid security. Therefore, these securities may be less effective as a means of "locking in" attractive long-term interest rates, and they may have less potential for appreciation during periods of declining interest rates, than conventional bonds with comparable stated maturities. Prepayment risks can lead to substantial fluctuations in the value of a mortgage-related security. In turn, this can affect the value of that Fund's shares. If a mortgage-related security has been purchased at a premium, all or part of the premium that Fund paid may be lost if there is a decline in the market value of the security, whether that results from interest rate changes or prepayments on the underlying mortgages. In the case of stripped mortgage-related securities, if they experience greater rates of prepayment than were anticipated, the Fund may fail to recoup its initial investment on the security. During periods of rapidly rising interest rates, prepayments of mortgage-related securities may occur at slower than expected rates. Slower prepayments effectively may lengthen a mortgage-related security's expected maturity. Generally, that would cause the value of the security to fluctuate more widely in responses to changes in interest rates. If the prepayments on a Fund's mortgage-related securities were to decrease broadly, that Fund's effective duration, and therefore its sensitivity to interest rate changes, would increase. As with other debt securities, the values of mortgage-related securities may be affected by changes in the market's perception of the creditworthiness of the entity issuing the securities or guaranteeing them. Their values may also be affected by changes in government regulations and tax policies. |_| Collateralized Mortgage Obligations. CMOs are multi-class bonds that are backed by pools of mortgage loans or mortgage pass-through certificates. They may be collateralized by: (1) pass-through certificates issued or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac, (2) unsecuritized mortgage loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans' Affairs, (3) unsecuritized conventional mortgages, (4) other mortgage-related securities, or (5) any combination of these. Each class of CMO, referred to as a "tranche," is issued at a specific coupon rate and has a stated maturity or final distribution date. Principal prepayments on the underlying mortgages may cause the CMO to be retired much earlier than the stated maturity or final distribution date. The principal and interest on the underlying mortgages may be allocated among the several classes of a series of a CMO in different ways. One or more tranches may have coupon rates that reset periodically at a specified increase over an index. These are floating rate CMOs, and typically have a cap on the coupon rate. Inverse floating rate CMOs have a coupon rate that moves in the reverse direction to an applicable index. The coupon rate on these CMOs will increase as general interest rates decrease. These are usually much more volatile than fixed rate CMOs or floating rate CMOs. |X| Foreign Securities. The Equity Funds and the Fixed Income Funds may invest in foreign securities, and Global Securities Fund expects to have substantial investments in foreign securities. These include equity securities issued by foreign companies and debt securities issued or guaranteed by foreign companies or governments, including supra-national entities. "Foreign securities" include equity and debt securities of companies organized under the laws of countries other than the United States and debt securities issued or guaranteed by governments other than the U.S. government or by foreign supra-national entities. They also include securities of companies (including those that are located in the U.S. or organized under U.S. law) that derive a significant portion of their revenue or profits from foreign businesses, investments or sales, or that have a significant portion of their assets abroad. They may be traded on foreign securities exchanges or in the foreign over-the-counter markets. Securities of foreign issuers that are represented by American Depository Receipts or that are listed on a U.S. securities exchange or traded in the U.S. over-the-counter markets are not considered "foreign securities" for the purpose of a Fund's investment allocations, because they are not subject to many of the special considerations and risks, discussed below, that apply to foreign securities traded and held abroad. Because the Funds may purchase securities denominated in foreign currencies, a change in the value of such foreign currency against the U.S. dollar will result in a change in the amount of income the Funds have available for distribution. Because a portion of the Funds' investment income may be received in foreign currencies, the Funds will be required to compute their income in U.S. dollars for distribution to shareholders, and therefore the Funds will absorb the cost of currency fluctuations. After the Funds have distributed income, subsequent foreign currency losses may result in the Fund's having distributed more income in a particular fiscal period than was available from investment income, which could result in a return of capital to shareholders. Investing in foreign securities offers potential benefits not available from investing solely in securities of domestic issuers. They include the opportunity to invest in foreign issuers that appear to offer growth potential, or in foreign countries with economic policies or business cycles different from those of the U.S., or to reduce fluctuations in portfolio value by taking advantage of foreign stock markets that do not move in a manner parallel to U.S. markets. The Funds will hold foreign currency only in connection with the purchase or sale of foreign securities. |_| Foreign Debt Obligations. The debt obligations of foreign governments and entities may or may not be supported by the full faith and credit of the foreign government. The Fixed Income Funds may buy securities issued by certain supra-national entities, which include entities designated or supported by governments to promote economic reconstruction or development, international banking organizations and related government agencies. Examples are the International Bank for Reconstruction and Development (commonly called the "World Bank"), the Asian Development bank and the Inter-American Development Bank. The governmental members of these supra-national entities are "stockholders" that typically make capital contributions and may be committed to make additional capital contributions if the entity is unable to repay its borrowings. A supra-national entity's lending activities may be limited to a percentage of its total capital, reserves and net income. There can be no assurance that the constituent foreign governments will continue to be able or willing to honor their capitalization commitments for those entities. The Fixed Income Funds can invest in U.S. dollar-denominated "Brady Bonds." These foreign debt obligations may be fixed-rate par bonds or floating-rate discount bonds. They are generally collateralized in full as to repayment of principal at maturity by U.S. Treasury zero-coupon obligations that have the same maturity as the Brady Bonds. Brady Bonds can be viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity. Those uncollateralized amounts constitute what is called the "residual risk." If there is a default on collateralized Brady Bonds resulting in acceleration of the payment obligations of the issuer, the zero-coupon U.S. Treasury securities held as collateral for the payment of principal will not be distributed to investors, nor will those obligations be sold to distribute the proceeds. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds. The defaulted bonds will continue to remain outstanding, and the face amount of the collateral will equal the principal payments which would have then been due on the Brady Bonds in the normal course. Because of the residual risk of Brady Bonds and the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, Brady Bonds are considered speculative investments. |_| Risks of Foreign Investing. Investments in foreign securities may offer special opportunities for investing but also present special additional risks and considerations not typically associated with investments in domestic securities. Some of these additional risks are: o reduction of income by foreign taxes; o fluctuation in value of foreign investments due to changes in currency rates or currency control regulations (for example, currency blockage); o transaction charges for currency exchange; o lack of public information about foreign issuers; o lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to those applicable to domestic issuers; o less volume on foreign exchanges than on U.S. exchanges; o greater volatility and less liquidity on foreign markets than in the U.S.; o less governmental regulation of foreign issuers, stock exchanges and brokers than in the U.S.; o greater difficulties in commencing lawsuits; o higher brokerage commission rates than in the U.S.; o increased risks of delays in settlement of portfolio transactions or loss of certificates for portfolio securities; o possibilities in some countries of expropriation, confiscatory taxation, political, financial or social instability or adverse diplomatic developments; and o unfavorable differences between the U.S. economy and foreign economies. In the past, U.S. Government policies have discouraged certain investments abroad by U.S. investors, through taxation or other restrictions, and it is possible that such restrictions could be re-imposed. |_| Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer special opportunities for growth investing but have greater risks than more developed foreign markets, such as those in Europe, Canada, Australia, New Zealand and Japan. There may be even less liquidity in their securities markets, and settlements of purchases and sales of securities may be subject to additional delays. They are subject to greater risks of limitations on the repatriation of income and profits because of currency restrictions imposed by local governments. Those countries may also be subject to the risk of greater political and economic instability, which can greatly affect the volatility of prices of securities in those countries. The Manager will consider these factors when evaluating securities in these markets, because the selection of those securities must be consistent with the Fund's goal of preservation of principal. The Funds intend to invest less than 5% of their total assets in securities of issuers of Eastern European countries. The social, political and economic reforms in most Eastern European countries are still in their early stages, and there can be no assurance that these reforms will continue. Eastern European countries in many cases do not have a sophisticated or well-established capital market structure for the sale and trading of securities. Participation in the investment markets in some of those countries may be available initially or solely through investment in joint ventures, state enterprises, private placements, unlisted securities or other similar illiquid investment vehicles. In addition, although investment opportunities may exist in Eastern European countries, any change in the leadership or policies of the governments of those countries, or changes in the leadership or policies of any other government that exercises a significant influence over those countries, may halt the expansion of or reverse the liberalization of foreign investment policies now occurring. As a result investment opportunities which may currently exist may be threatened. The prior authoritarian governments of a number of the Eastern European countries previously expropriated large amounts of real and personal property, which may include property which will be represented by or held by entities issuing the securities a Fund might wish to purchase. In many cases, the claims of the prior property owners against those governments were never finally settled. There can be no assurance that any property represented by or held by entities issuing securities purchased by a Fund will not also be expropriated, nationalized, or confiscated. If that property were confiscated, the Fund could lose a substantial portion of its investments in such countries. A Fund's investments could also be adversely affected by exchange control regulations imposed in any of those countries. |_| Risks of Conversion to Euro. On January 1, 1999, eleven countries in the European Union adopted the euro as their official currency. However, their current currencies (for example, the franc, the mark, and the lira) will also continue in use until January 1, 2002. After that date, it is expected that only the euro will be used in those countries. A common currency is expected to confer some benefits in those markets, by consolidating the government debt market for those countries and reducing some currency risks and costs. But the conversion to the new currency will affect the Fund operationally and also has potential risks, some of which are listed below. Among other things, the conversion will affect: o issuers in which the Funds invest, because of changes in the competitive environment from a consolidated currency market and greater operational costs from converting to the new currency. This might depress securities values. o vendors the Funds depend on to carry out their business, such as their custodian bank (which holds the foreign securities each Fund buys), the Manager (which must price the Funds' investments to deal with the conversion to the euro) and brokers, foreign markets and securities depositories. If they are not prepared, there could be delays in settlements and additional costs to the Funds. o exchange contracts and derivatives that are outstanding during the transition to the euro. The lack of currency rate calculations between the affected currencies and the need to update the Fund's contracts could pose extra costs to the Funds. The Manager is upgrading (at its expense) its computer and bookkeeping systems to deal with the conversion. The Funds' custodian bank has advised the Manager of its plans to deal with the conversion, including how it will update its record keeping systems and handle the redenomination of outstanding foreign debt. The Funds' portfolio managers will also monitor the effects of the conversion on the issuers in which each Fund invests. The possible effect of these factors on the Funds' investments cannot be determined with certainty at this time, but they may reduce the value of some of the Funds' holdings and increase its operational costs. |X| Portfolio Turnover. "Portfolio turnover" describes the rates at which the Funds traded their portfolio securities during its last fiscal year. For example, if a Fund sold all of its securities during the year, its portfolio turnover rate would have been 100%. The Funds' portfolio turnover rates will fluctuate from year to year, and any of the Funds may have portfolio turnover rates of more than 100% annually. Other Investment Techniques and Strategies. In seeking their respective objectives, the Funds may from time to time use the types of investment strategies and investments described below. They are not required to use all of these strategies at all times, and at times may not use them. |X| Investing in Small, Unseasoned Companies. The Funds may invest in securities of small, unseasoned companies, subject to limits (if any) stated in that Fund's Prospectus. These are companies that have been in operation for less than three years, including the operations of any predecessors. Securities of these companies may be subject to volatility in their prices. They may have a limited trading market, which may adversely affect their ability to dispose of them and can reduce the price the Funds might be able to obtain for them. Other investors that own a security issued by a small, unseasoned issuer for which there is limited liquidity might trade the security when the Funds are attempting to dispose of their holdings of that security. In that case, a Fund might receive a lower price for its holdings than might otherwise be obtained. |X| When-Issued and Delayed-Delivery Transactions (All Portfolios). The Funds may invest in securities on a "when-issued" basis and may purchase or sell securities on a "delayed-delivery" or "forward commitment" basis. When-issued and delayed-delivery are terms that refer to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. When such transactions are negotiated, the price (which is generally expressed in yield terms) is fixed at the time the commitment is made. Delivery and payment for the securities take place at a later date (generally within 45 days of the date the offer is accepted). The securities are subject to change in value from market fluctuations during the period until settlement. The value at delivery may be less than the purchase price. For example, changes in interest rates in a direction other than that expected by the Manager before settlement will affect the value of such securities and may cause a loss to the Funds. During the period between purchase and settlement, no payment is made by the Funds to the issuer and no interest accrues to that portfolio from the investment. No income begins to accrue to the Funds on a when-issued security until the Funds receive the security at settlement of the trade. The Funds will engage in when-issued transactions to secure what the Manager considers to be an advantageous price and yield at the time of entering into the obligation. When a Fund enters into a when-issued or delayed-delivery transaction, it relies on the other party to complete the transaction. Its failure to do so may cause that Fund to lose the opportunity to obtain the security at a price and yield the Manager considers to be advantageous. When a Fund engages in when-issued and delayed-delivery transactions, it does so for the purpose of acquiring or selling securities consistent with its investment objective and policies for its portfolio or for delivery pursuant to options contracts it has entered into, and not for the purpose of investment leverage. Although a Fund will enter into delayed-delivery or when-issued purchase transactions to acquire securities, it may dispose of a commitment prior to settlement. If a Fund chooses to dispose of the right to acquire a when-issued security prior to its acquisition or to dispose of its right to delivery or receive against a forward commitment, it may incur a gain or loss. At the time a Fund makes the commitment to purchase or sell a security on a when-issued or delayed delivery basis, it records the transaction on their books and reflects the value of the security purchased in determining that Fund's net asset value. In a sale transaction, it records the proceeds to be received. That fund will identify on its books liquid assets at least equal in value to the value of that Fund's purchase commitments until that Fund pays for the investment. When-issued and delayed-delivery transactions can be used by the Funds as a defensive technique to hedge against anticipated changes in interest rates and prices. For instance, in periods of rising interest rates and falling prices, a Fund might sell securities in their portfolio on a forward commitment basis to attempt to limit its exposure to anticipated falling prices. In periods of falling interest rates and rising prices, a Fund might sell portfolio securities and purchase the same or similar securities on a when-issued or delayed-delivery basis to obtain the benefit of currently higher cash yields. |X| Zero-Coupon Securities. The Fixed Income Funds may buy zero-coupon and delayed interest securities, and "stripped" securities of foreign government issuers, which may or may not be backed by the "full faith and credit" of the issuing foreign government, and of corporations. The Fixed Income Funds may also buy zero-coupon and "stripped" U.S. government securities. Zero-coupon securities issued by foreign governments and by corporations will be subject to greater credit risks than U.S. government zero-coupon securities. |X| "Stripped" Mortgage-Related Securities. The Fixed Income Funds can invest in stripped mortgage-related securities that are created by segregating the cash flows from underlying mortgage loans or mortgage securities to create two or more new securities. Each has a specified percentage of the underlying security's principal or interest payments. These are a form of derivative investment. Mortgage securities may be partially stripped so that each class receives some interest and some principal. However, they may be completely stripped. In that case all of the interest is distributed to holders of one type of security, known as an "interest-only" security, or "I/O," and all of the principal is distributed to holders of another type of security, known as a "principal-only" security or "P/O." Strips can be created for pass-through certificates or CMOs. The yields to maturity of I/Os and P/Os are very sensitive to principal repayments (including prepayments) on the underlying mortgages. If the underlying mortgages experience greater than anticipated prepayments of principal, that Fund might not fully recoup its investment in an I/O based on those assets. If underlying mortgages experience less than anticipated prepayments of principal, the yield on the P/Os based on them could decline substantially. |X| Repurchase Agreements. The Funds may acquire securities subject to repurchase agreements. They may do so for liquidity purposes to meet anticipated redemptions of Fund shares, or pending the investment of the proceeds from sales of Fund shares, or pending the settlement of portfolio securities transactions, or for temporary defensive purposes, as described below. In a repurchase transaction, the Funds buy a security from, and simultaneously resells it to, an approved vendor for delivery on an agreed-upon future date. The resale price exceeds the purchase price by an amount that reflects an agreed-upon interest rate effective for the period during which the repurchase agreement is in effect. Approved vendors include U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that have been designated as primary dealers in government securities. They must meet credit requirements set by the Funds' Board of Trustees from time to time. The majority of these transactions run from day to day, and delivery pursuant to the resale typically occurs within one to five days of the purchase. Repurchase agreements having a maturity beyond seven days are subject to each Fund's limit on holding illiquid investments. No Fund will enter into a repurchase agreement that causes more than 15% of its net assets (for Money Fund/VA, 10%) to be subject to repurchase agreements having a maturity beyond seven days. There is no limit on the amount of a Fund's net assets that may be subject to repurchase agreements having maturities of seven days or less. Repurchase agreements, considered "loans" under the Investment Company Act, are collateralized by the underlying security. The Funds' repurchase agreements require that at all times while the repurchase agreement are in effect, the value of the collateral must equal or exceed the repurchase price to fully collateralize the repayment obligation. However, if the vendor fails to pay the resale price on the delivery date, the Funds may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so. The Manager will monitor the vendor's creditworthiness to confirm that the vendor is financially sound and will continuously monitor the collateral's value. |X| Illiquid and Restricted Securities. Under the policies and procedures established by the Fund's Board of Trustees, the Manager determines the liquidity of certain of the Funds' investments. To enable a Fund to sell its holdings of a restricted security not registered under the Securities Act of 1933, that Fund may have to cause those securities to be registered. The expenses of registering restricted securities may be negotiated by the Fund with the issuer at the time the Fund buys the securities. When a Fund must arrange registration because the Fund wishes to sell the security, a considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Fund could sell it. That Fund would bear the risks of any downward price fluctuation during that period. The Funds may also acquire restricted securities through private placements. Those securities have contractual restrictions on their public resale. Those restrictions might limit a Fund's ability to dispose of the securities and might lower the amount a Fund could realize upon the sale. The Funds have limitations that apply to purchases of restricted securities, as stated in the Prospectus. Those percentage restrictions do not limit purchases of restricted securities that are eligible for sale to qualified institutional purchasers under Rule 144A of the Securities Act of 1933, if those securities have been determined to be liquid by the Manager under Board-approved guidelines. Those guidelines take into account the trading activity for such securities and the availability of reliable pricing information, among other factors. If there is a lack of trading interest in a particular Rule 144A security, the Funds' holdings of that security may be considered to be illiquid. Illiquid securities include repurchase agreements maturing in more than seven days and participation interests that do not have puts exercisable within seven days. |X| Forward Rolls. The Funds can enter into "forward roll" transactions with respect to mortgage related securities. In this type of transaction, the Funds sell a mortgage related security to a buyer and simultaneously agrees to repurchase a similar security (the same type of security, and having the same coupon and maturity) at a later date at a set price. The securities that are repurchased will have the same interest rate as the securities that are sold, but typically will be collateralized by different pools of mortgages (with different prepayment histories) than the securities that have been sold. Proceeds from the sale are invested in short-term instruments, such as repurchase agreements. The income from those investments, plus the fees from the forward roll transaction, are expected to generate income to the Funds in excess of the yield on the securities that have been sold. The Funds will only enter into "covered" rolls. To assure their future payment of the purchase price, the Funds will identify cash, U.S. government securities or other high-grade debt securities on their books in an amount equal to their respective payment obligations under the roll. These transactions have risks. During the period between the sale and the repurchase, the Funds will not be entitled to receive interest and principal payments on the securities that have been sold. It is possible that the market value of the securities the Funds sell may decline below the price at which the Funds are obligated to repurchase securities. |X| Loans of Portfolio Securities. To raise cash for liquidity purposes or income, the Funds can lend their portfolio securities to brokers, dealers and other types of financial institutions approved by the Fund's Board of Trustees. These loans are limited to not more than 25% of the value of that Fund's net assets. The Funds currently do not intend to engage in loans of securities in the coming year, but if they do so, such loans will not likely exceed 5% of that Fund's total assets. There are some risks in connection with securities lending. The Funds might experience a delay in receiving additional collateral to secure a loan, or a delay in recovery of the loaned securities if the borrower defaults. The Funds must receive collateral for a loan. Under current applicable regulatory requirements (which are subject to change), on each business day the loan collateral must be at least equal to the value of the loaned securities. It must consist of cash, bank letters of credit, or securities of the U.S. Government or its agencies or instrumentalities, or other cash equivalents in which that Fund is permitted to invest. To be acceptable as collateral, letters of credit must obligate a bank to pay amounts demanded by the Funds if the demand meets the terms of the letter. The terms of the letter of credit and the issuing bank both must be satisfactory to the Funds. When they lend securities, that Fund receives amounts equal to the dividends or interest on loaned securities. It also receives one or more of (a) negotiated loan fees, (b) interest on securities used as collateral, and (c) interest on any short-term debt securities purchased with such loan collateral. Either type of interest may be shared with the borrower. That Fund may also pay reasonable finder's, custodian and administrative fees in connection with these loans. The terms of a Fund's loans must meet applicable tests under the Internal Revenue Code and must permit the Fund to reacquire loaned securities on five days' notice or in time to vote on any important matter. |X| Borrowing for Leverage. Each Fund has the ability to borrow from banks on an unsecured basis. Each Fund has undertaken to limit borrowing to 25% of the value of that Fund's net assets, which is further limited to 10% if borrowing is for a purpose other than to facilitate redemptions. Investing borrowed funds in portfolio securities is a speculative technique known as "leverage." The Funds may borrow only from banks. Under current regulatory requirements, borrowings can be made only to the extent that the value of that Fund's assets, less its liabilities other than borrowings, is equal to at least 300% of all borrowings (including the proposed borrowing). If the value of that Fund's assets fails to meet this 300% asset coverage requirement, that Fund will reduce its bank debt within three days to meet the requirement. To do so, that Fund might have to sell a portion of its investments at a disadvantageous time. A Fund will pay interest on these loans, and that interest expense will raise the overall expenses of that Fund and reduce its returns. If it does borrow, its expenses will be greater than comparable funds that do not borrow for leverage. Additionally, that Fund's net asset value per share might fluctuate more than that of funds that do not borrow. Currently, the Funds do not contemplate using this technique in the next year but if they do so, it will not likely be to a substantial degree. |X| Derivatives. The Funds can invest in a variety of derivative investments for hedging purposes. Some derivative investments the Funds can use are the hedging instruments described below in this Statement of Additional Information. The Equity Funds do not use, and do not currently contemplate using, derivatives or hedging instruments to a significant degree in the coming year and they are not obligated to use them in seeking their objectives. Other derivative investments the Fixed Income Funds can invest in include "index-linked" notes. Principal and/or interest payments on these notes depend on the performance of an underlying index. Currency-indexed securities are another derivative these Funds may use. Typically, these are short-term or intermediate-term debt securities. Their value at maturity or the rates at which they pay income are determined by the change in value of the U.S. dollar against one or more foreign currencies or an index. In some cases, these securities may pay an amount at maturity based on a multiple of the amount of the relative currency movements. This type of index security offers the potential for increased income or principal payments but at a greater risk of loss than a typical debt security of the same maturity and credit quality. Other derivative investments the Fixed Income Funds can use include debt exchangeable for common stock of an issuer or "equity-linked debt securities" of an issuer. At maturity, the debt security is exchanged for common stock of the issuer or it is payable in an amount based on the price of the issuer's common stock at the time of maturity. Both alternatives present a risk that the amount payable at maturity will be less than the principal amount of the debt because the price of the issuer's common stock might not be as high as the Manager expected. |X| Hedging. Although the Funds can use hedging instruments, they are not obligated to use them in seeking their objective. To attempt to protect against declines in the market value of the Funds' portfolio, to permit the Funds to retain unrealized gains in the value of portfolio securities which have appreciated, or to facilitate selling securities for investment reasons, the Funds could: |_| sell futures contracts, |_| buy puts on such futures or on securities, or |_| write covered calls on securities or futures. Covered calls may also be used to increase the Funds' income, but the Manager does not expect to engage extensively in that practice. The Funds can use hedging to establish a position in the securities market as a temporary substitute for purchasing particular securities. In that case the Funds would normally seek to purchase the securities and then terminate that hedging position. The Funds might also use this type of hedge to attempt to protect against the possibility that its portfolio securities would not be fully included in a rise in value of the market. To do so the Funds could: |_| buy futures, or |_| buy calls on such futures or on securities. The Funds' strategy of hedging with futures and options on futures will be incidental to the Fund's activities in the underlying cash market. The particular hedging instruments the Funds can use are described below. The Funds may employ new hedging instruments and strategies when they are developed, if those investment methods are consistent with the Funds' investment objective and are permissible under applicable regulations governing the Fund. |_| Futures. The Equity Funds, Multiple Strategies Fund/VA and Main Street Growth & Income Fund/VA can buy and sell future contracts that relate to (1) broadly-based stock indices (these are referred to as "stock index futures") and (2) foreign currencies (these are referred to as "forward contracts"). The Fixed Income Funds can buy and sell futures contracts that relate to (1) bond indices (these are referred to as "bond index futures"), (2) debt securities (these are referred to as "interest rate futures"), and (3) forward contracts. A broadly-based stock index is used as the basis for trading stock index futures. They may in some cases be based on stocks of issuers in a particular industry or group of industries. A stock index assigns relative values to the common stocks included in the index and its value fluctuates in response to the changes in value of the underlying stocks. A stock index cannot be purchased or sold directly. Bond index futures are similar contracts based on the future value of the basket of securities that comprise the index. These contracts obligate the seller to deliver, and the purchaser to take, cash to settle the futures transaction. There is no delivery made of the underlying securities to settle the futures obligation. Either party may also settle the transaction by entering into an offsetting contract. An interest rate future obligates the seller to deliver (and the purchaser to take) cash or a specified type of debt security to settle the futures transaction. Either party could also enter into an offsetting contract to close out the position. No money is paid or received by the Funds on the purchase or sale of a future. Upon entering into a futures transaction, the Funds will be required to deposit an initial margin payment with the futures commission merchant (the "futures broker"). Initial margin payments will be deposited with the Funds' custodian bank in an account registered in the futures broker's name. However, the futures broker can gain access to that account only under specified conditions. As the future is marked to market (that is, its value on that Fund's books is changed) to reflect changes in its market value, subsequent margin payments, called variation margin, will be paid to or by the futures broker daily. At any time prior to expiration of the future, the Funds may elect to close out their position by taking an opposite position, at which time a final determination of variation margin is made and any additional cash must be paid by or released to that Fund. Any loss or gain on the future is then realized by that Fund for tax purposes. All futures transactions are effected through a clearinghouse associated with the exchange on which the contracts are traded. |_| Put and Call Options. The Funds can buy and sell certain kinds of put options ("puts") and call options ("calls"). The Funds can buy and sell exchange-traded and over-the-counter put and call options, including index options, securities options, currency options, commodities options, and options on the other types of futures described above. |_| Writing Covered Call Options. The Funds can write (that is, sell) covered calls. If a Fund sells a call option, it must be covered. That means the Fund must own the security subject to the call while the call is outstanding, or, for certain types of calls, the call may be covered by segregating liquid assets to enable that Fund to satisfy its obligations if the call is exercised. Up to 100% of a Fund's total assets may be subject to calls that Fund writes. When a Fund writes a call on a security, it receives cash (a premium). That Fund agrees to sell the underlying security to a purchaser of a corresponding call on the same security during the call period at a fixed exercise price regardless of market price changes during the call period. The call period is usually not more than nine months. The exercise price may differ from the market price of the underlying security. That Fund shares the risk of loss that the price of the underlying security may decline during the call period. That risk may be offset to some extent by the premium the Fund receives. If the value of the investment does not rise above the call price, it is likely that the call will lapse without being exercised. In that case the Fund would keep the cash premium and the investment. When a Fund writes a call on an index, it receives cash (a premium). If the buyer of the call exercises it, the Fund will pay an amount of cash equal to the difference between the closing price of the call and the exercise price, multiplied by a specified multiple that determines the total value of the call for each point of difference. If the value of the underlying investment does not rise above the call price, it is likely that the call will lapse without being exercised. In that case the Fund would keep the cash premium. The Funds' custodian bank, or a securities depository acting for the custodian bank, will act as the Funds' escrow agent, through the facilities of the Options Clearing Corporation ("OCC"), as to the investments on which the Funds have written calls traded on exchanges or as to other acceptable escrow securities. In that way, no margin will be required for such transactions. OCC will release the securities on the expiration of the option or when the Funds enter into a closing transaction. When a Fund writes an over-the-counter ("OTC") option, that Fund will enter into an arrangement with a primary U.S. government securities dealer which will establish a formula price at which the Fund will have the absolute right to repurchase that OTC option. The formula price will generally be based on a multiple of the premium received for the option, plus the amount by which the option is exercisable below the market price of the underlying security (that is, the option is "in the money"). When a Fund writes an OTC option, it will treat as illiquid (for purposes of its restriction on holding illiquid securities) the mark-to-market value of any OTC option it holds, unless the option is subject to a buy-back agreement by the executing broker. To terminate its obligation on a call it has written, a Fund may purchase a corresponding call in a "closing purchase transaction." A Fund will then realize a profit or loss, depending upon whether the net of the amount of the option transaction costs and the premium received on the call the Fund wrote is more or less than the price of the call the Fund purchases to close out the transaction. That Fund may realize a profit if the call expires unexercised, because that Fund will retain the underlying security and the premium it received when it wrote the call. Any such profits are considered short-term capital gains for Federal income tax purposes, as are the premiums on lapsed calls. When distributed by a Fund they are taxable as ordinary income. If a Fund cannot effect a closing purchase transaction due to the lack of a market, it will have to hold the callable securities until the call expires or is exercised. A Fund may also write calls on a futures contract without owning the futures contract or securities deliverable under the contract. To do so, at the time the call is written, that Fund must cover the call by segregating an equivalent dollar amount of liquid assets. The Fund will segregate additional liquid assets if the value of the segregated assets drops below 100% of the current value of the future. Because of this segregation requirement, in no circumstances would that Fund's receipt of an exercise notice as to that future require that Fund to deliver a futures contract. It would simply put that Fund in a short futures position, which is permitted by the Funds' hedging policies. |_| Writing Put Options. Each Fund can sell put options. A put option on securities gives the purchaser the right to sell, and the writer the obligation to buy, the underlying investment at the exercise price during the option period. The Funds will not write puts if, as a result, more than 50% of the Fund's net assets would be required to be segregated to cover such put options. If a Fund writes a put, the put must be covered by segregated liquid assets. The premium the Funds receive from writing a put represents a profit, as long as the price of the underlying investment remains equal to or above the exercise price of the put. However, that Fund also assumes the obligation during the option period to buy the underlying investment from the buyer of the put at the exercise price, even if the value of the investment falls below the exercise price. If a put a Fund has written expires unexercised, that Fund realizes a gain in the amount of the premium less the transaction costs incurred. If the put is exercised, that Fund must fulfill its obligation to purchase the underlying investment at the exercise price. That price will usually exceed the market value of the investment at that time. In that case, that Fund may incur a loss if it sells the underlying investment. That loss will be equal to the sum of the sale price of the underlying investment and the premium received minus the sum of the exercise price and any transaction costs the Fund incurred. When writing a put option on a security, to secure its obligation to pay for the underlying security that Fund will deposit in escrow liquid assets with a value equal to or greater than the exercise price of the underlying securities. That Fund therefore forgoes the opportunity of investing the segregated assets or writing calls against those assets. As long as a Fund's obligation as the put writer continues, it may be assigned an exercise notice by the broker-dealer through which the put was sold. That notice will require that Fund to take delivery of the underlying security and pay the exercise price. No Fund has control over when it may be required to purchase the underlying security, since it may be assigned an exercise notice at any time prior to the termination of its obligation as the writer of the put. That obligation terminates upon expiration of the put. It may also terminate if, before it receives an exercise notice, that Fund effects a closing purchase transaction by purchasing a put of the same series as it sold. Once a Fund has been assigned an exercise notice, it cannot effect a closing purchase transaction. A Fund may decide to effect a closing purchase transaction to realize a profit on an outstanding put option it has written or to prevent the underlying security from being put. Effecting a closing purchase transaction will also permit that Fund to write another put option on the security, or to sell the security and use the proceeds from the sale for other investments. A Fund will realize a profit or loss from a closing purchase transaction depending on whether the cost of the transaction is less or more than the premium received from writing the put option. Any profits from writing puts are considered short-term capital gains for Federal tax purposes, and when distributed by a Fund, is taxable as ordinary income. |_| Purchasing Calls and Puts. Each Fund can purchase calls to protect against the possibility that its portfolio will not participate in an anticipated rise in the securities market. When a Fund buys a call (other than in a closing purchase transaction), it pays a premium. That Fund then has the right to buy the underlying investment from a seller of a corresponding call on the same investment during the call period at a fixed exercise price. A Fund benefits only if it sells the call at a profit or if, during the call period, the market price of the underlying investment is above the sum of the call price plus the transaction costs and the premium paid for the call and the Fund exercises the call. If a Fund does not exercise the call or sell it (whether or not at a profit), the call will become worthless at its expiration date. In that case the Fund will have paid the premium but lost the right to purchase the underlying investment. A Fund can buy puts whether or not it holds the underlying investment in its portfolio. When a Fund purchases a put, it pays a premium and, except as to puts on indices, has the right to sell the underlying investment to a seller of a put on a corresponding investment during the put period at a fixed exercise price. Buying a put on securities or futures a Fund owns enables that Fund to attempt to protect itself during the put period against a decline in the value of the underlying investment below the exercise price by selling the underlying investment at the exercise price to a seller of a corresponding put. If the market price of the underlying investment is equal to or above the exercise price and, as a result, the put is not exercised or resold, the put will become worthless at its expiration date. In that case the Fund will have paid the premium but lost the right to sell the underlying investment. However, the Fund may sell the put prior to its expiration. That sale may or may not be at a profit. When a Fund purchases a call or put on an index or future, it pays a premium, but settlement is in cash rather than by delivery of the underlying investment to the Fund. A gain or loss depends on changes in the index in question (and thus on price movements in the securities market generally) rather than on price movements in individual securities or futures contracts. A Fund may buy a call or put only if, after the purchase, the value of all call and put options held by the Fund will not exceed 5% of the Fund's total assets. |_| Buying and Selling Options on Foreign Currencies. A Fund can buy and sell calls and puts on foreign currencies. They include puts and calls that trade on a securities or commodities exchange or in the over-the-counter markets or are quoted by major recognized dealers in such options. A Fund could use these calls and puts to try to protect against declines in the dollar value of foreign securities and increases in the dollar cost of foreign securities the Fund wants to acquire. If the Manager anticipates a rise in the dollar value of a foreign currency in which securities to be acquired are denominated, the increased cost of those securities may be partially offset by purchasing calls or writing puts on that foreign currency. If the Manager anticipates a decline in the dollar value of a foreign currency, the decline in the dollar value of portfolio securities denominated in that currency might be partially offset by writing calls or purchasing puts on that foreign currency. However, the currency rates could fluctuate in a direction adverse to a Fund's position. That Fund will then have incurred option premium payments and transaction costs without a corresponding benefit. A call the Fund writes on a foreign currency is "covered" if that Fund owns the underlying foreign currency covered by the call or has an absolute and immediate right to acquire that foreign currency without additional cash consideration (or it can do so for additional cash consideration held in a segregated account by its custodian bank) upon conversion or exchange of other foreign currency held in its portfolio. A Fund could write a call on a foreign currency to provide a hedge against a decline in the U.S. dollar value of a security which the Fund owns or has the right to acquire and which is denominated in the currency underlying the option. That decline might be one that occurs due to an expected adverse change in the exchange rate. This is known as a "cross-hedging" strategy. In those circumstances, the Fund covers the option by maintaining cash, U.S. government securities or other liquid, high grade debt securities in an amount equal to the exercise price of the option, in a segregated account with the Fund's custodian bank. |_| Risks of Hedging with Options and Futures. The use of hedging instruments requires special skills and knowledge of investment techniques that are different than what is required for normal portfolio management. If the Manager uses a hedging instrument at the wrong time or judges market conditions incorrectly, hedging strategies may reduce a Fund's return. A Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments. A Fund's option activities could affect its portfolio turnover rate and brokerage commissions. The exercise of calls written by the Fund might cause a Fund to sell related portfolio securities, thus increasing its turnover rate. The exercise by a Fund of puts on securities will cause the sale of underlying investments, increasing portfolio turnover. Although the decision whether to exercise a put it holds is within a Fund's control, holding a put might cause that Fund to sell the related investments for reasons that would not exist in the absence of the put. A Fund could pay a brokerage commission each time it buys or sells a call, a put or an underlying investment in connection with the exercise of a call or put. Those commissions could be higher on a relative basis than the commissions for direct purchases or sales of the underlying investments. Premiums paid for options are small in relation to the market value of the underlying investments. Consequently, put and call options offer large amounts of leverage. The leverage offered by trading in options could result in a Fund's net asset values being more sensitive to changes in the value of the underlying investment. If a covered call written by a Fund is exercised on an investment that has increased in value, that Fund will be required to sell the investment at the call price. It will not be able to realize any profit if the investment has increased in value above the call price. An option position may be closed out only on a market that provides secondary trading for options of the same series, and there is no assurance that a liquid secondary market will exist for any particular option. A Fund might experience losses if it could not close out a position because of an illiquid market for the future or option. There is a risk in using short hedging by selling futures or purchasing puts on broadly-based indices or futures to attempt to protect against declines in the value of a Fund's portfolio securities. The risk is that the prices of the futures or the applicable index will correlate imperfectly with the behavior of the cash prices of that Fund's securities. For example, it is possible that while a Fund has used a hedging instrument in a short hedge, the market might advance and the value of the securities held in the Fund's portfolio might decline. If that occurred, the Fund would lose money on the hedging instrument and also experience a decline in the value of its portfolio securities. However, while this could occur for a very brief period or to a very small degree, over time the value of a diversified portfolio of securities will tend to move in the same direction as the indices upon which the hedging instrument is based. The risk of imperfect correlation increases as the composition of a Fund's portfolio diverges from the securities included in the applicable index. To compensate for the imperfect correlation of movements in the price of the portfolio securities being hedged and movements in the price of the hedging instruments, a Fund may use hedging instruments in a greater dollar amount than the dollar amount of portfolio securities being hedged. It might do so if the historical volatility of the prices of the portfolio securities being hedged are more than the historical volatility of the applicable index. The ordinary spreads between prices in the cash and futures markets are subject to distortions, due to differences in the nature of those markets. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities markets. Therefore, increased participation by speculators in the futures market may cause temporary price distortions. A Fund can use hedging instruments to establish a position in the securities markets as a temporary substitute for the purchase of individual securities (long hedging) by buying futures and/or calls on such futures, broadly-based indices or on securities. It is possible that when a Fund does so the market might decline. If that Fund then concludes not to invest in securities because of concerns that the market might decline further or for other reasons, the Fund will realize a loss on the hedging instruments that is not offset by a reduction in the price of the securities purchased. |_| Forward Contracts. Forward contracts are foreign currency exchange contracts. They are used to buy or sell foreign currency for future delivery at a fixed price. A Fund uses them to "lock in" the U.S. dollar price of a security denominated in a foreign currency that the Fund has bought or sold, or to protect against possible losses from changes in the relative values of the U.S. dollar and a foreign currency. A Fund limits its exposure in foreign currency exchange contracts in a particular foreign currency to the amount of its assets denominated in that currency or a closely-correlated currency. A Fund may also use "cross-hedging" where it hedges against changes in currencies other than the currency in which a security it holds is denominated. Under a forward contract, one party agrees to purchase, and another party agrees to sell, a specific currency at a future date. That date may be any fixed number of days from the date of the contract agreed upon by the parties. The transaction price is set at the time the contract is entered into. These contracts are traded in the inter-bank market conducted directly among currency traders (usually large commercial banks) and their customers. The Funds may use forward contracts to protect against uncertainty in the level of future exchange rates. The use of forward contracts does not eliminate the risk of fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does fix a rate of exchange in advance. Although forward contracts may reduce the risk of loss from a decline in the value of the hedged currency, at the same time they limit any potential gain if the value of the hedged currency increases. When a Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when it anticipates receiving dividend payments in a foreign currency, the Fund might desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of the dividend payments. To do so, that Fund could enter into a forward contract for the purchase or sale of the amount of foreign currency involved in the underlying transaction, in a fixed amount of U.S. dollars per unit of the foreign currency. This is called a "transaction hedge." The transaction hedge will protect the Fund against a loss from an adverse change in the currency exchange rates during the period between the date on which the security is purchased or sold or on which the payment is declared, and the date on which the payments are made or received. A Fund could also use forward contracts to lock in the U.S. dollar value of a portfolio position. This is called a "position hedge." When a Fund believes that foreign currency might suffer a substantial decline against the U.S. dollar, it could enter into a forward contract to sell an amount of that foreign currency approximating the value of some or all of the Fund's portfolio securities denominated in that foreign currency. When a Fund believes that the U.S. dollar might suffer a substantial decline against a foreign currency, it could enter into a forward contract to buy that foreign currency for a fixed dollar amount. Alternatively, a Fund could enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if the Fund believes that the U.S. dollar value of the foreign currency to be sold pursuant to its forward contract will fall whenever there is a decline in the U.S. dollar value of the currency in which portfolio securities of the Fund are denominated. That is referred to as a "cross hedge." A Fund will cover its short position in these cases by identifying to its custodian bank assets having a value equal to the aggregate amount of the Fund's commitment under forward contracts. No Fund will enter into forward contracts or maintain a net exposure to such contracts if the consummation of the contracts would obligate a Fund to deliver an amount of foreign currency in excess of the value of that Fund's portfolio securities or other assets denominated in that currency or another currency that is the subject of the hedge. The precise matching of the amounts under forward contracts and the value of the securities involved generally will not be possible because the future value of securities denominated in foreign currencies will change as a consequence of market movements between the date the forward contract is entered into and the date it is sold. In some cases the Manager might decide to sell the security and deliver foreign currency to settle the original purchase obligation. If the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver, the Fund might have to purchase additional foreign currency on the "spot" (that is, cash) market to settle the security trade. If the market value of the security instead exceeds the amount of foreign currency the Fund is obligated to deliver to settle the trade, the Fund might have to sell on the spot market some of the foreign currency received upon the sale of the security. There will be additional transaction costs on the spot market in those cases. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward contracts involve the risk that anticipated currency movements will not be accurately predicted, causing a Fund to sustain losses on these contracts and to pay additional transactions costs. The use of forward contracts in this manner might reduce a Fund's performance if there are unanticipated changes in currency prices to a greater degree than if a Fund had not entered into such contracts. At or before the maturity of a forward contract requiring a Fund to sell a currency, the Fund might sell a portfolio security and use the sale proceeds to make delivery of the currency. In the alternative a Fund might retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract. Under that contract a Fund will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, a Fund might close out a forward contract requiring it to purchase a specified currency by entering into a second contract entitling it to sell the same amount of the same currency on the maturity date of the first contract. The Fund would realize a gain or loss as a result of entering into such an offsetting forward contract under either circumstance. The gain or loss will depend on the extent to which the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and offsetting contract. The costs to a Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no brokerage fees or commissions are involved. Because these contracts are not traded on an exchange, a Fund must evaluate the credit and performance risk of the counterparty under each forward contract. Although a Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. Funds may convert foreign currency from time to time, and will incur costs in doing so. Foreign exchange dealers do not charge a fee for conversion, but they do seek to realize a profit based on the difference between the prices at which they buy and sell various currencies. Thus, a dealer might offer to sell a foreign currency to a Fund at one rate, while offering a lesser rate of exchange if the Fund desires to resell that currency to the dealer. |_| Regulatory Aspects of Hedging Instruments. When using futures and options on futures, the Funds are required to operate within certain guidelines and restrictions with respect to the use of futures as established by the Commodities Futures Trading Commission (the "CFTC"). In particular, a Fund is exempted from registration with the CFTC as a "commodity pool operator" if the Fund complies with the requirements of Rule 4.5 adopted by the CFTC. The Rule does not limit the percentage of Bond Fund/VA's assets that may be used for futures margin and related options premiums for a bona fide hedging position. However, under the Rule, a Fund must limit its aggregate initial futures margin and related options premiums to not more than 5% of the Funds' net assets for hedging strategies that are not considered bona fide hedging strategies under the Rule. Under the Rule, a Fund must also use short futures and options on futures solely for bona fide hedging purposes within the meaning and intent of the applicable provisions of the Commodity Exchange Act. Transactions in options by a Fund are subject to limitations established by the option exchanges. The exchanges limit the maximum number of options that may be written or held by a single investor or group of investors acting in concert. Those limits apply regardless of whether the options were written or purchased on the same or different exchanges or are held in one or more accounts or through one or more different exchanges or through one or more brokers. Thus, the number of options that a Fund may write or hold may be affected by options written or held by other entities, including other investment companies having the same advisor as that Fund (or an adviser that is an affiliate of the Funds' advisor). The exchanges also impose position limits on futures transactions. An exchange may order the liquidation of positions found to be in violation of those limits and may impose certain other sanctions. Under the Investment Company Act, when a Fund purchases a future, it must maintain cash or readily marketable short-term debt instruments in an amount equal to the market value of the securities underlying the future, less the margin deposit applicable to it. |_| Tax Aspects of Certain Hedging Instruments. Certain foreign currency exchange contracts are treated as "Section 1256 contracts" under the Internal Revenue Code. In general, gains or losses relating to Section 1256 contracts are characterized as 60% long-term and 40% short-term capital gains or losses under the Code. However, foreign currency gains or losses arising from Section 1256 contracts that are forward contracts generally are treated as ordinary income or loss. In addition, Section 1256 contracts held by the Funds at the end of each taxable year are "marked-to-market," and unrealized gains or losses are treated as though they were realized. These contracts also may be marked-to-market for other purposes under rules prescribed pursuant to the Internal Revenue Code. An election can be made by a Fund to exempt those transactions from this marked-to-market treatment. Certain forward contracts a Fund enters into may result in "straddles" for Federal income tax purposes. The straddle rules may affect the character and timing of gains (or losses) recognized by that Fund on straddle positions. Generally, a loss sustained on the disposition of a position making up a straddle is allowed only to the extent that the loss exceeds any unrecognized gain in the offsetting positions making up the straddle. Disallowed loss is generally allowed at the point where there is no unrecognized gain in the offsetting positions making up the straddle, or the offsetting position is disposed of. Under the Internal Revenue Code, the following gains or losses are treated as ordinary income or loss: (1) gains or losses attributable to fluctuations in exchange rates that occur between the time a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time that Fund actually collects such receivables or pays such liabilities, and (2) gains or losses attributable to fluctuations in the value of a foreign currency between the date of acquisition of a debt security denominated in a foreign currency or foreign currency forward contracts and the date of disposition. Currency gains and losses are offset against market gains and losses on each trade before determining a net "Section 988" gain or loss under the Internal Revenue Code for that trade, which may increase or decrease the amount of a Fund's investment income available for distribution to its shareholders. |X| Temporary Defensive Investments. When market conditions are unstable, or the Manager believes it is otherwise appropriate to reduce holdings in stocks, the Funds can invest in a variety of debt securities for defensive purposes. The Funds can also purchase these securities for liquidity purposes to meet cash needs due to the redemption of Fund shares, or to hold while waiting to reinvest cash received from the sale of other portfolio securities. The Funds can buy: |_| obligations issued or guaranteed by the U. S. government or its instrumentalities or agencies, |_| commercial paper (short-term, unsecured, promissory notes of domestic or foreign companies) rated in the three top rating categories of a nationally recognized rating organization, |_| short-term debt obligations of corporate issuers, rated investment grade (rated at least Baa by Moody's Investors Service, Inc. or at least BBB by Standard & Poor's Corporation, or a comparable rating by another rating organization), or unrated securities judged by the Manager to have a comparable quality to rated securities in those categories, |_| certificates of deposit and bankers' acceptances of domestic and foreign banks having total assets in excess of $1 billion, and |_| repurchase agreements. Short-term debt securities would normally be selected for defensive or cash management purposes because they can normally be disposed of quickly, are not generally subject to significant fluctuations in principal value and their value will be less subject to interest rate risk than longer-term debt securities. -- Money Fund/VA Investment Policies. Under Rule 2a-7, Money Fund/VA may purchase only "Eligible Securities," as defined below, that the Manger, under procedures approved by the Trust's Board of Trustees, has determined have minimal credit risk. An "Eligible Security" is (a) a security that has received a rating in one of the two highest short-term rating categories by any two "nationally-recognized statistical rating organizations" as defined in Rule 2a-7 ("Rating Organizations"), or, if only one Rating Organization has rated that security, by that Rating Organization (the "Rating Requirements"), (b) a security that is guaranteed, and either that guarantee or the party providing that guarantee meets the Rating Requirements, or (c) an unrated security that is either issued by an issuer having another similar security that meets the Rating Requirements, or is judged by the Manager to be of comparable quality to investments that meet the Rating Requirements. Rule 2a-7 permits Money Fund/VA to purchase "First Tier Securities," which are Eligible Securities rated in the highest category for short-term debt obligations by at least two Rating Organizations, or, if only one Rating Organization has rated a particular security, by that Rating Organization, or comparable unrated securities. If a security has ceased to be a First Tier Security, the Manager will promptly reassess whether the security continues to present "minimal credit risk." If the Manager becomes aware that any Rating Organization has downgraded its rating of a Second Tier Security or rated an unrated security below its second highest rating category, the Trust's Board of Trustees shall promptly reassess whether the security presents minimal credit risk and whether it is in Money Fund/VA's best interests to dispose of it; but if Money Fund/VA disposes of the security within 5 days of OppenheimerFunds, Inc. (the "Manager") learning of the downgrade, the Manager will provide the Board with subsequent notice of such downgrade. If a security is in default, or ceases to be an Eligible Security, or is determined no longer to present minimal credit risks, the Board must determine whether it would be in Money Fund/VA's best interests to dispose of the security. The Rating Organizations currently designated as such by the Securities and Exchange Commission ("SEC") are Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch IBCA, Inc., Duff & Phelps, Inc., and Thomson BankWatch, Inc. See Appendix A to this Statement of Additional Information for a description of the rating categories of the Rating Organizations. -- Certificates of Deposit and Commercial Paper. Money Fund/VA may invest in certificates of deposit of up to $100,000 of a domestic bank if such certificates of deposit are fully insured as to principal by the Federal Deposit Insurance Corporation. For purposes of this section, the term "bank" includes commercial banks, savings banks, and savings and loan associations and the term "foreign bank" includes foreign branches of U.S. banks (issuers of "Eurodollar" instruments), U.S. branches and agencies of foreign banks (issuers of "Yankee dollar" instruments) and foreign branches of foreign banks. Money Fund/VA also may purchase obligations issued by other entities if they are: (i) guaranteed as to principal and interest by a bank or corporation whose certificates of deposit or commercial paper may otherwise be purchased by Money Fund/VA, or (ii) subject to repurchase agreements (explained in the prospectus), if the collateral for the agreement complies with Rule 2a-7. -- Bank Loan Participation Agreements. Money Fund/VA may invest in bank loan participation agreements. They provide the Fund with an undivided interest in a loan made by the issuing bank in the proportion the Fund's interest bears to the total principal amount of the loan. In evaluating the risk of these investments, the Fund looks to the creditworthiness of the borrower that is obligated to make principal and interest payments on the loan. -- Time Deposits. Money Fund/VA may invest in fixed time deposits, which are non-negotiable deposits in a bank for a specified period of time at a stated interest rate, whether or not subject to withdrawal penalties; however, such deposits which are subject to such penalties, other than deposits maturing in less than 7 days, are subject to the 10% limitation applicable to illiquid securities purchased by Money Fund/VA. -- Floating Rate/Variable Rate Notes. Money Fund/VA may invest in instruments with floating or variable interest rates. The interest rate on a floating rate obligation is based on a stated prevailing market rate, such as a bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate of return on commercial paper or bank certificates of deposit, or some other standard, and is adjusted automatically each time such market rate is adjusted. The interest rate on a variable rate obligation is also based on a stated prevailing market rate but is adjusted automatically at a specified interval of no less than one year. Some variable rate or floating rate obligations in which Money Fund/VA may invest have a demand feature entitling the holder to demand payment at an amount approximately equal to the principal amount thereof plus accrued interest at any time, or at specified intervals not exceeding one year. These notes may or may not be backed by bank letters of credit. The interest rates on these notes fluctuate from time to time. Generally, the changes in the interest rate on such securities reduce the fluctuation in their market value. As interest rates decrease or increase, the potential for capital appreciation or depreciation is less than that for fixed-rate obligations of the same maturity. - -- Master Demand Notes. Master demand notes are corporate obligations that permit the investment of fluctuating amounts by Money Fund/VA at varying rates of interest pursuant to direct arrangements between Money Fund/VA, as lender, and the corporate borrower that issues the note. These notes permit daily changes in the amounts borrowed. Money Fund/VA has the right to increase the amount under the note at any time up to the full amount provided by the note agreement, or to decrease the amount. The borrower may repay up to the full amount of the note at any time without penalty. It is not generally contemplated that master demand notes will be traded because they are direct lending arrangements between the lender and the borrower. There is no secondary market for these notes, although they are redeemable and thus immediately repayable by the borrower at face value, plus accrued interest, at any time. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, Money Fund/VA's right to redeem is dependent upon the ability of the borrower to pay principal and interest on demand. In evaluating the master demand arrangements, the Manager considers the earning power, cash flow, and other liquidity ratios of the issuer. If they are not rated by Rating Organizations, Money Fund/VA may invest in them only if, at the time of an investment, they are Eligible Securities. The Manager will continuously monitor the borrower's financial ability to meet all of its obligations because Money Fund/VA's liquidity might be impaired if the borrower were unable to pay principal and interest on demand. There is no limit on the amount of the Money Fund/VA's assets that may be invested in floating rate and variable rate obligations. Floating rate or variable rate obligations which do not provide for recovery of principal and interest within seven days' notice will be subject to the 10% limitation applicable to illiquid securities purchased by Money Fund/VA. Investment Restrictions |X| What Are "Fundamental Policies?" Fundamental policies are those policies that the Fund has adopted to govern its investments that can be changed only by the vote of a "majority" of the Fund's outstanding voting securities. Under the Investment Company Act, a "majority" vote is defined as the vote of the holders of the lesser of: |_| 67% or more of the shares present or represented by proxy at a shareholder meeting, if the holders of more than 50% of the outstanding shares are present or represented by proxy, or |_| more than 50% of the outstanding shares. The Funds' investment objectives are fundamental policies. Other policies described in the Prospectus or this Statement of Additional Information are "fundamental" only if they are identified as such. The Funds' Board of Trustees can change non-fundamental policies without shareholder approval. However, significant changes to investment policies will be described in supplements or updates to the Prospectus or this Statement of Additional Information, as appropriate. The Funds' most significant investment policies are described in the Prospectus. |X| Do the Funds Have Additional Fundamental Policies? The following investment restrictions are fundamental policies of the Funds. |_| No Fund can buy securities issued or guaranteed by any one issuer if (i) more than 5% of its total assets would be invested in securities of that issuer or (ii) it would then own more than 10% of that issuer's voting securities, or (iii) it would then own more than 10% in principal amount of that issuer's outstanding debt securities. The restriction on debt securities does not apply to Strategic Bond Fund/VA. All of the restrictions apply only to 75% of each Fund's total assets. The limits do not apply to securities issued by the U.S. Government or any of its agencies or instrumentalities. |_| The Funds cannot lend money. However, they can invest in all or a portion of an issue of bonds, debentures, commercial paper or other similar corporate obligations of the types that are usually purchased by institutions, whether or not they are publicly distributed. The Funds may also enter into repurchase agreements, and make loans of portfolio securities. |_| The Funds cannot concentrate investments. That means they cannot invest 25% or more of their total assets in companies in any one industry. Obligations of the U.S. government, its agencies and instrumentalities are not considered to be part of an "industry" for the purposes of this restriction. This policy does not limit investments by Money Fund/VA in obligations issued by banks. |_| The Funds cannot buy or sell real estate or interests in real estate. However, the Funds can purchase debt securities secured by real estate or interests in real estate, or issued by companies, including real estate investment trusts, which invest in real estate or interests in real estate. |_| The Funds cannot underwrite securities of other companies. A permitted exception is in case a Fund is deemed to be an underwriter under the Securities Act of 1933 when reselling any securities held in its own portfolio. |_| The Funds cannot invest in commodities or commodity contracts, other than the hedging instruments permitted by any of its other fundamental policies. It does not matter whether the hedging instrument is considered to be a commodity or commodity contract. |_| The Funds cannot invest in the securities issued by any company for the purpose of exercising control of management of that company. |_| The Funds cannot invest in or hold securities of any issuer if officers and Trustees of the Funds or the Manager individually beneficially own more than 1/2 of 1% of the securities of that issuer and together own more than 5% of the securities of that issuer. |_| The Funds cannot mortgage, pledge, hypothecate or otherwise encumber any of its assets to secure a debt or a loan. However, this does not prohibit the Funds from entering into an escrow, collateral or margin arrangement with any of its investments. |_| The Funds cannot invest in oil, gas or other mineral explorations or development programs. However, the Funds may purchase options, futures contracts, swaps and other investments which are backed by, or the investment return from which are linked to oil, gas and mineral values. |_| The Funds cannot issue "senior securities," but this does not prohibit certain investment activities for which assets of the Funds are designated as segregated, or margin, collateral or escrow arrangements are established, to cover the related obligations. Examples of those activities include borrowing money, reverse repurchase agreements, delayed-delivery and when-issued arrangements for portfolio securities transactions, and contracts to buy or sell derivatives, hedging instruments, options or futures. Unless the Prospectus or this Statement of Additional Information states that a percentage restriction applies on an ongoing basis, it applies only at the time the Fund makes an investment. The Fund need not sell securities to meet the percentage limits if the value of the investment increases in proportion to the size of the Fund. For purposes of the Funds' policy not to concentrate its investments as described above, the Funds have adopted the industry classifications set forth in Appendix B to this Statement of Additional Information. This is not a fundamental policy. How the Funds Are Managed Organization and History. Each Fund is an investment portfolio, or "series" of Oppenheimer Variable Account Funds (the "Trust"), a multi-series open-end diversified management investment company organized as a Massachusetts business trust that presently includes ten series. Money Fund/VA, Bond Fund/VA and Capital Appreciation Fund/VA were all organized in 1983, High Income Fund/VA, Aggressive Growth Fund/VA and Multiple Strategies Fund/VA, were all organized in 1986, Global Securities Fund/VA was organized in 1990, Strategic Bond Fund/VA was organized in 1993, Main Street Growth & Income Fund/VA was organized in 1995, and Small Cap Growth Fund/VA was organized in 1998. The suffix "VA" was added to each Fund's name on May 1, 1999. Prior to that date, Oppenheimer Capital Appreciation Fund/VA was named "Oppenheimer Growth Fund," and Oppenheimer Main Street Growth & Income Fund/VA was named "Oppenheimer Growth & Income Fund." Prior to May 1, 1998, Oppenheimer Aggressive Growth Fund/VA was named "Oppenheimer Capital Appreciation Fund." All references to the Fund's Board of Trustees and Officers refer to the Trustees and Officers, respectively, of Oppenheimer Variable Account Funds. The Funds are governed by a Board of Trustees, which is responsible for protecting the interests of shareholders under Massachusetts law. The Trustees meet periodically throughout the year to oversee the Funds' activities, review their performance, and review the actions of the Manager. Although the Funds will not normally hold annual meetings of its shareholders, they may hold shareholder meetings from time to time on important matters, and shareholders have the right to call a meeting to remove a Trustee or to take other action described in the Declaration of Trust of Oppenheimer Variable Account Funds. |X| Classes of Shares. The Board of Trustees has the power, without shareholder approval, to divide unissued shares of any Fund into two or more classes. While the Board has done so, and each Fund currently has two classes of shares: Class 2 shares, and a class of shares without numerical designation, no Class 2 shares of any Fund are outstanding or have ever been offered as of the date of this Statement of Additional Information. All classes invest in the same investment portfolio. Each class of shares: o has its own dividends and distributions, o pays certain expenses which may be different for the different classes, o may have a different net asset value, o may have separate voting rights on matters in which interests of one class are different from interests of another class, and o votes as a class on matters that affect that class alone. Shares are freely transferable, and each share of each class has one vote at shareholder meetings, with fractional shares voting proportionally on matters submitted to the vote of shareholders. Each share of each Fund represents an interest in that Fund proportionately equal to the interest of each other share of the same class. The Trustees are authorized to create new series and classes of shares. The Trustees may reclassify unissued shares of the Funds into additional series or classes of shares. The Trustees also may divide or combine the shares of a class into a greater or lesser number of shares without changing the proportionate beneficial interest of a shareholder in the Funds. Shares do not have cumulative voting rights or preemptive or subscription rights. Shares may be voted in person or by proxy at shareholder meetings. |X| Meetings of Shareholders. As a Massachusetts business trust, the Funds are not required to hold, and do not plan to hold, regular annual meetings of shareholders. The Funds will hold meetings when required to do so by the Investment Company Act or other applicable law. They will also do so when a shareholder meeting is called by the Trustees or upon proper request of the shareholders. Shareholders have the right, upon the declaration in writing or vote of two-thirds of the outstanding shares of all the Funds, to remove a Trustee. The Trustees will call a meeting of shareholders to vote on the removal of a Trustee upon the written request of the record holders of 10% of all outstanding shares. If the Trustees receive a request from at least 10 shareholders stating that they wish to communicate with other shareholders to request a meeting to remove a Trustee, the Trustees will then either make the shareholder list available to the applicants or mail their communication to all other shareholders at the applicants' expense. The shareholders making the request must have been shareholders for at least six months and must hold shares of the Funds valued at $25,000 or more or constituting at least 1% of the Funds' outstanding shares, whichever is less. The Trustees may also take other action as permitted by the Investment Company Act. |X| Shareholder and Trustee Liability. The Declaration of Trust contains an express disclaimer of shareholder or Trustee liability for the Funds' obligations. It also provides for indemnification and reimbursement of expenses out of a Fund's property for any shareholder held personally liable for its obligations. The Declaration of Trust also states that upon request, a Fund shall assume the defense of any claim made against a shareholder for any act or obligation of the Fund and shall satisfy any judgment on that claim. Massachusetts law permits a shareholder of a business trust (such as the Trust) to be held personally liable as a "partner" under certain circumstances. However, the risk that a Fund shareholder will incur financial loss from being held liable as a "partner" of the Fund is limited to the relatively remote circumstances in which a Fund would be unable to meet its obligations. The Funds' contractual arrangements state that any person doing business with the Funds (and each shareholder of the Funds) agrees under its Declaration of Trust to look solely to the assets of the Fund for satisfaction of any claim or demand that may arise out of any dealings with that Fund. The contracts further state that the Trustees shall have no personal liability to any such person, to the extent permitted by law. Trustees and Officers of the Funds. The Trustees and officers of the Funds, and their principal occupations and business affiliations during the past five years are listed below. Trustees denoted with an asterisk (*) below are deemed to be "interested persons" of the Funds under the Investment Company Act. All of the Trustees are also trustees, directors or managing general partners of the following Denver-based Oppenheimer funds 1: Oppenheimer Cash Reserves Oppenheimer Total Return Fund, Inc. Oppenheimer Champion Income Fund Oppenheimer Variable Account Funds Oppenheimer Capital Income Fund Panorama Series Fund, Inc. Oppenheimer High Yield Fund Centennial America Fund, L. P. Oppenheimer International Bond Fund Centennial California Tax Exempt Trust Oppenheimer Integrity Funds Centennial Government Trust Oppenheimer Limited-Term Government Fund Centennial Money Market Trust Oppenheimer Main Street Funds, Inc. Centennial New York Tax Exempt Trust Oppenheimer Municipal Fund Centennial Tax Exempt Trust Oppenheimer Real Asset Fund The New York Tax-Exempt Income Fund, Inc. Oppenheimer Strategic Income Fund Ms. Macaskill and Messrs. Swain, Bishop, Donohue, Farrar and Zack, who are officers of the Fund, respectively hold the same offices with the other Denver-based Oppenheimer funds. As of April 1, 1999, the Trustees and officers of the Fund as a group did not beneficially own any shares of the Fund. Robert G. Avis,* Trustee; Age: 67 One North Jefferson Ave., St. Louis, Missouri 63103 Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G. Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset Management and A.G. Edwards Trust Company (its affiliated investment adviser and trust company, respectively). William A. Baker, Trustee; Age: 84 197 Desert Lakes Drive, Palm Springs, California 92264 Management Consultant. Charles Conrad, Jr., Trustee; Age: 68 1501 Quail Street, Newport Beach, CA 92660 Chairman and CEO of Universal Space Lines, Inc. (a space services management company); formerly Vice President of McDonnell Douglas Space Systems Co., prior to which he was associated with the National Aeronautics and Space Administration. Jon S. Fossel, Trustee; Age: 56 P.O. Box 44, Mead Street, Waccabuc, New York 10597 Formerly Chairman and a director of the Manager, President and a director of Oppenheimer Acquisition Corp., Shareholder Services, Inc. and Shareholder Financial Services, Inc. Sam Freedman, Trustee; Age: 58 4975 Lakeshore Drive, Littleton, Colorado 80123 Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services, Chairman, Chief Executive Officer and a director of Shareholder Services, Inc. and Shareholder Financial Services, Inc., Vice President and a director of Oppenheimer Acquisition Corp. and a director of the Manager. Raymond J. Kalinowski, Trustee; Age: 69 44 Portland Drive, St. Louis, Missouri 63131 Director of Wave Technologies International, Inc. (a computer products training company). C. Howard Kast, Trustee; Age: 76 2552 East Alameda, Denver, Colorado 80209 Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm). Robert M. Kirchner, Trustee; Age: 77 7500 E. Arapahoe Road, Englewood, Colorado 80112 President of The Kirchner Company (management consultants). James C. Swain, Chairman, Chief Executive Officer and Trustee*; Age 65 6803 South Tucson Way, Englewood, Colorado 80112 Vice Chairman of the Manager (since September 1988); formerly President and a director of Centennial Asset Management Corporation, and Chairman of the Board of Shareholder Services, Inc. Bridget A. Macaskill, President; Age: 50 Two World Trade Center, New York, New York 10048 President (since June 1991), Chief Executive Officer (since September 1995) and a director (since December 1994) of the Manager; President and a director (since June 1991) of HarbourView Asset Management Corp.; Chairman and a director (since August 1994) of Shareholder Services, Inc. and (since September 1995) Shareholder Financial Services, Inc.; President (since September 1995) and a director (since October 1990) of Oppenheimer Acquisition Corp.; President (since September 1995) and a director (since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of the Manager; a director of Oppenheimer Real Asset Management, Inc. (since July 1996); President and a director (since October 1997) of OppenheimerFunds International Ltd., an offshore fund management subsidiary of the Manager, and Oppenheimer Millennium Funds plc; President and a director of other Oppenheimer funds; a director of Hillsdown Holdings plc (a U.K. food company). Ned M. Steel, Trustee; Age: 84 3416 South Race Street, Englewood, Colorado 80110 Chartered Property and Casualty Underwriter; a director of Visiting Nurse Corporation of Colorado. Charles Albers, Vice President and Main Street Growth & Income Fund/VA Portfolio Manager, Age: 59. Two World Trade Center, New York, New York 10048-0203 Senior Vice President of the Manager (since April 1998); an officer of other Oppenheimer funds; a Certified Financial Analyst; formerly a Vice President and portfolio manager for Guardian Investor Services, the investment management subsidiary of The Guardian Life Insurance Company (since 1972). Bruce L. Bartlett, Vice President and Aggressive Growth Fund/VA Portfolio Manager, Age: 49 Two World Trade Center, New York, New York 10048 Senior Vice President of the Manager (since January 1998); an officer of other Oppenheimer funds; formerly a Vice President and Senior Portfolio Manager at First of America Investment Corp. John P. Doney, Vice President and Multiple Strategies Fund/VA Portfolio Manager, Age: 69. Two World Trade Center, New York, New York 10048-0203 Vice President of the Manager (since June 1992); an officer of other Oppenheimer funds; formerly Senior Vice President and Chief Investment Officer - Equities of National Securities & Research (mutual fund adviser) and Vice President of the National Affiliated Investment Companies. Alan Gilston, Vice President and Small Cap Growth Fund/VA Portfolio Manager, Age: 41 Two World Trade Center, New York, New York 10048 Vice President of the Manager (since September 1997); formerly a Vice President and portfolio manager at Schroder Capital Management International, Inc. John S. Kowalik, Vice President and Bond Fund/VA Portfolio Manager, Age: 42 Two World Trade Center, New York, New York 10048 Senior Vice President of the Manager (since July 1998); an officer of other Oppenheimer funds; formerly Managing Director and Senior Portfolio Manager at Prudential Global Advisors (1989-1998). Michael S. Levine, Vice President and Multiple Strategies Fund/VA Portfolio Manager, Age: 33 Two World Trade Center, New York, New York 10048 Vice President of the Manager (since April 1996); formerly Assistant Portfolio Manager of the Manager (from June 1994 to April 1996) and formerly portfolio manager and research associate for Amas Securities, Inc. (from February 1990 to February 1994). Nikolaos D. Monoyios, Vice President and Main Street Growth & Income Fund/VA Portfolio Manager, Age: 60. Two World Trade Center, New York, New York 10048-0203 Vice President of the Manager (since April 1998); an officer of other Oppenheimer funds; a Certified Financial Analyst; formerly a Vice President and portfolio manager for Guardian Investor Services, the investment management subsidiary of The Guardian Life Insurance Company (since 1979). David P. Negri, Vice President and High Income Fund/VA, Bond Fund/VA, Strategic Bond Fund/VA Portfolio Manager, Age: 45 Two World Trade Center, New York, New York 10048 Senior Vice President of the Manager (since June 1989); an officer of other Oppenheimer funds. Jane Putnam, Vice President and Capital Appreciation Fund/VA Portfolio Manager, Age: 38 Two World Trade Center, New York, New York 10048 Vice President of the Manager (since October 1995); an officer of other Oppenheimer funds; previously a portfolio manager and equity research analyst for Chemical Bank. Thomas P. Reedy, Vice President and High Income Fund/VA Portfolio Manager, Age: 37. Two World Trade Center, New York, New York 10048 Vice President of the Manager (since June 1993); an officer of other Oppenheimer funds. Richard H. Rubinstein, Vice President and Multiple Strategies Fund/VA Portfolio Manager, Age: 50 Two World Trade Center, New York, New York 10048 Senior Vice President of the Manager (since October 1995); an officer of other Oppenheimer funds (since June 1990). Arthur P. Steinmetz, Vice President and Strategic Bond Fund/VA Portfolio Manager, Age: 40 Two World Trade Center, New York, New York 10048 Senior Vice President of the Manager (since March 1993); an officer of other Oppenheimer funds. Jay W. Tracey III, Vice President and Small Cap Growth Fund/VA Portfolio Manager, Age: 45 Two World Trade Center, New York, New York 10048 Vice President of the Manager (since September 1994); an officer of other OppenheimerFunds; formerly a Managing Director of Buckingham Capital Management (February 1994-September 1994), prior to which he was Portfolio Manager and Vice President of the Fund and other Oppenheimer funds and a Vice President of the Manager (July 1991-February 1994). Carol E. Wolf, Vice President and Money Fund/VA Portfolio Manager, Age: 47 6803 South Tucson Way, Englewood, Colorado 80112 Vice President of the Manager and Centennial (since June 1990); an officer of other Oppenheimer funds. Arthur J. Zimmer, Vice President and Money Fund/VA Portfolio Manager, Age: 53 6803 South Tucson Way, Englewood, Colorado 80112 Senior Vice President of the Manager (since June 1997); Vice President of Centennial (since September 1991); an officer of other Oppenheimer funds; formerly Vice President of the Manager (October 1990-June 1997). William Wilby, Vice President and Global Securities Fund/VA Portfolio Manager, Age: 54 Two World Trade Center, New York, NY 10048-0203 Senior Vice President and the Manager (since July 1994) and HarbourView Asset Management Corporation (since October 1993); and officer of other Oppenheimer funds; formerly International Investment Strategist at Brown Brothers Harriman & Co., prior to which he was a Managing Director and Portfolio Manager at AIG Global Investors. Andrew J. Donohue, Vice President and Secretary; Age: 48 Two World Trade Center, New York, New York 10048 Executive Vice President (since January 1993), General Counsel (since October 1991) and a Director (since September 1995) of the Manager; Executive Vice President (since September 1993) and a director (since January 1992) of the Distributor; Executive Vice President, General Counsel and a director of HarbourView Asset Management Corp., Shareholder Services, Inc., Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc. (since September 1995); President and a director of Centennial Asset Management Corp. (since September 1995); President and a director of Oppenheimer Real Asset Management, Inc. (since July 1996); General Counsel (since May 1996) and Secretary (since April 1997) of Oppenheimer Acquisition Corp.; Vice President and a Director of OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an officer of other Oppenheimer funds. Brian W. Wixted, Treasurer; Age: 39 6803 South Tucson Way, Englewood, Colorado 80112 Senior Vice President and Treasurer (April 1999) of the Manger; formerly Principal and Chief Operating Officer, Bankers Trust Company - - Mutual Fund Services Division (March 1995 - March 1999); Vice President and Chief Financial Officer of CS First Boston Investment Management Corp. (September 1991 - March 1995); and Vice President and Accounting Manager, Merrill Lynch Asset Management (November 1987 - September 1991). Robert J. Bishop, Assistant Treasurer; Age: 40 6803 South Tucson Way, Englewood, Colorado 80112 Vice President of the Manager/Mutual Fund Accounting (since May 1996); an officer of other Oppenheimer funds; formerly an Assistant Vice President of the Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for the Manager. Scott T. Farrar, Assistant Treasurer; Age: 33 6803 South Tucson Way, Englewood, Colorado 80112 Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer of other Oppenheimer funds; formerly an Assistant Vice President of the Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for the Manager. Robert G. Zack, Assistant Secretary; Age: 50 Two World Trade Center, New York, New York 10048-0203 Senior Vice President (since May 1985) and Associate General Counsel (since May 1981) of the Manager, Assistant Secretary of Shareholder Services, Inc. (since May 1985), and Shareholder Financial Services, Inc. (since November 1989); Assistant Secretary (since October 1997) of Oppenheimer Millennium Funds plc and OppenheimerFunds International Ltd.; an officer of other Oppenheimer funds. |X| Remuneration of Trustees. The officers of the Funds and a Trustee of the Fund (Mr. Swain) are affiliated with the Manager and receive no salary or fee from the Funds. The remaining Trustees of the Funds received the compensation shown below. The compensation from the Funds were paid during their fiscal year ended December 31, 1998. The compensation from all of the Denver-based Oppenheimer funds includes the compensation from the Funds and represents compensation received as a director, trustee, managing general partner or member of a committee of the Board during the calendar year 1998. Aggregate Compensation Total Compensation from Oppenheimer Variable From all Denver- Account Funds Based Trustee's Name and Other OppenheimerFunds 1 Positions Robert G. Avis $3,908 $67,998 William A. Baker $4,026 $69,998 Charles Conrad, Jr. $3,908 $67,998 Jon. S. Fossel $3,880 $67,496 Sam Freedman Audit and Review Committee Member $4,253 $73,998 Raymond J. Kalinowski Audit and Review Committee Member $4,253 $73,998 C. Howard Kast Audit and Review Committee Chairman $4,429 $76,998 Robert M. Kirchner $3,908 $67,998 Ned M. Steel $3,908 $67,998 1. For the 1998 calendar year. |X| Deferred Compensation Plan. The Board of Trustees has adopted a Deferred Compensation Plan for disinterested Trustees that enables them to elect to defer receipt of all or a portion of the annual fees they are entitled to receive from the Funds. Under the plan, the compensation deferred by a Trustee is periodically adjusted as though an equivalent amount had been invested in shares of one or more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under the plan will be determined based upon the performance of the selected funds. Deferral of Trustee's fees under the plan will not materially affect the Funds' assets, liabilities and net income per share. The plan will not obligate the fund to retain the services of any Trustee or to pay any particular level of compensation to any Trustee. Pursuant to an Order issued by the Securities and Exchange Commission, the Funds may invest in the funds selected by the Trustee under the plan without shareholder approval for the limited purpose of determining the value of the Trustee's deferred fee account. - -- Major Shareholders. As of April 1, 1999 the holders of 5% or more of the outstanding shares of any Fund were separate accounts of the following insurance companies and their respective affiliates: (i) Monarch Life Insurance Company ("Monarch"), Springfield, MA; (ii) ReliaStar Bankers Security Life Insurance Company ("ReliaStar"), Minneapolis, MN; (iii) GE Life & Annuity Assurance Company ("GE"), Richmond, VA; (iv) Nationwide Life Insurance Company ("Nationwide"), Columbus, OH; (v) Aetna Life Insurance and Annuity Company ("Aetna"), Hartford, CT; (vi) Massachusetts Mutual Life Insurance Company, Springfield, MA ("MassMutual"), (vii) Jefferson-Pilot Life Insurance Company, Greensboro, NC and Alexander Hamilton Life Insurance Company of America, Concord, NH (collectively, "Jefferson Pilot"); (viii) CUNA Mutual Group ("CUNA"), Madison, WI; (ix) American General Annuity Insurance Company, Houston, TX ("American General"); and (x) Protective Life Insurance Company, Birmingham, AL ("Protective"). Such shares were held as shown in Appendix C. No shares of Class 2 shares of any Fund were outstanding as of that date. The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding company controlled by Massachusetts Mutual Life Insurance Company. The Manager and the Funds have a Code of Ethics. It is designed to detect and prevent improper personal trading by certain employees, including portfolio managers, that would compete with or take advantage of the Fund's portfolio transactions. Compliance with the Code of Ethics is carefully monitored and enforced by the Manager. |X| The Investment Advisory Agreements. The Manager provides investment advisory and management services to each Fund under an investment advisory agreement between the Manager and the Trust for each Fund. The Manager selects securities for the Funds' portfolios and handles their day-to-day business. The portfolio managers of the Funds are employed by the Manager and are the persons who are principally responsible for the day-to-day management of the Funds' portfolios. Other members of the Manager's Teams provide the portfolio managers with counsel and support in managing the Funds' portfolios. For Global Securities Fund/VA, this includes George Evans and Frank Jennings. Similarly, other members of the Manager's Fixed Income Portfolio Department, particularly portfolio analysts, traders and other portfolio managers having broad experience with domestic and international government and fixed-income securities, provide the portfolio managers of the High Income Fund/VA, Bond Fund/VA and Strategic Bond Fund/VA with support in managing the portfolios of those Funds. The agreements require the Manager, at its expense, to provide the Funds with adequate office space, facilities and equipment. It also requires the Manager to provide and supervise the activities of all administrative and clerical personnel required to provide effective administration for the Funds. Those responsibilities include the compilation and maintenance of records with respect to operations, the preparation and filing of specified reports, and composition of proxy materials and registration statements for continuous public sale of shares of the Funds. The Funds pay expenses not expressly assumed by the Manager under the advisory agreement. The advisory agreement lists examples of expenses paid by the Funds. The major categories relate to interest, taxes, brokerage commissions, fees to certain Trustees, legal and audit expenses, custodian and transfer agent expenses, share issuance costs, certain printing and registration costs and non-recurring expenses, including litigation costs. The management fees paid by the Funds to the Manager are calculated at the rates described in the Prospectus, which are applied to the assets of each Fund as a whole. Prior to May 1, 1999, the advisory agreement for Aggressive Growth Fund/VA did not include a breakpoint above $800 million. In the event more than one class of shares is issued, the fees would be allocated to each class of shares based upon the relative proportion of a Fund's net assets represented by that class. Management Fees for the Fiscal Year Ended December 31: Fund: 1996 1997 1998 Money Fund/VA $ 445,899 $601,698 $ 619,030 High Income Fund/VA $1,777,754 $1,667,490 $2,383,008 Bond Fund/VA $2,188,350 $3,281,556 $4,218,231 Aggressive Growth Fund/VA $3,382,840 $5,324,309 $6,564,650 Capital Appreciation Fund/VA $1,139,2551 $2,859,202 $4,369,487 Multiple Strategies Fund $3,132,569 $4,068,887 $4,584,184 Global Securities Fund/VA $ 3,395,740 $5,615,606 $7,167,836 Strategic Bond Fund/VA $ 618,338 $1,197,613 $1,860,227 Main Street Growth & Income Fund/VA $ 160,819 $ 790,577 $1,742,253 Small Cap Growth Fund/VA N/A N/A $ 2,2192 ____________________ (1) During the fiscal year ended December 31, 1996, the Manager reimbursed Oppenheimer Capital Appreciation Fund/VA $27,276 for certain SEC registration fees incurred in connection with the acquisition by that Fund of J.P. Capital Appreciation Fund, Inc. (2)From May 1, 1998 (commencement of operations) to December 31, 1998. The investment advisory agreements state that in the absence of willful misfeasance, bad faith, gross negligence in the performance of its duties or reckless disregard of its obligations and duties under the investment advisory agreement, the Manager is not liable for any loss resulting from a good faith error or omission on its part with respect to any of its duties under the agreement. The agreements permit the Manager to act as investment advisor for any other person, firm or corporation and to use the name "Oppenheimer" in connection with other investment companies for which it may act as investment adviser or general distributor. If the Manager shall no longer act as investment advisor to a Fund, the Manager may withdraw the right of that Fund to use the name "Oppenheimer" as part of its name. Brokerage Policies of the Funds Brokerage Provisions of the Investment Advisory Agreements. One of the duties of the Manager under the investment advisory agreements is to arrange the portfolio transactions for the Funds. The advisory agreements contain provisions relating to the employment of broker-dealers to effect the Funds' portfolio transactions. The Manager is authorized by the advisory agreements to employ broker-dealers, including "affiliated" brokers, as that term is defined in the Investment Company Act. The Manager may employ broker-dealers that the Manager thinks, in its best judgment based on all relevant factors, will implement the policy of the Funds to obtain, at reasonable expense, the "best execution" of the Funds' portfolio transactions. "Best execution" means prompt and reliable execution at the most favorable price obtainable. The Manager need not seek competitive commission bidding. However, it is expected to be aware of the current rates of eligible brokers and to minimize the commissions paid to the extent consistent with the interests and policies of the Funds as established by its Board of Trustees. Under the investment advisory agreements, the Manager may select brokers (other than affiliates) that provide brokerage and/or research services for the Funds and/or the other accounts over which the Manager or its affiliates have investment discretion. The commissions paid to such brokers may be higher than another qualified broker would charge, if the Manager makes a good faith determination that the commission is fair and reasonable in relation to the services provided. Subject to those considerations, as a factor in selecting brokers for the Funds' portfolio transactions, the Manager may also consider sales of shares of the Funds and other investment companies for which the Manager or an affiliate serves as investment adviser. Brokerage Practices Followed by the Manager. The Manager allocates brokerage for the Funds subject to the provisions of the investment advisory agreements and the procedures and rules described above. Generally, the Manager's portfolio traders allocate brokerage based upon recommendations from the Manager's portfolio managers. In certain instances, portfolio managers may directly place trades and allocate brokerage. In either case, the Manager's executive officers supervise the allocation of brokerage. Transactions in securities other than those for which an exchange is the primary market are generally done with principals or market makers. In transactions on foreign exchanges, the Funds may be required to pay fixed brokerage commissions and therefore would not have the benefit of negotiated commissions available in U.S. markets. Brokerage commissions are paid primarily for transactions in listed securities or for certain fixed-income agency transactions in the secondary market. Otherwise brokerage commissions are paid only if it appears likely that a better price or execution can be obtained by doing so. In an option transaction, the Funds ordinarily use the same broker for the purchase or sale of the option and any transaction in the securities to which the option relates. Other funds advised by the Manager have investment policies similar to those of the Funds. Those other funds may purchase or sell the same securities as the Funds at the same time as the Funds, which could affect the supply and price of the securities. If two or more funds advised by the Manager purchase the same security on the same day from the same dealer, the transactions under those combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each account. Most purchases of debt obligations are principal transactions at net prices. This affects a substantial portion of the portfolio transactions of Money Fund/VA, High Income Fund/VA, Bond Fund/VA and Strategic Bond Fund/VA. Instead of using a broker for those transactions, the Funds normally deal directly with the selling or purchasing principal or market maker unless the Manager determines that a better price or execution can be obtained by using the services of a broker. Purchases of portfolio securities from underwriters include a commission or concession paid by the issuer to the underwriter. Purchases from dealers include a spread between the bid and asked prices. The Funds seek to obtain prompt execution of these orders at the most favorable net price. The investment advisory agreements permit the Manager to allocate brokerage for research services. The research services provided by a particular broker may be useful only to one or more of the advisory accounts of the Manager and its affiliates. The investment research received for the commissions of those other accounts may be useful both to one of the Funds and one or more of the Manager's other accounts. Investment research may be supplied to the Manager by a third party at the instance of a broker through which trades are placed. Investment research services include information and analysis on particular companies and industries as well as market or economic trends and portfolio strategy, market quotations for portfolio evaluations, information systems, computer hardware and similar products and services. If a research service also assists the Manager in a non-research capacity (such as bookkeeping or other administrative functions), then only the percentage or component that provides assistance to the Manager in the investment decision-making process may be paid in commission dollars. The Board of Trustees permits the Manager to use stated commissions on secondary fixed-income agency trades to obtain research if the broker represents to the Manager that: (i) the trade is not from or for the broker's own inventory, (ii) the trade was executed by the broker on an agency basis at the stated commission, and (iii) the trade is not a riskless principal transaction. The Board of Trustees permits the Manager to use concessions on fixed-price offerings to obtain research, in the same manner as is permitted for agency transactions. The research services provided by brokers broadens the scope and supplements the research activities of the Manager. That research provides additional views and comparisons for consideration, and helps the Manager to obtain market information for the valuation of securities that are either held in the Fund's portfolio or are being considered for purchase. The Manager provides information to the Board about the commissions paid to brokers furnishing such services, together with the Manager's representation that the amount of such commissions was reasonably related to the value or benefit of such services. The (i) total brokerage commissions paid by the Funds (other than Money Fund/VA, which paid no brokerage commissions), not including spreads or concessions on principal transactions on a net trade basis, for the Funds' fiscal year ended December 31, 1996, 1997 and 1998; and (ii) for the Funds' fiscal year ended December 31, 1998, the amount of transactions directed to brokers for research services, and the amount of the commissions paid to broker-dealers for those services, is shown in the chart below:
Total Amount Commissions Paid Total Brokerage Commissions of Transactions For Paid by the Funds Fund 1996 1997 1998 1998 1998 High Income $ 24,248 $ 20,256 $62,251 $ 1,781,914 $ 447 Fund/VA Bond Fund/VA $ 13,852 $ 26,799 $91,170 $ 17,835,169 $ 1,500 Strategic Bond Fund/VA $ 11,995 $ 17,121 $219,537 $ 13,052,225 $ 7,186 Aggressive Growth Fund/VA $ 507,501 $810,749 $1,264,440 $244,597,427 $ 398,286 Capital Appreciation Fund/VA $215,286 $506,443 $805,082 $332,363,432 $ 483,496 Small Cap Growth Fund/VA -- -- $ 839 $ 19,016 $ 66 Global Securities Fund/VA $2,101,076 $2,114,523 $2,900,162 $977,222,013 $2,552,195 Multiple Strategies Fund/VA $ 351,373 $ 500,783 $430,211 $119,112,266 $ 238,988 Main Street Growth & Income Fund/VA $ 71,023 $ 209,630 $458,120 $144,672,877 $ 293,175
Distribution and Service Plans The Distributor. Under its General Distributor's Agreements with the Funds, OppenheimerFunds Distributor, Inc. will act as the principal underwriter of the Funds, Class 2 shares, if and when shares of that class are issued. There is no general distributor for the Funds' shares without numerical designation. Class 2 Service Plans Each Fund has adopted a Service Plan for its Class 2 shares under Rule 12b-1 of the Investment Company Act, pursuant to which each Fund would make payments to the Distributor in connection with the distribution and/or servicing of the shares of Class 2. Each Class 2 Plan has been approved by a vote of (i) the Board of Trustees of the Trust, including a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on that Plan, and (ii) the Manager as the then-sole initial holder of such shares. As of the date of this Statement of Additional Information, no Class 2 shares have been issued and therefore no payments have been made under the Plans. Under the Class 2 Plans, no payment will be made to any insurance company separate account sponsor or affiliate thereof under a Fund's Class 2 Plan (each is referred to as a "Recipient") in any quarter if the aggregate net assets of a Fund's shares held by the Recipient for itself and its customers did not exceed a minimum amount, if any, that may be determined from time to time by a majority of the Trust's Independent Trustees. Initially, the Board of Trustees has set the fee at 0.10% of average annual net assets and set no minimum amount. Under the Plans, the Manager and the Distributor may make payments to affiliates and, in their sole discretion, from time to time may use their own resources (which, as to the Manager, may include profits derived from the advisory fee it receives from each respective Fund) to make payments to Recipients for distribution and administrative services they perform. The Distributor and the Manager may, in their sole discretion, increase or decrease the amount of distribution assistance payments they make to Recipients from their own assets. Unless terminated as described below, each Class 2 Plan continues in effect from year to year but only as long as such continuance is specifically approved at least annually by the Trust's Board of Trustees and its Independent Trustees by a vote cast in person at a meeting called for the purpose of voting on such continuance. Any Class 2 Plan may be terminated at any time by the vote of a majority of the Independent Trustees or by the vote of the holders of a "majority" (as defined in the Investment Company Act) of the outstanding shares of that class. For purposes of voting with respect to the Class 2 Plans, Account owners are considered to be shareholders of a Fund's shares. No Class 2 Plan may be amended to increase materially the amount of payments to be made unless such amendment is approved by Account owners of the class affected by the amendment. All material amendments must be approved by the Board and a majority of the Independent Trustees. While the plans are in effect and Class 2 shares are outstanding, the Treasurer of the Trust must provide separate written reports to the Trust's Board of Trustees at least quarterly describing the amount of payments made pursuant to each Plan and the purposes for which the payments were made. These reports are subject to the review and approval of the Independent Trustees. The Class 2 Plans provide for the Distributor to be reimbursed for its distribution related services. The Distributor will pay insurance company separate account sponsors that offer Class 2 shares for certain activities, as described in the Prospectus. Performance of the Funds Explanation of Performance Terminology. The Funds use a variety of terms to illustrate their investment performance. Those terms include "cumulative total return," "average annual total return," "average annual total return at net asset value" and "total return at net asset value." An explanation of how total returns are calculated is set forth below. The charts below show the Funds' performance as of the Funds' most recent fiscal year end. You can obtain current performance information by calling the Funds' Transfer Agent at 1-888-470-0861. The Funds' illustrations of their performance data in advertisements must comply with rules of the Securities and Exchange Commission. Those rules describe the types of performance data that may be used and how it is to be calculated. In general, any advertisement by a Fund of its performance data must include the average annual total returns for the advertised class of shares of that Fund. Those returns must be shown for the 1, 5 and 10-year periods (or the life of the class, if less) ending as of the most recently ended calendar quarter prior to the publication of the advertisement (or its submission for publication). Use of standardized performance calculations enables an investor to compare the Funds' performance to the performance of other funds for the same periods. However, a number of factors should be considered before using the Funds' performance information as a basis for comparison with other investments: |_| Total returns measure the performance of a hypothetical account in a Fund over various periods and do not show the performance of each shareholder's account. Your account's performance will vary from the model performance data if you buy or sell shares during the period, or you bought your shares at a different time and price than the shares used in the model. |_| The Fund's performance does not reflect the charges deducted from an investor's separate account by the insurance company or other sponsor of that separate account, which vary from product to product. If these charges were deducted, performance will be lower than as described in the Fund's Prospectus and Statement of Additional Information. In addition, the separate accounts may have inception dates different from those of the Funds. |_| An investment in the Fund is not insured by the FDIC or any other government agency. |_| The Funds' performance returns do not reflect the effect of taxes on dividends and capital gains distributions. |_| The principal value of the Funds' shares and total returns are not guaranteed and normally will fluctuate on a daily basis.1 |_| When an investor's shares are redeemed, they may be worth more or less than their original cost.1 |_| Total returns for any given past period represent historical performance information and are not, and should not be considered, a prediction of future returns. The Funds' total returns should not be expected to be the same as the returns of other Oppenheimer funds, whether or not such other funds have the same portfolio managers and/or similar names. The Funds' total returns are affected by market conditions, the quality of that Funds' investments, the maturity of debt investments, the types of investments that Fund holds, and its operating expenses. |X| Total Return Information. There are different types of "total returns" to measure the Funds' performance. Total return is the change in value of a hypothetical investment in a Fund over a given period, assuming that all dividends and capital gains distributions are reinvested in additional shares and that the investment is redeemed at the end of the period. The cumulative total return measures the change in value over the entire period (for example, ten years). An average annual total return shows the average rate of return for each year in a period that would produce the cumulative total return over the entire period. However, average annual total returns do not show actual year-by-year performance. The Funds use standardized calculations for its total returns as prescribed by the SEC. The methodology is discussed below. _________________ 1. These statements do not apply to Money Fund/VA, which seeks to maintain a stable net asset value of $1.00 per shares. There can be no assurance that Money Fund/VA will be able to do so. |_| Average Annual Total Return. The "average annual total return" of each class is an average annual compounded rate of return for each year in a specified number of years. It is the rate of return based on the change in value of a hypothetical initial investment of $1,000 ("P" in the formula below) held for a number of years ("n" in the formula) to achieve an Ending Redeemable Value ("ERV" in the formula) of that investment, according to the following formula: ( ) 1/n ( ERV ) ( ______ ) - 1 = Average Annual Total Return ( P ) |_| Cumulative Total Return. The "cumulative total return" calculation measures the change in value of a hypothetical investment of $1,000 over an entire period of years. Its calculation uses some of the same factors as average annual total return, but it does not average the rate of return on an annual basis. Cumulative total return is determined as follows: ERV - P -------- = Total Return P The Funds' Total Returns for the Periods Ended 12/31/98 Average Annual Total Return For:
Five Year Ten Year Cumulative Fiscal Year Period Ended Period Inception Total Return Ended 12/31/98 Ended to From Inception 1 Fund 12/31/98 12/31/98 12/31/98 to 12/31/98 High Income Fund/VA .31% 8.62% 12.71% 12.26% 230.92% Bond Fund/VA 6.80% 7.01% 9.28% 9.66% 142.96% Aggressive Growth Fund/VA 12.36% 13.06% 16.12% 15.07% 345.69% Capital Appreciation Fund/VA 24.00% 22.10% 16.85% 16.03% 374.69% Multiple Strategies Fund/VA 6.66% 11.43% 11.22% 11.57% 189.65% Global Securities Fund/VA 14.11% 9.67% n/a 12.49% 160.49% Strategic Bond Fund/VA 2.90% 6.83% n/a 6.79% 45.03% Main Street Growth & Income Fund/VA 4.70% n/a n/a 27.00% 130.22% Small Cap Growth Fund/VA -4.00% n/a n/a -4.00% -4.00%
_____________ (1)Inception dates are as follows: 4/30/86 for High Income Fund/VA; 4/3/85 for Bond Fund/VA and Capital Appreciation Fund/VA; 8/15/86 for Aggressive Growth Fund/VA; 2/9/87 for Multiple Strategies Fund/VA; 11/12/90 for Global Securities Fund/VA; 5/3/93 for Strategic Bond Fund/VA; 7/5/95 for Main Street Growth & Income Fund/VA and 5/1/98 for Small Cap Growth Fund/VA. |_| Standardized Yield. The "standardized yield" (sometimes referred to just as "yield") is shown for a stated 30-day period. It is not based on actual distributions paid by the Fixed Income Funds to shareholders in the 30-day period, but is a hypothetical yield based upon the net investment income from the Fund's portfolio investments for that period. It may therefore differ from the "dividend yield" for the same class of shares, described below. Standardized yield is calculated using the following formula set forth in rules adopted by the Securities and Exchange Commission, designed to assure uniformity in the way that all funds calculate their yields: a - b 6 Standardized Yield = 2 [ (----- + 1) - 1] cd The symbols above represent the following factors: a = dividends and interest earned during the 30-day period. b = expenses accrued for the period (net of any expense assumptions). c = the average daily number of shares of that class outstanding during the 30-day period that were entitled to receive dividends. d = the maximum offering price per share of that class on the last day of the period, adjusted for undistributed net investment income. The standardized yield for a particular 30-day period may differ from the yield for other periods. The SEC formula assumes that the standardized yield for a 30-day period occurs at a constant rate for a six-month period and is annualized at the end of the six-month period. Additionally, because each class of shares is subject to different expenses, it is likely that the standardized yields of the Fund's classes of shares will differ for any 30-day period. |_| Dividend Yield. The Fixed Income Funds may quote a "dividend yield" for each class of its shares. Dividend yield is based on the dividends paid on a class of shares during the actual dividend period. To calculate dividend yield, the dividends of a class declared during a stated period are added together, and the sum is multiplied by 12 (to annualize the yield) and divided by the maximum offering price on the last day of the dividend period. The formula is shown below: Dividend Yield = dividends paid x 12/maximum offering price (payment date) Yields for the 30-Day Periods Ended 12/31/98 Fund Standardized Yield Dividend Yield High Income Fund/VA 9.47% 8.77% Bond Fund/VA 6.24% 6.81% Strategic Bond Fund/VA 8.38% 7.03% |_| Money Fund/VA Yields. The current yield for Money Fund/VA is calculated for a seven-day period of time as follows. First, a base period return is calculated for the seven-day period by determining the net change in the value of a hypothetical pre-existing account having one share at the beginning of the seven-day period. The change includes dividends declared on the original share and dividends declared on any shares purchased with dividends on that share, but such dividends are adjusted to exclude any realized or unrealized capital gains or losses affecting the dividends declared. Next, the base period return is multiplied by 365/7 to obtain the current yield to the nearest hundredth of one percent. The compounded effective yield for a seven-day period is calculated by (1) adding 1 to the base period return (obtained as described above), (2) raising the sum to a power equal to 365 divided by 7, and (3) subtracting 1 from the result. The yield as calculated above may vary for accounts less than approximately $100 in value due to the effect of rounding off each daily dividend to the nearest full cent. The calculation of yield under either procedure described above does not take into consideration any realized or unrealized gains or losses on the Fund's portfolio securities which may affect dividends. Therefore, the return on dividends declared during a period may not be the same on an annualized basis as the yield for that period. Other Performance Comparisons. The Funds may compare their performance annually to that of an appropriate broadly-based market index in its Annual Report to shareholders. You can obtain that information by contacting the Transfer Agent at the addresses or telephone numbers shown on the cover of this Statement of Additional Information. The Funds may also compare their performance to that of other investments, including other mutual funds, or use rankings of its performance by independent ranking entities. Examples of these performance comparisons are set forth below. |X| Lipper Rankings. From time to time the Funds may publish the rankings of their performance by Lipper Analytical Services, Inc. Lipper is a widely-recognized independent mutual fund monitoring service. Lipper monitors the performance of regulated investment companies, including the Funds, and ranks their performance for various periods based on categories relating to investment objectives. Lipper currently ranks the Funds' performance against other funds in the same investment category. The Lipper performance rankings are based on total returns that include the reinvestment of capital gain distributions and income dividends but do not take sales charges or taxes into consideration. Lipper also publishes "peer-group" indices of the performance of all mutual funds in a category that it monitors and averages of the performance of the funds in particular categories. |X| Morningstar Ratings and Rankings. From time to time the star rating and ranking of the performance of separate accounts that hold Fund shares will be determined by Morningstar, an independent mutual fund monitoring service. Morningstar rates and ranks separate accounts that hold mutual funds in broad investment categories. The results may be published by or for the Funds or the separate account sponsors. Morningstar proprietary star ratings reflect historical risk-adjusted total investment return. Investment return measures one-, three-, five- and ten-year average annual total returns (depending on the inception of the separate account) in excess of 90-day U.S. Treasury bill returns after considering the fund's sales charges and expenses. Risk measures a separate account performance below 90-day U.S. Treasury bill returns. Risk and investment return are combined to produce star ratings reflecting performance relative to the average fund in a fund's category. Five stars is the highest rating (top 10% of separate accounts in a category), four stars is "above average" (next 22.5%), three stars is "average" (next 35%), two stars is "below average" (next 22.5%) and one star is "lowest" (bottom 10%). The current overall star rating is the separate account's 3-year rating or its combined 3- and 5-year rating (weighted 60%/40% respectively), or its combined 3-, 5-, and 10- year rating (weighted 40%, 30% and 30%, respectively), depending on the inception date of the separate accounts. Ratings are subject to change monthly. The total return rating of a separate account holding shares of a Fund may also be compared to that of other separate accounts in its Morningstar category, in addition to its star ratings. Those total return ratings are percentages from one percent to one hundred percent and are not risk adjusted. For example, if a separate account is in the 94th percentile, that means that 94% of the separate accounts in the same category performed better than it did. |X| Performance Rankings and Comparisons by Other Entities and Publications. From time to time the Funds may include in advertisements and sales literature performance information about the Funds cited in newspapers and other periodicals such as The New York Times, The Wall Street Journal, Barron's, or similar publications. That information may include performance quotations from other sources, including Lipper and Morningstar. The Funds' performance may be compared in publications to the performance of various market indices or other investments, and averages, performance rankings or other benchmarks prepared by recognized mutual fund statistical services. Investors may also wish to compare the returns on the Funds' shares to the return on fixed-income investments available from banks and thrift institutions. Those include certificates of deposit, ordinary interest-paying checking and savings accounts, and other forms of fixed or variable time deposits, and various other instruments such as Treasury bills. However, the Funds' returns and share price are not guaranteed or insured by the FDIC or any other agency and will fluctuate daily,1 while bank depository obligations may be insured by the FDIC and may provide fixed rates of return. Repayment of principal and payment of interest on Treasury securities is backed by the full faith and credit of the U.S. government. From time to time, the Funds may publish rankings or ratings of the Manager or Transfer Agent, and of the investor services provided by them to shareholders of the Oppenheimer funds, other than performance rankings of the Oppenheimer funds themselves. Those ratings or rankings of shareholder and investor services by third parties may include comparisons of their services to those provided by other mutual fund families selected by the rating or ranking services. They may be based upon the opinions of the rating or ranking service itself, using its research or judgment, or based upon surveys of investors, brokers, insurance sponsors, shareholders or others. ABOUT YOUR ACCOUNT How to Buy and Sell Shares Shares of the Funds are sold to provide benefits under variable life insurance policies and variable annuity and other insurance company separate accounts, as explained in the Funds' Prospectuses for the Funds and for the insurance product you have selected. Therefore, instructions from an investor to buy or sell shares of the Funds should be directed to the insurance sponsor for the investor's separate account, or that insurance sponsor's agent. |X| Allocation of Expenses. The Funds pay expenses related to its daily operations, such as custodian bank fees, Trustees' fees, transfer agency fees, legal fees and auditing costs. Those expenses are paid out of the Fund's assets and are not paid directly by shareholders. However, those expenses reduce the net asset value of shares, and therefore are indirectly borne by shareholders through their investment. If and when more than one class of the Funds' shares are issued, the methodology for calculating the net asset value, dividends and distributions of the Fund's share classes would recognize two types of expenses. General expenses that do not pertain specifically to any one class would be allocated pro rata to the shares of all classes. The allocation would be based on the percentage of the Fund's total assets that is represented by the assets of each class, and then equally to each outstanding share within a given class. Such general expenses include management fees, legal, bookkeeping and audit fees, printing and mailing costs of shareholder reports, Prospectuses, Statements of Additional Information and other materials for current shareholders, fees to unaffiliated Trustees, custodian bank expenses, share issuance costs, organization and start-up costs, interest, taxes and brokerage commissions, and non-recurring expenses, such as litigation costs. Other expenses that are directly attributable to a particular class would be allocated equally to each outstanding share within that class. Examples of such expenses include service plan (12b-1) fees of Class 2 shares, transfer and shareholder servicing agent fees and expenses, and shareholder meeting expenses (to the extent that such expenses pertain only to a specific class). Determination of Net Asset Values Per Share. The net asset values per share of each class of shares of the Funds are determined as of the close of business of The New York Stock Exchange on each day that the Exchange is open. The calculation is done by dividing the value of the Fund's net assets attributable to a class by the number of shares of that class that are outstanding. The Exchange normally closes at 4:00 P.M., New York time, but may close earlier on some other days (for example, in case of weather emergencies or on days falling before a holiday). The Exchange's most recent annual announcement (which is subject to change) states that it will close on New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days. Dealers other than Exchange members may conduct trading in certain securities on days on which the Exchange is closed (including weekends and U.S. holidays) or after 4:00 P.M. on a regular business day. The Funds' net asset values will not be calculated on those days, and the values of some of the Fund's portfolio securities may change significantly on those days, when shareholders may not purchase or redeem shares. Additionally, trading on European and Asian stock exchanges and over-the-counter markets normally is completed before the close of The New York Stock Exchange. Changes in the values of securities traded on foreign exchanges or markets as a result of events that occur after the prices of those securities are determined, but before the close of The New York Stock Exchange, will not be reflected in the Funds' calculation of their net asset values that day unless the Board of Trustees determines that the event is likely to effect a material change in the value of the security. The Manager may make that determination, under procedures established by the Board. |X| Securities Valuation.1 The Funds' Board of Trustees has established procedures for the valuation of the Funds' securities. In general those procedures are as follows: |_| Equity securities traded on a U.S. securities exchange or on NASDAQ are valued as follows: (1) if last sale information is regularly reported, they are valued at the last reported sale price on the principal exchange on which they are traded or on NASDAQ, as applicable, on that day, or (2) if last sale information is not available on a valuation date, they are valued at the last reported sale price preceding the valuation date if it is within the spread of the closing "bid" and "asked" prices on the valuation date or, if not, at the closing "bid" price on the valuation date. |_| Equity securities traded on a foreign securities exchange generally are valued in one of the following ways: (1) at the last sale price available to the pricing service approved by the Board of Trustees, or (2) at the mean between the "bid" and "asked" prices obtained from the principal exchange on which the security is traded or, on the basis of reasonable inquiry, from two market makers in the security. |_| Long-term debt securities having a remaining maturity in excess of 60 days are valued based on the mean between the "bid" and "asked" prices determined by a portfolio pricing service approved by the Funds' Board of Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable inquiry. |_| The following securities are valued at the mean between the "bid" and "asked" prices determined by a pricing service approved by the Funds' Board of Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable inquiry: ________________ 1. These statements do not apply to Money Fund/VA, which seeks to maintain a stable net asset value of $1.00 per shares. There can be no assurance that Money Fund/VA will be able to do so. (1) debt instruments that have a maturity of more than 397 days when issued, (2) debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more than 60 days, and (3) non-money market debt instruments that had a maturity of 397 days or less when issued and which have a remaining maturity of 60 days or less. |_| The following securities are valued at cost, adjusted for amortization of premiums and accretion of discounts: (1) money market debt securities held by a non-money market fund that had a maturity of less than 397 days when issued that have a remaining maturity of 60 days or less, and (2) debt instruments held by a money market fund that have a remaining maturity of 397 days or less. |_| Securities (including restricted securities) not having readily-available market quotations are valued at fair value determined under the Board's procedures. If the Manager is unable to locate two market makers willing to give quotes, a security may be priced at the mean between the "bid" and "asked" prices provided by a single active market maker (which in certain cases may be the "bid" price if no "asked" price is available). In the case of U.S. government securities, mortgage-backed securities, corporate bonds and foreign government securities, when last sale information is not generally available, the Manager may use pricing services approved by the Board of Trustees. The pricing service may use "matrix" comparisons to the prices for comparable instruments on the basis of quality, yield, and maturity. Other special factors may be involved (such as the tax-exempt status of the interest paid by municipal securities). The Manager will monitor the accuracy of the pricing services. That monitoring may include comparing prices used for portfolio valuation to actual sales prices of selected securities. The closing prices in the London foreign exchange market on a particular business day that are provided to the Manager by a bank, dealer or pricing service that the Manager has determined to be reliable are used to value foreign currency, including forward contracts, and to convert to U.S. dollars securities that are denominated in foreign currency. Puts, calls, and futures are valued at the last sale price on the principal exchange on which they are traded or on NASDAQ, as applicable, as determined by a pricing service approved by the Board of Trustees or by the Manager. If there were no sales that day, they shall be valued at the last sale price on the preceding trading day if it is within the spread of the closing "bid" and "asked" prices on the principal exchange or on NASDAQ on the valuation date. If not, the value shall be the closing bid price on the principal exchange or on NASDAQ on the valuation date. If the put, call or future is not traded on an exchange or on NASDAQ, it shall be valued by the mean between "bid" and "asked" prices obtained by the Manager from two active market makers. In certain cases that may be at the "bid" price if no "asked" price is available. When a Fund writes an option, an amount equal to the premium received is included in that Fund's Statement of Assets and Liabilities as an asset. An equivalent credit is included in the liability section. The credit is adjusted ("marked-to-market") to reflect the current market value of the option. In determining the Fund's gain on investments, if a call or put written by a Fund is exercised, the proceeds are increased by the premium received. If a call or put written by a Fund expires, that Fund has a gain in the amount of the premium. If that Fund enters into a closing purchase transaction, it will have a gain or loss, depending on whether the premium received was more or less than the cost of the closing transaction. If a Fund exercises a put it holds, the amount that Fund receives on its sale of the underlying investment is reduced by the amount of premium paid by the Fund. Money Fund/VA Net Asset Valuation Per Share. Money Fund/VA will seek to maintain a net asset value of $1.00 per share for purchases and redemptions. There can be no assurance it will do so. Money Fund/VA operates under Rule 2a-7 under which it may use the amortized cost method of valuing their shares. The Funds' Board of Trustees has adopted procedures for that purpose. The amortized cost method values a security initially at its cost and thereafter assumes a constant amortization of any premium or accretion of any discount, regardless of the impact of fluctuating interest rates on the market value of the security. This method does not take into account unrealized capital gains or losses. The Funds' Board of Trustees has established procedures intended to stabilize Money Fund/VA's net asset value at $1.00 per share. If Money Fund/VA's net asset value per share were to deviate from $1.00 by more than 0.5%, Rule 2a-7 requires the Board promptly to consider what action, if any, should be taken. If the Trustees find that the extent of any such deviation may result in material dilution or other unfair effects on shareholders, the Board will take whatever steps it considers appropriate to eliminate or reduce such dilution or unfair effects, including, without limitation, selling portfolio securities prior to maturity, shortening the average portfolio maturity, withholding or reducing dividends, reducing the outstanding number of shares of that Fund without monetary consideration, or calculating net asset value per share by using available market quotations. As long as Money Fund/VA uses Rule 2a-7, it must abide by certain conditions described in the Prospectus which limit the maturity of securities that Fund buys. Under Rule 2a-7, the maturity of an instrument is generally considered to be its stated maturity (or in the case of an instrument called for redemption, the date on which the redemption payment must be made), with special exceptions for certain variable rate demand and floating rate instruments. Repurchase agreements and securities loan agreements are, in general, treated as having maturity equal to the period scheduled until repurchase or return, or if subject to demand, equal to the notice period. While amortized cost method provides certainty in valuation, there may be periods during which the value of an instrument, as determined by amortized cost, is higher or lower than the price Money Fund/VA would receive if it sold the instrument. During periods of declining interest rates, the daily yield on shares of that Fund may tend to be lower (and net investment income and daily dividends higher) than market prices or estimates of market prices for its portfolio. Thus, if the use of amortized cost by the funds resulted in a lower aggregate portfolio value on a particular day, a prospective investor in Money Fund/VA would be able to obtain a somewhat higher yield than would result from investment in a fund utilizing solely market values, and existing investors in that Fund would receive less investment income than if Money Fund/VA were priced at market value. Conversely, during periods of rising interest rates, the daily yield on shares of that Fund will tend to be higher and its aggregate value lower than that of a portfolio priced at market value. A prospective investor would receive a lower yield than from an investment in a portfolio priced at market value, while existing investors in Money Fund/VA would receive more investment income than if that Fund were priced at market value. Dividends, Capital Gains and Taxes Dividends and Distributions. The dividends and distributions paid by a class of shares will vary from time to time depending on market conditions, the composition of the Funds' portfolios, and expenses borne by the Funds or borne separately by a class (if more than one class of shares are outstanding). Dividends are calculated in the same manner, at the same time, and on the same day for each class of shares. However, if and when Class 2 shares are ever issued, dividends on Class 2 shares are expected to be lower. That is because of the effect of the service fee on Class 2 shares. Those dividends will also differ in amount as a consequence of any difference in the net asset values of the different classes of shares. Tax Status of the Fund's Dividends and Distributions. The federal tax treatment of the Funds' dividends and capital gains distributions is briefly highlighted in the Prospectus, and may also be explained in the prospectus for the insurance product you have selected. The Funds intend to qualify as a "regulated investment company" under the Internal Revenue Code (although it reserves the right not to qualify). If the Funds qualify as "regulated investment companies" under the Internal Revenue Code, they will not be liable for federal income taxes on amounts paid by it as dividends and distributions. The Funds qualified as regulated investment companies in its last fiscal year. The Internal Revenue Code contains a number of complex tests relating to qualification which the Funds might not meet in any particular year. If it did not so qualify, the Funds would be treated for tax purposes as an ordinary corporation and receive no tax deduction for payments made to shareholders. Additional Information About the Funds The Transfer Agent. OppenheimerFunds Services, Inc., the Fund's Transfer Agent, is a division of the Manager. It is responsible for maintaining the Fund's shareholder registry and shareholder accounting records, and for paying dividends and distributions to shareholders of record (the participating insurance companies that hold shares in their separate accounts). It also handles administrative functions. It acts on an "at-cost" basis. It also acts as shareholder servicing agent for the other Oppenheimer funds. Contract owners should refer inquiries about their accounts as directed by the instructions in the prospectus of their insurance product. The Custodian Bank. The Bank of New York is the custodian bank for the Funds' assets. The custodian bank's responsibilities include safeguarding and controlling the Fund's portfolio securities and handling the delivery of such securities to and from the Funds. It will be the practice of the Funds to deal with the custodian bank in a manner uninfluenced by any banking relationship the custodian bank may have with the Manager and its affiliates. The Funds' cash balances with the custodian bank in excess of $100,000 are not protected by Federal deposit insurance. Those uninsured balances at times may be substantial. Independent Auditors. Deloitte & Touche LLP are the independent auditors of the Funds. They audit the Funds' financial statements and perform other related audit services. They also act as auditors for certain other funds advised by the Manager and its affiliates. OPPENHEIMER VARIABLE ACCOUNT FUNDS INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds: We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Oppenheimer Money Fund, Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund (formerly Oppenheimer Capital Appreciation Fund), Oppenheimer Growth Fund, Oppenheimer Multiple Strategies Fund, Oppenheimer Global Securities Fund, Oppenheimer Strategic Bond Fund, Oppenheimer Growth & Income Fund and Oppenheimer Small Cap Growth Fund (all of which are series of Oppenheimer Variable Account Funds) as of December 31, 1998, the related statements of operations for the year then ended, the statements of changes in net assets for the years ended December 31, 1998 and 1997, and the financial highlights for the applicable periods ended December 31, 1998, 1997, 1996, 1995 and 1994. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1998 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Oppenheimer Money Fund, Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund, Oppenheimer Multiple Strategies Fund, Oppenheimer Global Securities Fund, Oppenheimer Strategic Bond Fund, Oppenheimer Growth & Income Fund and Oppenheimer Small Cap Growth Fund as of December 31, 1998, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods, in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP - --------------------------- DELOITTE & TOUCHE LLP Denver, Colorado January 25, 1999 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
PRINCIPAL VALUE AMOUNT NOTE 1 - ------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 1.2% - ------------------------------------------------------------------------------------------- Repurchase agreement with PaineWebber, Inc., 6.25%, dated 12/31/98, to be repurchased at $1,801,250 on 1/4/99, collateralized by Federal National Mortgage Assn. Participation Nts., 6% 12/1/13, with a value of $1,842,032 $ 1,800,000 $ 1,800,000 - ------------------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT - 2.0% - ------------------------------------------------------------------------------------------- Societe Generale, 5.80%, 3/31/99 3,000,000 3,000,215 - ------------------------------------------------------------------------------------------- LETTERS OF CREDIT - 9.6% - ------------------------------------------------------------------------------------------- Abbey National plc, guaranteeing commercial paper of Abbey National North America Corp., 5.50%, 2/4/99 3,500,000 3,481,820 - ------------------------------------------------------------------------------------------- Bank of America, NT & SA, guaranteeing commercial paper of Minmetals Capitals & Securities, Inc., 4.95%, 3/8/99 4,000,000 3,963,700 - ------------------------------------------------------------------------------------------- Barclays Bank plc, guaranteeing commercial paper of: Banca Serfin, SA, Institucion de Banca Multiple, Grupo Financiero Serfin, Nassau Branch, 5.42%, 5/26/99 1,500,000 1,467,254 Pactual Overseas Corp., 5.05%, 5/14/99 2,750,000 2,698,693 - ------------------------------------------------------------------------------------------- Bayerische Veriensbank AG, guaranteeing commercial paper of Unibanco-Uniao de Bancos Brasileiros, Series D, 5.05%, 4/16/99 3,000,000 2,955,813 - --------------- Total Letters of Credit 14,567,280 - ------------------------------------------------------------------------------------------- SHORT-TERM NOTES - 86.9% - ------------------------------------------------------------------------------------------- ASSET-BACKED - 11.1% Atlantis One Funding Corp., 5.20%, 5/14/99(1) 2,500,000 2,451,326 - ------------------------------------------------------------------------------------------- Cooperative Assn. of Tractor Dealers, Inc.: Series A, 4.92%, 4/21/99 1,500,000 1,477,450 Series B, 4.92%, 4/23/99 1,000,000 984,693 - ------------------------------------------------------------------------------------------- Park Avenue Receivables Corp., 5.60%, 1/13/99(1) 4,000,000 3,992,600 - ------------------------------------------------------------------------------------------- Preferred Receivables Funding Corp., 4.93%, 6/21/99(1) 3,000,000 2,929,890 - ------------------------------------------------------------------------------------------- Sigma Finance, Inc.: 5.50%, 1/29/99(1) 2,500,000 2,489,500 5.50%, 2/12/99(1) 2,500,000 2,483,958 - --------------- 16,809,417 - ------------------------------------------------------------------------------------------- BANK HOLDING COMPANIES - 4.5% Bankers Trust Co., New York: 5.01%, 7/15/99 2,000,000 1,945,725 5.05%, 6/2/99 5,000,000 4,893,389 - --------------- 6,839,114 - ------------------------------------------------------------------------------------------- BEVERAGES - 2.3% Coca-Cola Enterprises, Inc., 5.11%, 3/4/99(1) 3,500,000 3,469,198 - ------------------------------------------------------------------------------------------- BROKER/DEALERS - 17.5% Bear Stearns Cos., Inc., 4.92%, 2/18/99(2) 2,000,000 2,000,000 - ------------------------------------------------------------------------------------------- Goldman Sachs Group, LP: 5%, 4/20/99 4,000,000 3,939,445 5.10%, 3/22/99 3,000,000 2,966,000
21 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL VALUE AMOUNT NOTE 1 - ------------------------------------------------------------------------------------------- BROKER/DEALERS (CONTINUED) Lehman Brothers Holdings, Inc., 5.495%, 2/25/99 $ 1,000,000 $ 991,605 - ------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc.: 5.50%, 2/26/99 3,000,000 2,974,333 5.51%, 2/12/99 2,500,000 2,483,929 - ------------------------------------------------------------------------------------------- Morgan Stanley Dean Witter & Co., 5.50%, 1/4/99(2) 4,300,000 4,300,000 - ------------------------------------------------------------------------------------------- NationsBanc Montgomery Securities, LLC, 5.70%, 1/4/99(2) 5,000,000 5,000,000 - ------------------------------------------------------------------------------------------- Salomon Smith Barney Holdings, Inc., 5.15%, 2/18/99 2,000,000 1,986,267 - --------------- 26,641,579 - ------------------------------------------------------------------------------------------- COMMERCIAL FINANCE - 12.6% Countrywide Home Loans: 5.25%, 2/27/99(2) 1,200,000 1,200,000 5.50%, 1/8/99 4,000,000 3,995,722 - ------------------------------------------------------------------------------------------- FINOVA Capital Corp.: 5.32%, 5/7/99 2,300,000 2,257,174 5.33%, 2/26/99 1,250,000 1,239,597 5.38%, 5/21/99 1,000,000 979,311 - ------------------------------------------------------------------------------------------- Heller Financial, Inc.: 5.289%, 1/11/99(2) 1,500,000 1,500,000 6.51%, 9/20/99 2,080,000 2,095,221 - ------------------------------------------------------------------------------------------- Safeco Cedit Co., 4.95%, 6/11/99 2,000,000 1,955,725 - ------------------------------------------------------------------------------------------- TransAmerica Finance Corp., 5.11%, 3/1/99 4,000,000 3,966,501 - --------------- 19,189,251 - ------------------------------------------------------------------------------------------- CONSUMER FINANCE - 2.6% Sears Roebuck Acceptance Corp., 4.90%, 6/23/99 4,000,000 3,905,811 - ------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL - 7.5% General Motors Acceptance Corp.: 5.48%, 1/28/99 3,000,000 2,987,603 5.50%, 2/19/99 1,500,000 1,488,771 - ------------------------------------------------------------------------------------------- Household Finance Corp., 4.948%, 3/29/99(2) 5,000,000 4,999,178 - ------------------------------------------------------------------------------------------- Household International, Inc., 5.21%, 2/3/99(1) 2,000,000 1,990,448 - --------------- 11,466,000 - ------------------------------------------------------------------------------------------- INDUSTRIAL SERVICES - 4.6% Atlas Copco AB: 5.27%, 4/21/99(1) 3,000,000 2,951,692 5.42%, 1/19/99(1) 4,000,000 3,989,160 - --------------- 6,940,852 - ------------------------------------------------------------------------------------------- INSURANCE - 17.8% AIG Life Insurance Co., 5.62%, 1/4/99(2)(3) 3,000,000 3,000,000 - ------------------------------------------------------------------------------------------- General American Life Insurance Co., 5.24%, 1/4/99(2) 5,000,000 5,000,000 - ------------------------------------------------------------------------------------------- Pacific Life Insurance Co., 4.73%, 1/4/99(2)(3) 5,000,000 5,000,000 - ------------------------------------------------------------------------------------------- Protective Life Insurance Co., 5.577%, 1/4/99(2) 5,000,000 5,000,000 - ------------------------------------------------------------------------------------------- Safeco Corp., 4.90%, 6/17/99 2,000,000 1,954,539 - ------------------------------------------------------------------------------------------- Security Benefit Life Insurance Co., 5.577%, 1/4/99(2) 5,000,000 5,000,000
22 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL VALUE AMOUNT NOTE 1 - ------------------------------------------------------------------------------------------- INSURANCE (CONTINUED) Travelers Insurance Co., 5.034%, 1/4/99(2)(3) $ 2,000,000 $ 2,000,000 - --------------- 26,954,539 - ------------------------------------------------------------------------------------------- LEASING & FACTORING - 4.4% American Honda Finance Corp., 5.219%, 1/20/99(2)(4) 3,000,000 3,000,000 - ------------------------------------------------------------------------------------------- International Lease Finance Corp., 6.625%, 4/1/99 3,675,000 3,685,758 - --------------- 6,685,758 - ------------------------------------------------------------------------------------------- SPECIAL PURPOSE FINANCIAL - 2.0% SMM Trust, Series 1998-I, 5.624%, 5/28/99(2)(3) 3,000,000 3,000,000 - --------------- Total Short-Term Notes 131,901,519 - ------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE 99.7% 151,269,014 - ------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.3 529,786 ----------- - --------------- NET ASSETS 100.0% $ 151,798,800 ----------- - --------------- ----------- - ---------------
Short-term notes and letters of credit are generally traded on a discount basis; the interest rate is the discount rate received by the Fund at the time of purchase. Other securities normally bear interest at the rates shown. 1. Security issued in an exempt transaction without registration under the Securities Act of 1933. Such securities amount to $26,747,772, or 17.62% of the Fund's net assets, and have been determined to be liquid pursuant to guidelines adopted by the Board of Trustees. 2. Floating or variable rate obligation. The interest rate, which is based on specific, or an index of, market interest rates, is subject to change periodically and is the effective rate on December 31, 1998. This instrument may also have a demand feature which allows, on up to 30 days' notice, the recovery of principal at any time, or at specified intervals not exceeding one year. Maturity date shown represents effective maturity based on variable rate and, if applicable, demand feature. 3. Identifies issues considered to be illiquid or restricted -- See applicable note of Notes to Financial Statements. 4. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $3,000,000, or 1.98% of the Fund's net assets as of December 31, 1998. See accompanying Notes to Financial Statements. 23 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS - 2.5% - ------------------------------------------------------------------------- AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg. Pass-Through Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 137,562 - ------------------------------------------------------------------------- Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates, Series 1997-D4: Cl. B1, 7.525%, 4/14/29(3) 167,000 133,913 Cl. B2, 7.525%, 4/14/29(3) 167,000 129,477 Cl. B3, 7.525%, 4/14/29(3) 166,000 117,186 - ------------------------------------------------------------------------- CBA Mortgage Corp., Mtg. Pass-Through Certificates, Series 1993-C1: Cl. E, 7.76%, 12/25/03(2)(3) 250,000 232,969 Cl. F, 7.76%, 12/25/03(2)(3) 700,000 571,594 - ------------------------------------------------------------------------- CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates, Series 1997-C1: Cl. F, 7.50%, 6/20/13(2) 300,000 233,906 Cl. G, 7.50%, 6/20/14(2) 500,000 357,969 Cl. H, 7.50%, 8/20/14(2) 225,000 154,406 - ------------------------------------------------------------------------- First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates, Series 1997-CHL1, 8.098%, 2/25/11-5/25/08(2)(3) 1,800,000 1,423,500 - ------------------------------------------------------------------------- Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-C1, Cl. E, 7.436%, 3/15/06(2)(3) 835,342 781,567 - ------------------------------------------------------------------------- Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2) 254,890 211,768 - ------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1994-C1, Cl. E, 8%, 6/25/26 638,732 629,102 Series 1994-C2, Cl. G, 8%, 4/25/25 702,303 684,746 Series 1995-C1, Cl. F, 6.90%, 2/25/27 574,328 537,401 - ------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.132%, 4/25/26(2) 1,452,915 1,072,433 - ------------------------------------------------------------------------- Structured Asset Securities Corp., Multiclass Pass-Through Certificates, Series 1996-C3, Cl. E, 8.458%, 6/25/30(4) 650,000 628,977 --------------- Total Mortgage-Backed Obligations (Cost $7,948,598) 8,038,476
- ------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS - 2.2% - ------------------------------------------------------------------------- Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas, Series I, 3.011%, 4/1/07(3)(ARP) 2,880,683 1,856,930 - ------------------------------------------------------------------------- Brazil (Federal Republic of) Capitalization Bonds, 8%, 4/15/14 588,810 351,814 - ------------------------------------------------------------------------- Brazil (Federal Republic of) Eligible Interest Bonds, 6.125%, 4/15/06(3) 1,056,000 681,120 - ------------------------------------------------------------------------- Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 2.50%, 7/28/12(5) 500,000 286,250 - ------------------------------------------------------------------------- Bulgaria (Republic of) Interest Arrears Bonds, 6.688%, 7/28/11(3) 1,450,000 975,125 - ------------------------------------------------------------------------- Germany (Republic of) Treasury Bills, Zero Coupon, 3.404%, 1/15/99(6)(DEM) 3,000,000 1,799,162 - ------------------------------------------------------------------------- Panama (Government of) Interest Reduction Bonds, 4%, 7/17/14(5) 275,000 205,563 - ------------------------------------------------------------------------- Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4%, 3/7/17(5) 400,000 252,000
24 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED) - ------------------------------------------------------------------------- Philippines (Republic of) Debs., 6%, 12/1/09(3) $ 149,600 $ 122,298 - ------------------------------------------------------------------------- PT Hutama Karya Promissory Nts., Zero Coupon, 2/10/98 (2)(7)(IDR) 1,000,000,000 31,250 - ------------------------------------------------------------------------- Russia (Government of) Debs., 5.969%, 12/15/15(3) 17,680 1,956 - ------------------------------------------------------------------------- Russia (Government of) Principal Loan Debs., Series 24 yr., 5.969%, 12/15/20(3) 1,050,000 64,982 - ------------------------------------------------------------------------- United Mexican States Sr. Nts., 8.625%, 3/12/08 500,000 463,750 --------------- Total Foreign Government Obligations (Cost $7,573,982) 7,092,200 - ------------------------------------------------------------------------- CORPORATE BONDS AND NOTES - 77.1% - ------------------------------------------------------------------------- AEROSPACE/DEFENSE - 3.5% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 1,000,000 1,045,000 - ------------------------------------------------------------------------- Amtran, Inc.: 9.625% Nts., 12/15/05 800,000 804,000 10.50% Sr. Nts., 8/1/04 700,000 731,500 - ------------------------------------------------------------------------- Atlas Air, Inc.: 9.25% Sr. Nts., 4/15/08(2) 1,325,000 1,328,312 9.375% Sr. Nts., 11/15/06(4) 1,000,000 1,025,000 10.75% Sr. Nts., 8/1/05 700,000 738,500 - ------------------------------------------------------------------------- BE Aerospace, Inc., 9.50% Sr. Sub. Nts., 11/1/08(4) 1,840,000 1,959,600 - ------------------------------------------------------------------------- Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts., Series 1997-1, 1/1/01(2) 800,000 784,000 - ------------------------------------------------------------------------- Decrane Aircraft Holdings, Inc., Units (each unit consists of $1,000 principal amount of 12% sr. sub. nts., 9/30/08 and one warrant to purchase 1.55 shares of common stock)(4)(8) 1,750,000 1,758,750 - ------------------------------------------------------------------------- Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts., Series 1997-A, Cl. B, 6/15/04(2) 317,051 338,104 - ------------------------------------------------------------------------- Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(2) 855,765 847,208 --------------- 11,359,974 - ------------------------------------------------------------------------- CHEMICALS - 1.5% Brunner Mond Group plc, 12.50% Sr. Sub. Nts., 7/15/08(4)(GBP) 1,200,000 1,840,381 - ------------------------------------------------------------------------- ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 500,000 505,000 - ------------------------------------------------------------------------- ICO, Inc., 10.375% Sr. Nts., 6/1/07 275,000 257,125 - ------------------------------------------------------------------------- Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B, 9/15/07 330,000 265,650 - ------------------------------------------------------------------------- PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 500,000 387,500 - ------------------------------------------------------------------------- Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 400,000 322,000 - ------------------------------------------------------------------------- Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts., Series B, 8/1/07 795,000 810,900 - ------------------------------------------------------------------------- Sterling Chemicals, Inc., 11.25% Sr. Sub. Nts., 4/1/07 250,000 211,250 - ------------------------------------------------------------------------- Texas Petrochemicals Corp., 11.125% Sr. Sub. Nts., 7/1/06 280,000 277,200 --------------- 4,877,006 - ------------------------------------------------------------------------- CONSUMER DURABLES - 0.3% Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 425,000 403,750
25 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- CONSUMER DURABLES (CONTINUED) TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) $ 350,000 $ 406,353 --------------- 810,103 - ------------------------------------------------------------------------- CONSUMER NON-DURABLES - 3.0% AKI Holdings, Inc.: 0%/13.50% Sr. Disc. Debs., 7/1/09(4)(9) 1,080,000 426,600 10.50% Sr. Nts., 7/1/08(4) 1,000,000 955,000 - ------------------------------------------------------------------------- American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05 880,000 506,000 - ------------------------------------------------------------------------- Bell Sports, Inc., 11% Sr. Sub. Nts., 8/15/08(4) 900,000 918,000 - ------------------------------------------------------------------------- Globe Manufacturing, Inc., 10% Sr. Sub. Nts., 8/1/08(4) 900,000 819,000 - ------------------------------------------------------------------------- Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 720,000 723,600 - ------------------------------------------------------------------------- Revlon Consumer Products Corp.: 8.625% Sr. Unsec. Sub. Nts., 2/1/08 2,200,000 2,013,000 9% Sr. Nts., 11/1/06(4) 1,000,000 1,000,000 - ------------------------------------------------------------------------- Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., Series B, 11.41%, 3/15/01(6) 1,250,000 718,750 - ------------------------------------------------------------------------- Salton/Maxim Housewares, Inc., 10.75% Sr. Sub. Nts., 12/15/05(4) 1,000,000 1,011,250 - ------------------------------------------------------------------------- Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08 600,000 573,000 - ------------------------------------------------------------------------- William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 235,000 249,100 --------------- 9,913,300 - ------------------------------------------------------------------------- ENERGY - 4.0% AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(4) 750,000 744,375 - ------------------------------------------------------------------------- Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07 480,000 391,200 - ------------------------------------------------------------------------- Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 1,040,000 930,800 - ------------------------------------------------------------------------- Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 275,000 254,375 - ------------------------------------------------------------------------- Dailey International, Inc., 9.50% Sr. Unsec. Nts., Series B, 2/15/08 800,000 356,000 - ------------------------------------------------------------------------- Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 800,000 676,000 - ------------------------------------------------------------------------- Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(4) 1,000,000 685,000 - ------------------------------------------------------------------------- Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 500,000 392,500 - ------------------------------------------------------------------------- Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 1,025,000 702,125 - ------------------------------------------------------------------------- National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(7) 810,000 303,750 - ------------------------------------------------------------------------- Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 1,420,000 1,143,100 - ------------------------------------------------------------------------- P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,800,000 1,827,000 - ------------------------------------------------------------------------- Petroleum Heat & Power Co., Inc., 9.375% Sr. Sub. Debs., 2/1/06 1,175,000 1,104,500 - ------------------------------------------------------------------------- Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 800,000 744,000 - ------------------------------------------------------------------------- RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 1,060,000 747,300 - ------------------------------------------------------------------------- Statia Terminals International/Statia Terminals (Canada), Inc., 11.75% First Mtg. Nts., Series B, 11/15/03 225,000 226,125 - ------------------------------------------------------------------------- Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 735,000 712,950 - ------------------------------------------------------------------------- Universal Compression Holdings, Inc.: 0%/9.875% Sr. Disc. Nts., 2/15/08(9) 1,325,000 801,625
26 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- ENERGY (CONTINUED) Universal Compression Holdings, Inc.: (Continued) 0%/11.375% Sr. Disc. Nts., 2/15/09(9) $ 720,000 $ 432,000 --------------- 13,174,725 - ------------------------------------------------------------------------- FINANCIAL - 1.5% Bakrie Investindo, Zero Coupon Promissory Nts., 3/26/98(2)(7)(IDR) 1,000,000,000 31,250 - ------------------------------------------------------------------------- Bank Plus Corp., 12% Sr. Nts., 7/18/07 517,000 416,185 - ------------------------------------------------------------------------- CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 900,000 886,500 - ------------------------------------------------------------------------- ECM Fund, L.P. I., 14% Sub. Nts., 6/10/02(2) 36,714 36,807 - ------------------------------------------------------------------------- Local Financial Corp., 11% Sr. Nts., 9/8/04(4) 800,000 812,000 - ------------------------------------------------------------------------- Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 450,000 362,250 - ------------------------------------------------------------------------- PT Polysindo Eka Perkasa, 24% Nts., 6/19/03(IDR) 657,200,000 9,858 - ------------------------------------------------------------------------- Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 2,000,000 1,870,000 - ------------------------------------------------------------------------- Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(7) 300,000 81,000 - ------------------------------------------------------------------------- Veritas Capital Trust, 10% Nts., 1/1/28 550,000 496,375 --------------- 5,002,225 - ------------------------------------------------------------------------- FOOD & DRUG - 1.7% Fleming Cos., Inc.: 10.50% Sr. Sub. Nts., Series B, 12/1/04 300,000 285,000 10.625% Sr. Sub. Nts., Series B, 7/31/07 1,135,000 1,064,062 - ------------------------------------------------------------------------- Pathmark Stores, Inc.: 0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(9) 2,710,000 2,235,750 12.625% Sub. Nts., 6/15/02 900,000 882,000 - ------------------------------------------------------------------------- Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 1,060,000 1,152,750 --------------- 5,619,562 - ------------------------------------------------------------------------- FOOD/TOBACCO - 1.6% Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 520,000 543,400 - ------------------------------------------------------------------------- Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(9) 750,000 517,500 - ------------------------------------------------------------------------- Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 1,600,000 1,608,000 - ------------------------------------------------------------------------- Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10 400,000 410,000 - ------------------------------------------------------------------------- SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 934,250 - ------------------------------------------------------------------------- Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 1,175,000 1,139,750 --------------- 5,152,900 - ------------------------------------------------------------------------- FOREST PRODUCTS/CONTAINERS - 1.0% Ball Corp.: 7.75% Sr. Nts., 8/1/06(4) 700,000 735,000 8.25% Sr. Sub. Nts., 8/1/08(4) 800,000 836,000 - ------------------------------------------------------------------------- Four M Corp., 12% Sr. Sec. Nts., Series B, 6/1/06 190,000 141,550 - ------------------------------------------------------------------------- Riverwood International Corp.: 10.625% Sr. Unsec. Nts., 8/1/07 1,330,000 1,323,350 10.875% Sr. Sub. Nts., 4/1/08 200,000 182,000
27 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- FOREST PRODUCTS/CONTAINERS (CONTINUED) SF Holdings Group, Inc., 0%/12.75% Sr. Disc. Nts., 3/15/08(9) $ 600,000 $ 213,000 --------------- 3,430,900 - ------------------------------------------------------------------------- GAMING/LEISURE - 5.5% AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(9) 450,000 245,250 - ------------------------------------------------------------------------- Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 940,000 869,500 - ------------------------------------------------------------------------- Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(7) 9,500 -- - ------------------------------------------------------------------------- Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 840,000 823,200 - ------------------------------------------------------------------------- Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 500,000 500,000 - ------------------------------------------------------------------------- Grand Casinos, Inc., 10.125% First Mtg. Sec. Nts., 12/1/03 630,000 689,850 - ------------------------------------------------------------------------- Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 1,600,000 1,608,000 - ------------------------------------------------------------------------- Harveys Casino Resorts, 10.625% Sr. Unsec. Sub. Nts., 6/1/06 120,000 130,200 - ------------------------------------------------------------------------- Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,300,000 1,348,750 - ------------------------------------------------------------------------- Intrawest Corp.: 9.75% Sr. Nts., 8/15/08 900,000 927,000 9.75% Sr. Unsec. Nts., 8/15/08(4) 600,000 618,000 - ------------------------------------------------------------------------- Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts., Series B, 11/15/02 725,000 873,625 - ------------------------------------------------------------------------- Outboard Marine Corp., 10.75% Sr. Nts., 6/1/08(4) 590,000 578,200 - ------------------------------------------------------------------------- Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 12/15/05(4) 800,000 805,000 - ------------------------------------------------------------------------- Premier Parks, Inc.: 0%/10% Sr. Disc. Nts., 4/1/08(9) 1,200,000 819,000 9.25% Sr. Nts., 4/1/06 600,000 623,250 - ------------------------------------------------------------------------- Rio Hotel & Casino, Inc.: 9.50% Sr. Sub. Nts., 4/15/07 1,000,000 1,110,000 10.625% Sr. Sub. Nts., 7/15/05 125,000 136,875 - ------------------------------------------------------------------------- Showboat Marina Casino Partnership/Showboat Marina Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 1,125,000 1,276,875 - ------------------------------------------------------------------------- Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 1,000,000 1,031,250 - ------------------------------------------------------------------------- Station Casinos, Inc.: 8.875% Sr. Sub. Nts., 12/1/08(4) 1,250,000 1,275,000 9.625% Sr. Sub. Nts., 6/1/03 200,000 207,220 9.75% Sr. Sub. Nts., 4/15/07 800,000 840,000 10.125% Sr. Sub. Nts., 3/15/06 800,000 842,000 --------------- 18,178,045 - ------------------------------------------------------------------------- HEALTHCARE - 2.1% Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 1,300,000 1,287,000 - ------------------------------------------------------------------------- Fresenius Medical Care Capital Trust III, 7.375% Nts., 2/1/08(DEM) 1,225,000 775,957 - ------------------------------------------------------------------------- ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(4) 1,065,000 1,080,975 - ------------------------------------------------------------------------- Integrated Health Services, Inc.: 9.25% Sr. Sub. Nts., Series A, 1/15/08 90,000 84,600 9.50% Sr. Sub. Nts., 9/15/07 760,000 725,800 10.25% Sr. Sub. Nts., 4/30/06 35,000 34,475 - ------------------------------------------------------------------------- Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 1,000,000 885,000
28 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- HEALTHCARE (CONTINUED) Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(4) $ 1,200,000 $ 1,134,000 - ------------------------------------------------------------------------- Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07 635,000 517,525 - ------------------------------------------------------------------------- Tenet Healthcare Corp., 8.125% Sr. Sub. Nts., 12/1/08(4) 250,000 257,500 --------------- 6,782,832 - ------------------------------------------------------------------------- HOUSING - 1.1% Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08 1,300,000 1,306,500 - ------------------------------------------------------------------------- Nortek, Inc.: 8.875% Sr. Nts., 8/1/08(4) 250,000 256,250 9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,449,000 9.25% Sr. Nts., Series B, 3/15/07 625,000 643,750 --------------- 3,655,500 - ------------------------------------------------------------------------- INFORMATION TECHNOLOGY - 1.2% Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(9) 900,000 499,500 - ------------------------------------------------------------------------- Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 1,125,000 1,074,375 - ------------------------------------------------------------------------- Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 628,125 - ------------------------------------------------------------------------- Unisys Corp., 11.75% Sr. Nts., 10/15/04 275,000 320,375 - ------------------------------------------------------------------------- WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(9) 1,750,000 962,500 - ------------------------------------------------------------------------- Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 500,000 477,500 --------------- 3,962,375 - ------------------------------------------------------------------------- MANUFACTURING - 2.8% American Standard Cos., Inc., 7.625% Sr. Nts., 2/15/10(10) 1,500,000 1,507,500 - ------------------------------------------------------------------------- Axia, Inc. (New), 10.75% Sr. Sub. Nts., 7/15/08 420,000 428,400 - ------------------------------------------------------------------------- Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 400,000 390,000 - ------------------------------------------------------------------------- Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 803,250 - ------------------------------------------------------------------------- Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 635,000 574,675 - ------------------------------------------------------------------------- Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 725,000 692,375 - ------------------------------------------------------------------------- Insilco Corp., Units (each unit consists of $1,000 principal amount of 12% Sr. Sub. Nts., 8/15/07 and one warrant to purchase 0.52 shares of common stock)(4)(8) 765,000 795,600 - ------------------------------------------------------------------------- International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 528,750 - ------------------------------------------------------------------------- MOLL Industries, Inc., 10.50% Sr. Sub. Nts., 7/1/08(4) 560,000 551,600 - ------------------------------------------------------------------------- Polymer Group, Inc.: 8.75% Sr. Sub. Nts., 3/1/08 1,500,000 1,481,250 9% Sr. Sub. Nts., 7/1/07 250,000 248,750 - ------------------------------------------------------------------------- Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 560,000 546,000 - ------------------------------------------------------------------------- Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08 630,000 620,550 --------------- 9,168,700 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-BROADCASTING - 2.3% Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 915,000 951,600
29 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-BROADCASTING (CONTINUED) Chancellor Media Corp.: 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 $ 975,000 $ 1,004,250 9% Sr. Sub. Nts., 10/1/08(4) 2,200,000 2,332,000 10.50% Sr. Sub. Nts., Series B, 1/15/07 450,000 495,000 - ------------------------------------------------------------------------- Jacor Communications, Inc., 8% Sr. Sub. Nts., 2/15/10 1,180,000 1,250,800 - ------------------------------------------------------------------------- Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(5) 400,000 402,000 - ------------------------------------------------------------------------- Sinclair Broadcast Group, Inc., 9% Sr. Unsec. Sub. Nts., 7/15/07 1,085,000 1,112,125 - ------------------------------------------------------------------------- Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 25,000 26,625 --------------- 7,574,400 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-CABLE/WIRELESS VIDEO - 5.0% Adelphia Communications Corp.: 8.125% Sr. Nts., Series B, 7/15/03 1,000,000 1,028,750 8.375% Sr. Nts., Series B, 2/1/08 1,000,000 1,037,500 9.25% Sr. Nts., 10/1/02 390,000 413,400 9.875% Sr. Nts., Series B, 3/1/07 140,000 155,400 10.50% Sr. Unsec. Nts., Series B, 7/15/04 340,000 382,500 - ------------------------------------------------------------------------- CSC Holdings, Inc.: 7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 1,041,600 9.875% Sr. Sub. Debs., 4/1/23 1,000,000 1,117,500 9.875% Sr. Sub. Nts., 5/15/06 550,000 602,250 10.50% Sr. Sub. Debs., 5/15/16 250,000 295,000 - ------------------------------------------------------------------------- Diva Systems Corp., Units (each unit consists of $1,000 principal amount of 0%/12.625% sr. disc. nts., 3/1/08 and three warrants to purchase three shares of common stock)(4)(8)(9) 500,000 207,500 - ------------------------------------------------------------------------- EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(9) 200,000 206,000 - ------------------------------------------------------------------------- EchoStar DBS Corp., 12.50% Sr. Sec. Nts., 7/1/02 1,700,000 1,963,500 - ------------------------------------------------------------------------- EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts., 3/15/04(9) 2,005,000 2,010,012 - ------------------------------------------------------------------------- Falcon Holding Group LP, 0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(9) 1,300,000 897,000 - ------------------------------------------------------------------------- Falcon Holding Group LP, 8.375% Sr. Unsec. Debs., Series B, 4/15/10 2,200,000 2,288,000 - ------------------------------------------------------------------------- Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts., Series B, 11/1/03(3) 885,000 924,825 - ------------------------------------------------------------------------- Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 1,020,000 1,014,900 - ------------------------------------------------------------------------- Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 500,000 315,299 - ------------------------------------------------------------------------- United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(9)(10) 1,040,000 566,800 --------------- 16,467,736 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-DIVERSIFIED MEDIA - 2.0% Ackerley Group, Inc., 9% Sr. Sub. Nts., 1/15/09(4) 1,250,000 1,275,000 - ------------------------------------------------------------------------- GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(2) 452,782 461,956 - ------------------------------------------------------------------------- Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07 225,000 167,062 - ------------------------------------------------------------------------- Regal Cinemas, Inc.: 8.875% Sr. Sub. Nts., 12/15/10(4) 1,250,000 1,246,875
30 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-DIVERSIFIED MEDIA (CONTINUED) Regal Cinemas, Inc.: (Continued) 9.50% Sr. Sub. Nts., 6/1/08(4) $ 750,000 $ 783,750 - ------------------------------------------------------------------------- SFX Entertainment, Inc.: 9.125% Sr. Sub. Nts., 12/1/08(4) 900,000 905,625 9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 1,800,000 1,791,000 --------------- 6,631,268 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS - -16.3% Amazon.Com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(9) 2,500,000 1,662,500 - ------------------------------------------------------------------------- COLT Telecom Group plc: 0%/12% Sr. Unsec. Disc. Nts., 12/15/06(9) 225,000 190,125 7.625% Bonds, 7/31/08(DEM) 1,925,000 1,143,511 8.875% Sr. Nts., 11/30/07(DEM) 250,000 154,231 10.125% Sr. Nts., 11/30/07(GBP) 400,000 699,676 Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase 7.8 common shares)(8)(9) 1,775,000 1,499,875 - ------------------------------------------------------------------------- Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 800,000 820,000 - ------------------------------------------------------------------------- Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 800,000 388,000 - ------------------------------------------------------------------------- Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(9) 2,100,000 1,748,250 - ------------------------------------------------------------------------- Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 400,000 384,000 - ------------------------------------------------------------------------- DTI Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., Series B, 3/1/08(9) 1,500,000 397,500 - ------------------------------------------------------------------------- e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07 725,000 679,687 - ------------------------------------------------------------------------- Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08 715,000 718,575 - ------------------------------------------------------------------------- FaciliCom International, Inc., 10.50% Sr. Nts., Series B, 1/15/08 545,000 438,725 - ------------------------------------------------------------------------- FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(9) 1,100,000 335,500 - ------------------------------------------------------------------------- Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(9) 810,000 433,350 - ------------------------------------------------------------------------- Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08 950,000 1,011,750 - ------------------------------------------------------------------------- Globix Corp., 13% Sr. Unsec. Nts., 5/1/05 1,800,000 1,485,000 - ------------------------------------------------------------------------- GST Telecommunications, Inc.: 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(4)(9) 178,000 141,287 12.75% Sr. Sub. Nts., 11/15/07 1,250,000 1,168,750 - ------------------------------------------------------------------------- ICG Holdings, Inc.: 0%/10% Sr. Unsec. Disc. Nts., 2/15/08(9) 1,220,000 652,700 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(9) 115,000 86,250 0%/13.50% Sr. Disc. Nts., 9/15/05(9) 980,000 813,400 - ------------------------------------------------------------------------- Intermedia Communications, Inc.: 8.60% Sr. Unsec. Nts., Series B, 6/1/08 905,000 864,275 8.875% Sr. Nts., 11/1/07 460,000 446,200 - ------------------------------------------------------------------------- ITC Deltacom, Inc.: 8.875% Sr. Nts., 3/1/08 1,000,000 980,000 11% Sr. Nts., 6/1/07 750,000 806,250
31 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS (CONTINUED) KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(9) $ 2,455,000 $ 1,190,675 - ------------------------------------------------------------------------- Level 3 Communications, Inc.: 0%/10.50% Sr. Disc. 12/1/08(4)(9) 900,000 528,750 9.125% Sr. Unsec. Nts., 5/1/08 2,000,000 1,985,000 - ------------------------------------------------------------------------- Long Distance International, Inc., 12.25% Sr. Nts., 4/15/08(4) 800,000 668,000 - ------------------------------------------------------------------------- Metromedia Fiber Network, Inc., 10% Sr. Nts., 11/15/08(4) 1,600,000 1,652,000 - ------------------------------------------------------------------------- Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(9)(DEM) 700,000 240,615 - ------------------------------------------------------------------------- NEXTLINK Communications, Inc.: 0%/9.45% Sr. Disc. Unsec. Nts., 4/15/08(9) 1,015,000 583,625 9% Sr. Nts., 3/15/08 800,000 756,000 9.625% Sr. Nts., 10/1/07 1,210,000 1,161,600 10.75% Sr. Nts., 11/15/08(4) 1,200,000 1,227,000 - ------------------------------------------------------------------------- NorthEast Optic Network, Inc., 12.75% Sr. Nts., 8/15/08 750,000 738,750 - ------------------------------------------------------------------------- NTL, Inc.: 0%/9.75% Sr. Deferred Coupon Nts., 4/1/08(4)(9) 350,000 218,750 0%/12.375% Sr. Nts., 10/1/08(4)(9) 3,400,000 2,146,250 7% Cv. Sub. Nts., 12/15/08(4) 1,500,000 1,623,750 10% Sr. Nts., Series B, 2/15/07 1,055,000 1,086,650 11.50% Sr. Nts., 10/1/08(4) 1,600,000 1,756,000 - ------------------------------------------------------------------------- Petersburg Long Distance, Inc., 9% Cv. Sub. Nts., 6/1/06(4) 170,000 63,112 - ------------------------------------------------------------------------- PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 3,170,000 3,154,150 - ------------------------------------------------------------------------- Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts., 10/15/07(9) 1,460,000 1,135,150 - ------------------------------------------------------------------------- RSL Communications plc: 0%/10.125% Sr. Disc. Nts., 3/1/08(9) 720,000 415,800 9.125% Sr. Unsec. Nts., 3/1/08 500,000 462,500 10.50% Sr. Nts., 11/15/08(4) 1,450,000 1,417,375 - ------------------------------------------------------------------------- TeleWest Communications plc: 0%/11% Sr. Disc. Debs., 10/1/07(9) 990,000 831,600 11.25% Sr. Nts., 11/1/08(4) 1,610,000 1,811,250 - ------------------------------------------------------------------------- Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 1,300,000 1,371,500 - ------------------------------------------------------------------------- US Xchange LLC, 15% Sr. Nts., 7/1/08 800,000 824,000 - ------------------------------------------------------------------------- Verio, Inc.: 10.375% Sr. Unsec. Nts., 4/1/05 1,480,000 1,457,800 11.25% Sr. Nts., 12/1/08(4) 1,300,000 1,313,000 13.50% Sr. Unsec. Nts., 6/15/04 385,000 417,725 - ------------------------------------------------------------------------- Viatel, Inc.: 0%/12.50% Sr. Unsec. Disc. Nts., 4/15/08(9) 765,000 455,175 11.25% Sr. Sec. Nts., 4/15/08 580,000 595,950 --------------- 53,438,869 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS - 7.0% Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(4) 200,000 201,000 - ------------------------------------------------------------------------- CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(9) 2,319,000 591,345
32 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS (CONTINUED) Cellular Communications International, Inc., 0%/9.50% Bonds, 4/1/05(9)(XEU) $ 2,750,000 $ 2,728,674 - ------------------------------------------------------------------------- Centennial Cellular Corp., 10.75% Sr. Sub. Nts., 12/15/08(4) 800,000 800,000 - ------------------------------------------------------------------------- Crown Castle International Corp., 0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(9) 940,000 662,700 - ------------------------------------------------------------------------- CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(9) 1,000,000 455,000 - ------------------------------------------------------------------------- Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 240,000 246,000 - ------------------------------------------------------------------------- Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts., Series B, 7/15/05(7)(9) 226,000 46,330 - ------------------------------------------------------------------------- ICO Global Communications (Holdings) Ltd., Units (each unit consists of $1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant to purchase 19.85 shares of common stock)(8) 700,000 525,000 - ------------------------------------------------------------------------- Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(9) 300,000 213,750 - ------------------------------------------------------------------------- Nextel Communications, Inc.: 0%/9.75% Sr. Disc. Nts., 10/31/07(9) 1,130,000 689,300 0%/10.65% Sr. Disc. Nts., 9/15/07(9) 1,095,000 703,538 - ------------------------------------------------------------------------- Omnipoint Corp., 11.625% Sr. Nts., Series A, 8/15/06 2,765,000 1,935,500 - ------------------------------------------------------------------------- Orange plc: 7.625% Sr. Nts., 8/1/08(GBP) 400,000 478,509 8% Sr. Nts., 8/1/08 2,600,000 2,639,000 - ------------------------------------------------------------------------- ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 1,125,000 1,164,375 - ------------------------------------------------------------------------- Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(9) 1,150,000 724,500 - ------------------------------------------------------------------------- Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(9) 2,400,000 1,410,000 - ------------------------------------------------------------------------- Price Communications Cellular Holdings, Inc., 11.25% Sr. Nts., 8/15/08(11) 425,000 403,750 - ------------------------------------------------------------------------- Price Communications Wireless, Inc.: 9.125% Sr. Sec. Nts., 12/15/06(4) 800,000 812,000 11.75% Sr. Sub. Nts., 7/15/07 425,000 450,500 - ------------------------------------------------------------------------- Real Time Data, Inc., Units (each unit consists of $1,000 principal amount of 0%/13.50% sub. disc. nts., 8/15/06 and one warrant to purchase six common shares)(4)(8)(9) 1,000,000 465,000 - ------------------------------------------------------------------------- Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,900,000 1,914,250 - ------------------------------------------------------------------------- SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(9) 3,220,000 1,867,600 - ------------------------------------------------------------------------- Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(4)(9) 1,640,000 828,200 --------------- 22,955,821 - ------------------------------------------------------------------------- METALS/MINERALS - 2.1% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 885,000 924,825 - ------------------------------------------------------------------------- Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 340,000 260,100 - ------------------------------------------------------------------------- Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 320,000 343,200 - ------------------------------------------------------------------------- Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 1,500,000 1,518,750 - ------------------------------------------------------------------------- International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 400,000 378,000 - ------------------------------------------------------------------------- Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07 850,000 816,000
33 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- METALS/MINERALS (CONTINUED) Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(9) $ 2,000,000 $ 690,000 - ------------------------------------------------------------------------- Metallurg, Inc., 11% Sr. Nts., 12/1/07 540,000 504,900 - ------------------------------------------------------------------------- Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 1,400,000 1,438,500 --------------- 6,874,275 - ------------------------------------------------------------------------- RETAIL - 1.5% Boyds Collection Ltd., 9% Sr. Sub. Nts., 5/15/08(4) 1,250,000 1,281,250 - ------------------------------------------------------------------------- Eye Care Centers of America, Inc., 9.125% Sr. Sub. Nts., 5/1/08(4) 1,100,000 1,050,500 - ------------------------------------------------------------------------- Finlay Enterprises, Inc., 9% Debs., 5/1/08 900,000 796,500 - ------------------------------------------------------------------------- Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 555,000 - ------------------------------------------------------------------------- Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(4) 1,000,000 995,000 - ------------------------------------------------------------------------- Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 342,063 --------------- 5,020,313 - ------------------------------------------------------------------------- SERVICE - 4.5% Allied Waste North America, Inc., 7.875% Sr. Nts., 1/1/09(4) 835,000 849,613 - ------------------------------------------------------------------------- Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07 125,000 135,625 - ------------------------------------------------------------------------- Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(9) 775,000 639,375 - ------------------------------------------------------------------------- Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 750,000 753,750 - ------------------------------------------------------------------------- Fisher Scientific International, Inc.: 9% Sr. Sub. Nts., 2/1/08(4) 365,000 366,825 9% Sr. Unsec. Sub. Nts., 2/1/08 2,050,000 2,060,250 - ------------------------------------------------------------------------- Great Lakes Dredge & Dock Corp., 11.25% Sr. Sub. Nts., 8/15/08(4) 915,000 933,300 - ------------------------------------------------------------------------- Intermedia Communications, Inc., 8.50% Sr. Nts., Series B, 1/15/08 660,000 630,300 - ------------------------------------------------------------------------- Lamar Advertising Co.: 8.625% Sr. Sub. Nts., 9/15/07 1,225,000 1,292,375 9.625% Sr. Sub. Nts., 12/1/06 815,000 876,125 - ------------------------------------------------------------------------- Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08 1,500,000 1,402,500 - ------------------------------------------------------------------------- Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(2) 1,500,000 1,500,000 - ------------------------------------------------------------------------- Protection One Alarm Monitoring, Inc.: 6.75% Cv. Sr. Sub. Nts., 9/15/03 950,000 974,938 13.625% Sr. Sub. Disc. Nts., 6/30/05 400,000 458,000 - ------------------------------------------------------------------------- United Rentals, Inc., 9.25% Sr. Sub. Nts., 1/15/09(4) 2,000,000 2,015,000 --------------- 14,887,976 - ------------------------------------------------------------------------- TRANSPORTATION - 4.1% Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 500,000 432,500 - ------------------------------------------------------------------------- Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 390,000 399,750 - ------------------------------------------------------------------------- Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06 125,000 130,625 - ------------------------------------------------------------------------- Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 600,000 669,000 - ------------------------------------------------------------------------- HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(4) 950,000 859,750 - ------------------------------------------------------------------------- Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 25,000 23,500
34 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ------------------------------------------------------------------------- TRANSPORTATION (CONTINUED) Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal amount of 12% first priority ship mtg. nts., 7/15/05 and one warrant to purchase five shares of common stock)(4)(8) $ 1,500,000 $ 1,207,500 - ------------------------------------------------------------------------- Navigator Gas Transport plc: 10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 1,175,000 1,039,875 Units (each unit consists of $1,000 principal amount of 12% second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(4)(8) 500,000 452,500 - ------------------------------------------------------------------------- Oxford Automotive, Inc.: 10.125% Sr. Sub. Nts., 6/15/07(2) 600,000 627,000 10.125% Sr. Unsec. Sub. Nts., 6/15/07 1,525,000 1,586,000 - ------------------------------------------------------------------------- Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship Mtg. Nts., 5/30/08 700,000 528,500 - ------------------------------------------------------------------------- Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 1,432,500 - ------------------------------------------------------------------------- Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04(10) 1,850,000 1,563,250 - ------------------------------------------------------------------------- Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(9) 2,600,000 2,509,000 --------------- 13,461,250 - ------------------------------------------------------------------------- UTILITY - 1.5% Calpine Corp.: 8.75% Sr. Nts., 7/15/07 545,000 553,175 10.50% Sr. Nts., 5/15/06 25,000 27,688 - ------------------------------------------------------------------------- El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(12) 555,000 645,188 - ------------------------------------------------------------------------- ESI Tractebel Acquisition Corp., 7.99% Bonds, 12/30/11 1,000,000 987,312 - ------------------------------------------------------------------------- Niagara Mohawk Power Corp., 7.75% Sr. Unsec. Nts., Series G, 10/1/08 2,400,000 2,637,211 --------------- 4,850,574 --------------- Total Corporate Bonds and Notes (Cost $261,935,960) 253,250,629
SHARES - -------------------------------------------------------------------- PREFERRED STOCKS - 5.3% - -------------------------------------------------------------------- CGA Group Ltd., Preferred Stock, Series A(2)(11) 74,045 1,851,125 - -------------------------------------------------------------------- Chesapeake Energy Corp., 7% Cum. Cv.(4) 24,575 251,894 - -------------------------------------------------------------------- Clark USA, Inc., 11.50% Cum. Exchangeable(11) 430 362,275 - -------------------------------------------------------------------- Concentric Network Corp., 13.50% Preferred, Series B(11) 532 456,190 - -------------------------------------------------------------------- Dobson Communications Corp., 12.25% Sr. Exchangeable(11) 1,092 974,610 - -------------------------------------------------------------------- e.spire Communications, Inc., 12.75% Jr. Redeemable Preferred Stock 1,167 574,747 - -------------------------------------------------------------------- Eagle-Picher Holdings, Inc., Cum. Exchangeable, Series B, 3/1/08, Non-Vtg.(13) 8,000 406,000 - -------------------------------------------------------------------- EchoStar Communications Corp., 12.125% Sr. Redeemable Exchangeable, Series B, Non-Vtg.(11) 819 952,087 - -------------------------------------------------------------------- Fidelity Federal Bank FSB Glendale California, l2% Non-Cum. Exchangeable Perpetual Preferred Stock, Series A 20 465 - -------------------------------------------------------------------- Global Crossing Holdings Ltd., 10.50% Sr. Exchangeable Preferred, 12/1/08(4)(13) 15,000 1,473,750 - -------------------------------------------------------------------- ICG Holdings, Inc., 14.25% Exchangeable(11) 264 291,060 - -------------------------------------------------------------------- Intermedia Communications, Inc., 13.50% Exchangeable, Series B(11) 792 786,060
35 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------- PREFERRED STOCKS (CONTINUED) - -------------------------------------------------------------------- Nebco Evans Holdings, Inc., 11.25% Cum. Exchangeable(11) 6,510 327,127 - -------------------------------------------------------------------- Nextel Communications, Inc., 11.125% Exchangeable, Series E(11) 790 712,975 - -------------------------------------------------------------------- NEXTLINK Communications, Inc., 14% Cum. Exchangeable, Vtg.(11) 32,362 1,723,277 - -------------------------------------------------------------------- Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(11) 40 341,000 - -------------------------------------------------------------------- Petroleum Heat & Power Co., Inc., Jr. Cv. Preferred Stock(13) 3,963 6,935 - -------------------------------------------------------------------- PRIMEDIA, Inc.: 8.625% Exchangeable 10,000 965,000 9.20% Exchangeable, Series F 2,500 246,250 - -------------------------------------------------------------------- Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(11) 1,057 985,653 - -------------------------------------------------------------------- SD Warren Co., 14% Cum. Exchangeable, Series B, Non-Vtg.(13) 25,000 1,281,250 - -------------------------------------------------------------------- SF Holdings Group, Inc., 13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(11) 196 847,700 - -------------------------------------------------------------------- SFX Broadcasting, Inc./Capstar Broadcasting Corp., 12.625% Cum., Series E, Non-Vtg.(11) 1,314 158,994 - -------------------------------------------------------------------- Spanish Broadcasting Systems, Inc., 14.25% Cum. Exchangeable, Non-Vtg.(4)(11) 602 615,545 - -------------------------------------------------------------------- Viatel, Inc., 10% Cv., Series A(11) 672 74,088 - -------------------------------------------------------------------- Walden Residential Properties, Inc.: 9.16% Cv., Series B 30,000 690,000 9.20% Preferred 8,950 194,663 --------------- Total Preferred Stocks (Cost $21,439,498) 17,550,720 - -------------------------------------------------------------------- COMMON STOCKS - 0.2% - -------------------------------------------------------------------- Celcaribe SA(4)(13) 121,950 259,144 - -------------------------------------------------------------------- Coinstar, Inc.(13) 5,250 56,437 - -------------------------------------------------------------------- ECM Fund, L.P. I.(2) 150 132,750 - -------------------------------------------------------------------- Equitable Bag, Inc.(2)(13) 3,723 3,723 - -------------------------------------------------------------------- Golden State Bancorp, Inc.(13) 15,626 259,782 - -------------------------------------------------------------------- Gulfstream Holding, Inc.(13) 56 -- - -------------------------------------------------------------------- Horizon Group Properties, Inc.(13) 851 3,298 - -------------------------------------------------------------------- Intermedia Communications, Inc.(13) 206 3,554 - -------------------------------------------------------------------- Omnipoint Corp.(13) 5,000 46,563 - -------------------------------------------------------------------- Optel, Inc.(13) 945 9 - -------------------------------------------------------------------- SF Holdings Group, Inc., Cl. C(13) 8,452 16,904 --------------- Total Common Stocks (Cost $542,407) 782,164 UNITS - -------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES - 0.4% - -------------------------------------------------------------------- American Telecasting, Inc. Wts., Exp. 6/99(2) 6,000 60 - -------------------------------------------------------------------- Ames Department Stores, Inc., Litigation Trust(2) 39,658 397 - -------------------------------------------------------------------- Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/00(2) 125 1
36 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE UNITS NOTE 1 - -------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED) - -------------------------------------------------------------------- Capital Gaming International, Inc. Wts., Exp. 2/99 21,112 $ -- - -------------------------------------------------------------------- CellNet Data Systems, Inc. Wts., Exp. 10/07(4) 1,919 9,835 - -------------------------------------------------------------------- CGA Group Ltd. Wts., Exp. 12/49(2) 62,000 18,600 - -------------------------------------------------------------------- Clearnet Communications, Inc. Wts., Exp. 9/05 660 1,567 - -------------------------------------------------------------------- Concentric Network Corp. Wts., Exp. 12/07(2) 750 111,682 - -------------------------------------------------------------------- Covad Communications Group, Inc. Wts., Exp. 3/08(2) 900 45,000 - -------------------------------------------------------------------- Covergent Communications, Inc. Wts., Exp. 4/08(2) 3,200 4,000 - -------------------------------------------------------------------- DTI Holdings, Inc. Wts., Exp. 3/08(2) 7,500 375 - -------------------------------------------------------------------- e.spire Communications, Inc. Wts., Exp. 11/05 475 11,465 - -------------------------------------------------------------------- FirstWorld Communications, Inc. Wts., Exp. 4/08(2) 1,100 11,000 - -------------------------------------------------------------------- Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(2) 500 10,500 - -------------------------------------------------------------------- Geotek Communications, Inc. Wts., Exp. 7/05(2) 52,500 525 - -------------------------------------------------------------------- Globix Corp. Wts., Exp. 5/05(2) 1,800 18,000 - -------------------------------------------------------------------- Golden State Bancorp, Inc. Wts., Exp. 1/01 15,626 71,294 - -------------------------------------------------------------------- Gothic Energy Corp. Wts.: Exp. 1/03(4) 13,117 131 Exp. 9/04(2) 14,000 15,750 - -------------------------------------------------------------------- ICG Communications, Inc. Wts., Exp. 9/05(2) 5,940 81,411 - -------------------------------------------------------------------- IHF Capital, Inc.: Series I Wts., Exp. 11/99(2) 400 4 Wts., Exp. 11/99(5) 250 2 - -------------------------------------------------------------------- In-Flight Phone Corp. Wts., Exp. 8/02 950 -- - -------------------------------------------------------------------- KMC Telecom Holdings, Inc. Wts., Exp. 4/08(2) 2,455 6,444 - -------------------------------------------------------------------- Long Distance International, Inc. Wts., 4/08(2) 800 2,000 - -------------------------------------------------------------------- Microcell Telecommunications, Inc. Wts., Exp. 6/06(2) 3,200 58,000 - -------------------------------------------------------------------- Millenium Seacarriers, Inc. Wts., Exp. 7/05(2) 1,500 9,375 - -------------------------------------------------------------------- Omnipoint Corp. Wts., Exp. 11/00(2) 7,500 69,844 - -------------------------------------------------------------------- Orion Network Systems, Inc. Wts., Exp. 1/07(2) 800 10,000 - -------------------------------------------------------------------- Price Communications Corp. Wts., Exp. 8/07(2) 8,600 410,650 - -------------------------------------------------------------------- Protection One, Inc. Wts.: Exp. 11/03(2) 28,000 350,000 Exp. 6/05(2) 1,600 16,000 - -------------------------------------------------------------------- Trizec Hahn Corp. Wts., Exp. 7/99 3,970 11,665 - -------------------------------------------------------------------- United International Holdings, Inc. Wts., Exp. 11/99(2) 1,440 21,780 - -------------------------------------------------------------------- Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/20 3,570 -- - -------------------------------------------------------------------- WAM!NET, Inc. Wts., Exp. 3/05(2) 5,250 42,000 --------------- Total Rights, Warrants and Certificates (Cost $368,233) 1,419,357
37 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - -------------------------------------------------------------------- STRUCTURED INSTRUMENTS - 8.4% - -------------------------------------------------------------------- Bankers Trust/Bear Stearns High Yield Composite Index Linked Nts., 8.55%, 4/5/99-5/4/99 $ 6,000,000 5,765,550 - -------------------------------------------------------------------- Bear Stearns High Yield Composite Index Linked Nts.: 8.5%, 4/9/99-5/14/99 12,000,000 11,805,840 9%, 2/5/99 1,500,000 1,382,865 - -------------------------------------------------------------------- Goldman Sachs Group LP, High Yield Index Nts., 8%, 3/4/99 1,500,000 1,403,400 - -------------------------------------------------------------------- J.P. Morgan & Co., Inc., The Emerging Markets Bond Index Linked Nts., 9.50%, 1/29/99(14) 3,000,000 2,515,290 - -------------------------------------------------------------------- Shoshone Partners Loan Trust Sr. Nts., 6.97%, 4/28/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(2)(3) 5,360,000 4,806,894 --------------- Total Structured Instruments (Cost $29,503,421) 27,679,839 - -------------------------------------------------------------------- REPURCHASE AGREEMENTS - 1.6% - -------------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98, to be repurchased at $5,102,692 on 1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%, 2/15/99-7/15/06, with a value of $5,204,061 (Cost $5,100,000) 5,100,000 5,100,000 - -------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $334,412,099) 97.7% 320,913,385 - -------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 2.3 7,649,272 -------------- --------------- NET ASSETS 100.0% $ 328,562,657 -------------- --------------- -------------- ---------------
1. Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP - Argentine Peso CAD - Canadian Dollar DEM - German Mark GBP - British Pound Sterling IDR - Indonesian Rupiah XEU - European Currency Units 2. Identifies issues considered to be illiquid or restricted - See applicable note of Notes to Financial Statements. 3. Represents the current interest rate for a variable rate security. 4. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $62,611,444 or 19.06% of the Fund's net assets as of December 31, 1998. 5. Represents the current interest rate for an increasing rate security. 6. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 7. Non-income producing - issuer is in default. 8. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units which represent debt securities, face amount disclosed represents total underlying principal. 9. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 10. Securities with an aggregate market value of $2,919,300 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See applicable note of Notes to Financial Statements. 38 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED) - -------------------------------------------------------------------------------- 11. Interest or dividend is paid in kind. 12. A sufficient amount of securities has been designated to cover outstanding forward foreign currency exchange contracts. See applicable note of Notes to Financial Statements. 13. Non-income producing security. 14. Security is linked to the Emerging Markets Bond Index (EMBI). The EMBI tracks total returns for currency denominated debt instruments of the emerging markets. Countries covered are Argentina, Brazil, Bulgaria, Ecuador, Mexico, Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia and Venezuela. See accompanying Notes to Financial Statements. 39 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ------------------------------------------------------------------ MORTGAGE-BACKED OBLIGATIONS - 43.5% - ------------------------------------------------------------------ GOVERNMENT AGENCY - 26.6% - ------------------------------------------------------------------ FHLMC/FNMA/SPONSORED - 12.7% Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates: Series 1092, Cl. K, 8.50%, 6/15/21 $ 3,000,000 $ 3,181,890 Series 151, Cl. F, 9%, 5/15/21 866,526 912,825 Series 1541, Cl. H, 7%, 10/15/22 4,750,000 4,987,500 Series 1712, Cl. B, 6%, 3/15/09 1,000,000 995,930 Series 1714, Cl. M, 7%, 8/15/23 2,000,000 2,038,120 - ------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg. Participation Certificates, 7%, 4/1/26 3,854,379 3,930,812 - ------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 3,036,540 - ------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security, Series 197, Cl. IO, 9.643%, 4/1/28(2) 14,642,987 3,807,177 - ------------------------------------------------------------------ Federal Home Loan Mortgage Corp.-Government National Mortgage Assn., Gtd. Multiclass Mtg. Participation Certificates, Series 26, Cl. B, 6%, 5/25/15 6,499,999 6,485,764 - ------------------------------------------------------------------ Federal National Mortgage Assn.: 6.50%, 1/25/28(4) 16,500,000 16,610,880 6.50%, 3/1/11-11/1/28 9,097,770 9,165,493 7%, 1/25/28(4) 15,000,000 15,302,400 7%, 4/1/04-11/1/25 986,546 1,004,337 7.50%, 1/1/08-1/1/26 3,076,835 3,161,912 8%, 5/1/17 425,154 443,491 - ------------------------------------------------------------------ Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, 8.75%, 11/25/05 1,894,061 1,970,411 - ------------------------------------------------------------------ Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Trust 1989-17, Cl. E, 10.40%, 4/25/19 877,884 967,315 Trust 1997-25, Cl. B, 7%, 12/18/22 1,370,000 1,390,975 - ------------------------------------------------------------------ Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security: Trust 277-C1, 21.711%, 4/1/27(5) 632,721 555,806 Trust 294, Cl. 1, 5.206%, 2/1/28(5) 3,557,954 3,024,262 ------------- 82,973,840 - ------------------------------------------------------------------ GUARANTEED - 13.9% Government National Mortgage Assn.: 6.50%, 9/15/24 15,628,113 15,805,493 7%, 1/1/28(4) 15,000,000 15,346,950 7%, 1/15/09-8/15/28 8,941,590 9,154,395 7.50%, 1/15/27-9/15/28 39,204,128 40,441,375 8%, 1/15/28-9/15/28 9,884,125 10,273,267 ------------- 91,021,480
40 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ------------------------------------------------------------------ PRIVATE - 16.9% - ------------------------------------------------------------------ COMMERCIAL - 12.5% Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1997-D5, Cl. A6, 7.185%, 2/14/41(6) $ 3,000,000 $ 2,746,406 Series 1997-D5, Cl. B2, 6.93%, 2/14/41 5,400,000 3,904,875 Series 1998-MD6, Cl. A3, 6.98%, 3/15/28(6) 6,000,000 6,143,437 - ------------------------------------------------------------------ Asset Securitization Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1997-D5, Cl. PS1, 9.092%, 2/14/41(2) 18,497,284 1,789,034 - ------------------------------------------------------------------ BKB Commercial Mortgage Trust, Commercial Mtg. Obligations, Series 1997-C1, Cl. C, 7.45%, 10/25/00(3) 815,000 813,727 - ------------------------------------------------------------------ Capital Lease Funding Securitization LP, Interest-Only Stripped Mtg.-Backed Security, Series 1997-CTL1, 10.611%, 6/22/24(2)(3) 31,405,361 1,293,901 - ------------------------------------------------------------------ Commercial Mortgage Acceptance Corp., Collateralized Mtg. Obligations, Series 1996-C1, Cl. D, 7.746%, 12/25/20(3)(6) 2,500,000 2,464,844 - ------------------------------------------------------------------ CRIMMI MAE Trust I, Collateralized Mtg. Obligations, Series 1996-C1, Cl. A2, 8/30/05(7) 2,000,000 1,961,909 - ------------------------------------------------------------------ CS First Boston Mortgage Securities Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1998-C1, Cl. AX, 8.082%, 4/11/30(2)(3) 25,105,463 1,796,610 - ------------------------------------------------------------------ FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Series 1994-C1, Cl. 2-D, 8.70%, 9/25/25 1,500,000 1,530,000 Series 1994-C1, Cl. 2-E, 8.70%, 9/25/25 1,500,000 1,494,375 - ------------------------------------------------------------------ First Union-Lehman Brothers Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 1998-C2, Cl. E, 6.778%, 5/18/13 2,000,000 1,731,250 - ------------------------------------------------------------------ First Union-Lehman Brothers Commercial Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security: Series 1997-C1, Cl. IO, 10.173%, 4/18/27(2) 8,454,887 587,218 Series 1997-C1, 8.357%-8.992%, 4/18/27(2) 24,962,333 1,733,712 Series 1998-C2, 8.971%, 5/18/28(2) 29,808,827 1,227,285 - ------------------------------------------------------------------ General Motors Acceptance Corp., Collateralized Mtg. Obligations: Series 1997-C2, Cl. D, 7.192%, 1/15/08 3,500,000 3,469,375 Series 1998-C1, Cl. E, 7.086%, 3/15/11(6) 3,500,000 3,520,781 - ------------------------------------------------------------------ General Motors Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1, Cl. X, 8.665%-9.155%, 7/15/27(2) 28,232,978 2,523,322 - ------------------------------------------------------------------ GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates, Series 1997-CL1, Cl. F, 7.309%-7.779%, 7/13/30(6) 5,000,000 4,752,187 - ------------------------------------------------------------------ Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, 8.783%, 2/18/28(2) 44,613,659 2,718,645 - ------------------------------------------------------------------ Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates: Series 1996-C1, Cl. D, 7.42%, 4/25/28 2,000,000 2,047,500 Series 1997-C2, Cl. D, 7.072%, 12/10/29(6) 4,000,000 3,877,500 - ------------------------------------------------------------------ Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates: Series 1996-C1, Cl. D-1, 7.436%, 2/15/28(3)(6) 1,000,000 1,028,125 Series 1997-RR, Cl. D, 7.436%, 4/30/39(3) 4,300,000 4,055,437 Series 1997-XL1, Cl. F, 7.413%, 10/3/30(6) 2,500,000 2,523,437 - ------------------------------------------------------------------ NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates, Series-DMC, Cl. B, 8.562%-8.921%, 8/12/11(3) 6,000,000 6,319,000
41 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ------------------------------------------------------------------ COMMERCIAL (CONTINUED) Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through Certificates: Series 1, Cl. C, 7.21%, 12/21/26(3) $ 250,000 $ 247,891 Series 1, Cl. D, 7.68%, 12/21/26(3) 500,000 501,563 - ------------------------------------------------------------------ Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,505,391 Series 1995-C1, Cl. D, 6.90%, 2/25/27 3,000,000 2,981,953 - ------------------------------------------------------------------ Structured Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1997-LLI, Cl. E, 7.30%, 4/12/12 4,000,000 3,773,750 - ------------------------------------------------------------------ Structured Asset Securities Corp., Multiclass Pass-Through Certificates: Series 1996-C3, Cl. C, 7.375%, 6/25/30(3)(6) 3,000,000 3,044,063 Series 1996-CFL, Cl. D, 7.034%, 2/25/28 1,800,000 1,815,750 ------------- 81,924,253 - ------------------------------------------------------------------ MULTI-FAMILY - 0.2% Countrywide Funding Corp., Mtg. Pass-Through Certificates, Series 1993-12, Cl. B1, 6.625%, 2/25/24 996,193 970,043 - ------------------------------------------------------------------ Merrill Lynch Trust, Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 43, Cl. E, 6.50%, 8/27/15 444,793 445,487 - ------------------------------------------------------------------ Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates, Series 1991-M5, Cl. A, 9%, 3/25/17(3) 189,239 187,820 ------------- 1,603,350 - ------------------------------------------------------------------ OTHER - 0.0% Salomon Brothers Mortgage Securities VI, Interest-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. B, 23.059%-24.103%, 10/23/17(2) 74,644 20,155 - ------------------------------------------------------------------ Salomon Brothers Mortgage Securities VI, Principal-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. A, 16.254%-24.103%, 10/23/17(5) 110,461 95,169 ------------- 115,324 - ------------------------------------------------------------------ RESIDENTIAL - 4.2% CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(3) 5,006,000 4,790,116 - ------------------------------------------------------------------ First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates, Series 1997-CHL1, 8.098%, 7/25/06(3)(6) 4,024,000 3,939,748 - ------------------------------------------------------------------ Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates: Series 1997-HF1, Cl. E, 7.55%, 7/15/29(3) 1,500,000 1,543,125 Series 1997-WF1, Cl. E, 7.49%, 5/15/09(3) 1,000,000 1,012,813 - ------------------------------------------------------------------ NationsBank Trust, Lease Pass-Through Certificates, Series 1997A-1, 7.442%, 1/10/11(6) 2,500,000 2,656,641 - ------------------------------------------------------------------ Residential Accredit Loans, Inc., Mtg. Asset-Backed Pass-Through Certificates, Series 1997-QS11, 7%, 10/25/12 13,039,614 13,259,658 - ------------------------------------------------------------------ Ryland Mortgage Securities Corp. III Sub. Bonds, Series 1992-A, Cl. 1A, 8.256%, 3/29/30(6) 310,293 314,075 ------------- 27,516,176 ------------- Total Mortgage-Backed Obligations (Cost $285,512,044) 285,154,423
42 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ----------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS - 0.1% - ----------------------------------------------------------------------- Ontario, Canada (Province of) Bonds, 8%, 10/17/01 $ 750,000 $ 803,977 - ----------------------------------------------------------------------- PT Hutama Karya Medium-Term Nts., Zero Coupon, 3/17/99 (3)(8)IDR 1,000,000,000 31,250 ------------- Total Foreign Government Obligations (Cost $1,102,252) 835,227 - ----------------------------------------------------------------------- LOAN PARTICIPATIONS - 0.1% - ----------------------------------------------------------------------- Colombia (Republic of) 1989-1990 Integrated Loan Facility Bonds, 6.375%, 7/1/01(3)(6) (Cost $795,958) 825,799 761,800 - ----------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES - 0.8% - ----------------------------------------------------------------------- Dade County, FL Educational Facilities Authority Exchangeable Revenue Bonds, University of Miami, Prerefunded, MBIA Insured, 7.65%, 4/1/10 175,000 187,808 - ----------------------------------------------------------------------- Dade County, FL Educational Facilities Authority Revenue Bonds, University of Miami, MBIA Insured, 7.65%, 4/1/10 205,000 219,252 - ----------------------------------------------------------------------- Dade County, FL Educational Facilities Authority Taxable Exchange Revenue Bonds, University of Miami, MBIA Insured, 7.65%, 4/1/10 120,000 128,342 - ----------------------------------------------------------------------- Pinole, CA Redevelopment Agency Tax Allocation Taxable Bonds, Pinole Vista Redevelopment, Series B, 8.35%, 8/1/17 670,000 708,659 - ----------------------------------------------------------------------- Port of Portland, OR Special Obligation Taxable Revenue Bonds, PAMCO Project, 9.20%, 5/15/22 500,000 552,200 - ----------------------------------------------------------------------- Virgin Islands Public Finance Authority Taxable Revenue Refunding Bonds, Sr. Lien Loan Nts., Series B, 6.99%, 10/1/01 3,265,000 3,337,124 ------------- Total Municipal Bonds and Notes (Cost $4,928,533) 5,133,385 - ----------------------------------------------------------------------- CORPORATE BONDS AND NOTES - 54.1% - ----------------------------------------------------------------------- AEROSPACE/DEFENSE - 0.6% Amtran, Inc., 9.625% Nts., 12/15/05 800,000 804,000 - ----------------------------------------------------------------------- Atlas Air, Inc., 8.01% Nts., 1/2/10 3,000,000 3,022,332 ------------- 3,826,332 - ----------------------------------------------------------------------- CHEMICALS - 1.4% ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 300,000 303,000 - ----------------------------------------------------------------------- IMC Global, Inc., 7.625% Bonds, 11/1/05 9,000,000 9,222,048 ------------- 9,525,048 - ----------------------------------------------------------------------- CONSUMER DURABLES - 0.1% Toro Co., 7.125% Nts., 6/15/07 1,000,000 969,152 - ----------------------------------------------------------------------- CONSUMER NON-DURABLES - 1.2% AKI Holdings, Inc., 10.50% Sr. Nts., 7/1/08(7) 300,000 286,500 - ----------------------------------------------------------------------- Bell Sports, Inc., 11% Sr. Sub. Nts., 8/15/08(7) 110,000 112,200 - ----------------------------------------------------------------------- Fruit of the Loom, Inc., 7% Debs., 3/15/11 1,097,000 988,345 - ----------------------------------------------------------------------- Harman International Industries, Inc., 7.32% Nts., 7/1/07 5,000,000 5,244,195 - ----------------------------------------------------------------------- Procter & Gamble Co., 9.36% Debs., Series A, 1/1/21 500,000 664,743 - ----------------------------------------------------------------------- Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06(7) 500,000 500,000
43 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ----------------------------------------------------------------------- CONSUMER NON-DURABLES (CONTINUED) Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08 $ 360,000 $ 343,800 ------------- 8,139,783 - ----------------------------------------------------------------------- ENERGY - 5.0% BP America, Inc., 10.875% Unsec. Unsub. Nts., 8/1/01CAD 1,000,000 737,839 - ----------------------------------------------------------------------- Coastal Corp., 8.75% Sr. Nts., 5/15/99 500,000 505,244 - ----------------------------------------------------------------------- Colorado Interstate Gas Corp., 10% Sr. Debs., 6/15/05 500,000 615,642 - ----------------------------------------------------------------------- Eastern Energy Ltd., 6.75% Sr. Nts., 12/1/06(7) 2,000,000 2,104,710 - ----------------------------------------------------------------------- Enron Corp., 9.875% Debs., 6/15/03 375,000 427,440 - ----------------------------------------------------------------------- ENSCO International, Inc.: 6.75% Nts., 11/15/07 5,000,000 5,096,110 7.20% Debs., 11/15/27 3,000,000 3,047,355 - ----------------------------------------------------------------------- Enterprise Oil plc, 6.70% Sr. Nts., 9/15/07 4,000,000 3,981,300 - ----------------------------------------------------------------------- Global Marine, Inc., 7.125% Nts., 9/1/07 8,000,000 8,128,224 - ----------------------------------------------------------------------- Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(7) 300,000 235,500 - ----------------------------------------------------------------------- Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05 500,000 495,000 - ----------------------------------------------------------------------- HNG Internorth/Enron Corp., 9.625% Debs., 3/15/06 500,000 612,929 - ----------------------------------------------------------------------- McDermott, Inc., 9.375% Nts., 3/15/02 400,000 427,277 - ----------------------------------------------------------------------- Mitchell Energy & Development Corp., 9.25% Sr. Nts., 1/15/02 55,000 58,200 - ----------------------------------------------------------------------- Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 400,000 322,000 - ----------------------------------------------------------------------- P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,200,000 1,218,000 - ----------------------------------------------------------------------- Saga Petroleum ASA, 7.25% Debs., 9/23/27 1,000,000 920,550 - ----------------------------------------------------------------------- Talisman Energy, Inc., 7.25% Debs., 10/15/27 2,500,000 2,411,257 - ----------------------------------------------------------------------- Texaco Capital, Inc., 8.875% Gtd. Debs., 9/1/21 500,000 648,127 - ----------------------------------------------------------------------- TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 750,000 961,927 ------------- 32,954,631 - ----------------------------------------------------------------------- FINANCIAL - 13.7% Aeltus CBO II Ltd./Aeltus CBO II Corp., 7.982% Sr. Sec. Sub. Bonds, 8/6/09(3) 5,000,000 4,831,250 - ----------------------------------------------------------------------- Aetna Services, Inc., 7.125% Nts., 8/15/06 1,000,000 1,051,813 - ----------------------------------------------------------------------- Allmerica Capital I, 8.207% Debs., 2/3/27(9) 2,000,000 2,241,142 - ----------------------------------------------------------------------- American General Finance Corp., 5.875% Sr. Nts., 7/1/00 196,000 197,088 - ----------------------------------------------------------------------- BankAmerica Corp. (New), 7.75% Sub. Nts., 7/15/02 750,000 805,140 - ----------------------------------------------------------------------- Banque Centrale de Tunisie, 7.50% Nts., 9/19/07 900,000 821,056 - ----------------------------------------------------------------------- Chase Manhattan Corp. (New), 10.125% Sub. Nts., 11/1/00 750,000 809,707 - ----------------------------------------------------------------------- Citicorp Capital I, 7.933% Gtd. Bonds, 2/15/27 2,000,000 2,193,572 - ----------------------------------------------------------------------- CNA Financial Corp., 6.25% Nts., 11/15/06 2,195,000 2,199,572 - ----------------------------------------------------------------------- EOP Operating LP, 6.625% Sr. Unsec. Nts., 2/15/05 1,000,000 985,431 - ----------------------------------------------------------------------- Farmers Exchange Capital, 7.05% Trust Surplus Nts., 7/15/28(7) 3,000,000 3,027,762
44 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ----------------------------------------------------------------------- FINANCIAL (CONTINUED) First Chicago Corp.: 11.25% Sub. Nts., 2/20/01 $ 750,000 $ 834,676 9% Sub. Nts., 6/15/99 150,000 152,283 - ----------------------------------------------------------------------- Fleet Mtg. Group, Inc., 6.50% Nts., 9/15/99 500,000 502,804 - ----------------------------------------------------------------------- Ford Motor Credit Co., 6.75% Nts., 8/15/08 1,000,000 1,064,037 - ----------------------------------------------------------------------- Franchise Finance Corp. of America, 8.25% Sr. Unsec. Nts., 10/30/03 7,850,000 7,984,047 - ----------------------------------------------------------------------- Household Finance Corp.: 6.40% Sr. Unsec. Unsub. Nts., Series EMTN, 6/17/08 2,000,000 2,063,900 8.95% Debs., 9/15/99 500,000 511,410 - ----------------------------------------------------------------------- Household International BV, 6% Gtd. Sr. Nts., 3/15/99 131,000 131,127 - ----------------------------------------------------------------------- HSBC America Capital Trust II, 8.38% Capital Securities, 5/15/27(7) 3,000,000 3,061,941 - ----------------------------------------------------------------------- Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 3,000,000 3,000,228 - ----------------------------------------------------------------------- Liberty Mutual Insurance Co., 7.697% Unsec. Nts., 10/15/2097(7) 7,000,000 7,069,440 - ----------------------------------------------------------------------- Long Island Savings Bank, 6.20% Nts., 4/2/01 4,000,000 4,038,592 - ----------------------------------------------------------------------- Lumbermens Mutual Casualty Co., 8.30% Surplus Nts., 12/1/37(7) 2,000,000 2,242,676 - ----------------------------------------------------------------------- Merrill Lynch & Co., Inc.: 6.56% Nts., 12/16/07 2,000,000 2,084,358 6.875% Nts., 3/1/03-11/15/18 7,450,000 7,774,573 - ----------------------------------------------------------------------- Metropolitan Life Insurance Co., 6.30% Nts., 11/1/03(7) 3,000,000 3,016,956 - ----------------------------------------------------------------------- Morgan Stanley Dean Witter & Co., 7% Debs., 10/1/13 1,000,000 1,059,171 - ----------------------------------------------------------------------- Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,000,000 1,009,119 - ----------------------------------------------------------------------- Prudential Insurance Co. of America, 6.875% Nts., 4/15/03(7) 3,000,000 3,108,741 - ----------------------------------------------------------------------- Rank Group Finance plc, 6.75% Gtd. Nts., 11/30/04 3,000,000 3,018,534 - ----------------------------------------------------------------------- Salomon Smith Barney Holdings, Inc., 6.25% Bonds, 1/15/05 3,000,000 3,037,068 - ----------------------------------------------------------------------- Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,044,339 - ----------------------------------------------------------------------- SunAmerica, Inc.: 9% Sr. Nts., 1/15/99 196,000 196,152 9.95% Unsec. Debs., 8/1/08 3,000,000 3,814,737 - ----------------------------------------------------------------------- Travelers Group, Inc.: 6.875% Debs., 2/15/2098 1,000,000 1,018,395 7.25% Sr. Unsec. Nts., 5/1/01 3,300,000 3,414,117 - ----------------------------------------------------------------------- U.S. Leasing International, Inc., 6.625% Sr. Nts., 5/15/03 750,000 774,986 - ----------------------------------------------------------------------- Washington Mutual Capital I, 8.375% Sub. Capital Income Nts., 6/1/27 3,000,000 3,314,010 ------------- 89,505,950 - ----------------------------------------------------------------------- FOOD & DRUG - 0.2% Pathmark Stores, Inc.: 0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(10) 1,095,000 903,375 12.625% Sub. Nts., 6/15/02 400,000 392,000 ------------- 1,295,375 - ----------------------------------------------------------------------- FOOD/TOBACCO - 0.3% Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 300,000 313,500 - ----------------------------------------------------------------------- Bass America, Inc., 6.75% Gtd. Nts., 8/1/99 750,000 755,815
45 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ----------------------------------------------------------------------- FOOD/TOBACCO (CONTINUED) Coca-Cola Enterprises, Inc., 6.95% Debs., 11/15/26 $ 1,000,000 $ 1,067,105 ------------- 2,136,420 - ----------------------------------------------------------------------- FOREST PRODUCTS/CONTAINERS - 0.6% Boise Cascade Corp., 9.90% Nts., 3/15/00 750,000 774,358 - ----------------------------------------------------------------------- Fletcher Challenge Capital Canada, Inc., 7.75% Nts., 6/20/06 1,800,000 1,834,477 - ----------------------------------------------------------------------- Mail-Well I Corp., 8.75% Sr. Sub. Nts., 12/15/08(7) 800,000 804,000 - ----------------------------------------------------------------------- Potlatch Corp., 9.46% Medium-Term Nts., 4/2/02 500,000 548,572 ------------- 3,961,407 - ----------------------------------------------------------------------- GAMING/LEISURE - 2.5% Circus Circus Enterprises, Inc., 6.75% Nts., 7/15/03 375,000 348,440 - ----------------------------------------------------------------------- Hilton Hotels Corp., 7.95% Sr. Nts., 4/15/07 4,000,000 4,150,864 - ----------------------------------------------------------------------- HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 300,000 301,500 - ----------------------------------------------------------------------- Intrawest Corp., 9.75% Sr. Nts., 8/15/08 950,000 978,500 - ----------------------------------------------------------------------- Marriott International, Inc., 6.875% Nts., 11/15/05(7) 8,500,000 8,542,373 - ----------------------------------------------------------------------- Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 12/15/05(7) 600,000 603,750 - ----------------------------------------------------------------------- Premier Parks, Inc., 0%/10% Sr. Disc. Nts., 4/1/08(10) 300,000 204,750 - ----------------------------------------------------------------------- Station Casinos, Inc.: 8.875% Sr. Sub. Nts., 12/1/08(7) 400,000 408,000 9.75% Sr. Sub. Nts., 4/15/07 550,000 577,500 ------------- 16,115,677 - ----------------------------------------------------------------------- HEALTHCARE - 0.3% Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 600,000 594,000 - ----------------------------------------------------------------------- ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(7) 125,000 126,875 - ----------------------------------------------------------------------- Roche Holdings, Inc., 2.75% Bonds, 4/14/00 1,250,000 1,210,938 ------------- 1,931,813 - ----------------------------------------------------------------------- HOUSING - 1.2% Building Materials Corp. of America, 8% Sr. Nts., 12/1/08(7) 800,000 802,000 - ----------------------------------------------------------------------- Nationwide Health Properties, Inc., 7.60% Nts., Series C, 11/20/28 6,900,000 6,934,500 ------------- 7,736,500 - ----------------------------------------------------------------------- INFORMATION TECHNOLOGY - 1.6% Motorola, Inc., 6.50% Unsec. Debs., 11/15/28 10,000,000 10,185,970 - ----------------------------------------------------------------------- MANUFACTURING - 0.4% MOLL Industries, Inc., 10.50% Sr. Sub. Nts., 7/1/08(7) 250,000 246,250 - ----------------------------------------------------------------------- Norsk Hydro AS, 8.75% Bonds, 10/23/01 1,000,000 1,073,750 - ----------------------------------------------------------------------- Tenneco, Inc. (New): 10.20% Debs., 3/15/08 400,000 490,210 8.075% Nts., 10/1/02 650,000 694,406 ------------- 2,504,616 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-BROADCASTING - 1.9% Chancellor Media Corp.: 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 2,500,000 2,575,000 9% Sr. Sub. Nts., 10/1/08(7) 2,200,000 2,332,000
46 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-BROADCASTING (CONTINUED) Clear Channel Communications, Inc., 6.625% Nts., 6/15/08 $ 3,000,000 $ 3,045,828 - ----------------------------------------------------------------------- Time Warner, Inc., 6.95% Debs., 1/15/28 4,000,000 4,250,416 ------------- 12,203,244 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-CABLE/WIRELESS VIDEO - 1.4% Comcast Cable Communications, Inc., 8.125% Unsec. Nts., 5/1/04 5,000,000 5,524,825 - ----------------------------------------------------------------------- CSC Holdings, Inc., 7.625% Sr. Unsec. Debs., 7/15/18 1,500,000 1,478,400 - ----------------------------------------------------------------------- TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 2,200,000 2,395,351 ------------- 9,398,576 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-DIVERSIFIED MEDIA - 3.3% GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(3) 1,086,678 1,108,694 - ----------------------------------------------------------------------- Imax Corp., 7.875% Sr. Nts., 12/1/05 900,000 913,500 - ----------------------------------------------------------------------- Reed Elsevier, Inc., 6.625% Nts., 10/15/23(7) 600,000 591,516 - ----------------------------------------------------------------------- Reed Publishing (USA), Inc., 7.66% Medium-Term Nts., 2/19/99 500,000 501,083 - ----------------------------------------------------------------------- Regal Cinemas, Inc., 9.50% Sr. Sub. Nts., 6/1/08(7) 500,000 522,500 - ----------------------------------------------------------------------- SFX Entertainment, Inc., 9.125% Sr. Sub. Nts., 12/1/08(7) 600,000 603,750 - ----------------------------------------------------------------------- Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 1,295,000 1,588,491 - ----------------------------------------------------------------------- Time Warner, Inc., 9.15% Debs., 2/1/23 12,000,000 15,822,516 ------------- 21,652,050 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS - -1.9% Cable & Wireless Communications plc, 6.625% Nts., 3/6/05 1,000,000 1,010,803 - ----------------------------------------------------------------------- Intermedia Communications, Inc., 8.60% Sr. Unsec. Nts., Series B, 6/1/08 905,000 864,275 - ----------------------------------------------------------------------- NEXTLINK Communications, Inc., 9.625% Sr. Nts., 10/1/07 2,200,000 2,112,000 - ----------------------------------------------------------------------- NTL, Inc., 11.50% Sr. Nts., 10/1/08(7) 1,000,000 1,097,500 - ----------------------------------------------------------------------- PSINet, Inc.: 10% Sr. Unsec. Nts., Series B, 2/15/05 1,000,000 995,000 11.50% Sr. Nts., 11/1/08(7) 1,000,000 1,052,500 - ----------------------------------------------------------------------- Qwest Communications International, Inc., 0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(10) 1,350,000 1,026,000 - ----------------------------------------------------------------------- Shaw Communications, Inc., 8.54% Debs., 9/30/27CAD 3,000,000 2,031,401 - ----------------------------------------------------------------------- TCI Communications, Inc., 6.875% Sr. Unsec. Nts., 2/15/06 2,000,000 2,150,738 ------------- 12,340,217 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS - 0.9% Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(7) 200,000 201,000 - ----------------------------------------------------------------------- Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts., 12/15/06(7) 1,000,000 1,015,000 - ----------------------------------------------------------------------- SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(10) 700,000 406,000 - ----------------------------------------------------------------------- Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(7)(10) 600,000 303,000 - ----------------------------------------------------------------------- U.S. Cellular Corp., 7.25% Nts., 8/15/07 4,000,000 4,253,488 ------------- 6,178,488 - ----------------------------------------------------------------------- METALS/MINERALS - 0.1% Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 750,000 759,375
47 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ----------------------------------------------------------------------- RETAIL - 1.3% Eye Care Centers of America, Inc., 9.125% Sr. Sub. Nts., 5/1/08(7) $ 250,000 $ 238,750 - ----------------------------------------------------------------------- Neiman Marcus Group, Inc., 6.65% Sr. Nts., 6/1/08 3,000,000 3,014,988 - ----------------------------------------------------------------------- Staples, Inc., 7.125% Sr. Nts., 8/15/07 5,000,000 5,159,805 ------------- 8,413,543 - ----------------------------------------------------------------------- SERVICE - 4.3% Allied Waste North America, Inc., 7.875% Sr. Nts., 1/1/09(7) 665,000 676,638 - ----------------------------------------------------------------------- Archer Daniels Midland Co., 7.125% Debs., 3/1/13 750,000 849,599 - ----------------------------------------------------------------------- Arvin Industries, Inc., 6.75% Nts., 3/15/08 2,500,000 2,585,635 - ----------------------------------------------------------------------- Cendant Corp., 7.75% Sr. Unsec. Nts., 12/1/03(11) 10,000,000 10,230,150 - ----------------------------------------------------------------------- Great Lakes Dredge & Dock Corp., 11.25% Sr. Sub. Nts., 8/15/08(7) 135,000 137,700 - ----------------------------------------------------------------------- Tyco International Group SA, 5.875% Nts., 11/1/04(7) 13,500,000 13,436,375 ------------- 27,916,097 - ----------------------------------------------------------------------- TRANSPORTATION - 4.7% Chrysler Corp., 7.40% Debs., 8/1/2097 2,000,000 2,262,372 - ----------------------------------------------------------------------- CSX Corp.: 6.80% Fixed Nts., 12/1/28 2,700,000 2,697,808 7.25% Sr. Unsec. Debs., 5/1/27 4,820,000 5,145,480 - ----------------------------------------------------------------------- Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 574,979 - ----------------------------------------------------------------------- Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 777,202 - ----------------------------------------------------------------------- UAL Corp., 9.125% Debs., 1/15/12 5,000,000 5,780,190 - ----------------------------------------------------------------------- Union Pacific Corp.: 6.39% Medium-Term Nts., Series E, 11/1/04 13,000,000 13,152,724 9.65% Medium-Term Nts., 4/17/00 400,000 418,300 ------------- 30,809,055 - ----------------------------------------------------------------------- UTILITY - 5.2% AES Corp., 8% Sr. Nts., 12/31/08 6,600,000 6,537,762 - ----------------------------------------------------------------------- Alltel Corp., 6.50% Debs., 11/1/13 1,000,000 1,051,429 - ----------------------------------------------------------------------- Cincinnati Bell Telephone Co., 6.30% Sr. Unsec. Bonds, 12/1/28 1,000,000 1,005,723 - ----------------------------------------------------------------------- Cleveland Electric Illuminating Co./Toledo Edison Co., 7.13% Sec. Nts., Series B, 7/1/07 3,000,000 3,218,124 - ----------------------------------------------------------------------- Consolidated Natural Gas Co., 6.625% Debs., 12/1/13 1,000,000 1,032,508 - ----------------------------------------------------------------------- GTE Corp., 9.375% Debs., 12/1/00 500,000 538,142 - ----------------------------------------------------------------------- Long Island Lighting Co., 8.20% Debs., 3/15/23 3,300,000 3,574,250 - ----------------------------------------------------------------------- National Fuel Gas Co., 7.75% Debs., 2/1/04 500,000 546,822 - ----------------------------------------------------------------------- Northern Telecom Ltd., 6.875% Nts., 10/1/02 500,000 525,985 - ----------------------------------------------------------------------- Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 750,000 826,739 - ----------------------------------------------------------------------- South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 601,390 - ----------------------------------------------------------------------- Sprint Capital Corp., 6.875% Sr. Unsec. Nts., 11/15/28 6,000,000 6,250,440 - ----------------------------------------------------------------------- TE Products Pipeline Co., 6.45% Sr. Nts., 1/15/08 4,000,000 4,061,760 - ----------------------------------------------------------------------- Texas Gas Transmission Corp., 8.625% Nts., 4/1/04 500,000 565,720 - ----------------------------------------------------------------------- Washington Gas Light Co., 8.75% First Mtg. Bonds, 7/1/19 500,000 506,909
48 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT (1) NOTE 1 - ----------------------------------------------------------------------- UTILITY (CONTINUED) Williams Cos., Inc., 6.125% Sec. Nts., 2/15/02 $ 3,000,000 $ 3,026,301 ------------- 33,870,004 ------------- Total Corporate Bonds and Notes (Cost $347,798,759) 354,329,323
SHARES - ----------------------------------------------------------------- PREFERRED STOCKS - 1.6% - ----------------------------------------------------------------- Centaur Funding Corp., 9.08%, Cum. Preferred Shares, 4/21/20(3)(12) 6,600 6,917,625 - ----------------------------------------------------------------- United Dominion Realty Trust, Inc., 8.50% Unsec. Unsub. Preferred Nts. 135,000 3,493,125 ------------- Total Preferred Stocks (Cost $9,975,000) 10,410,750 - ----------------------------------------------------------------- OTHER SECURITIES - 0.5% - ----------------------------------------------------------------- Allstate Financing I, 7.95% Gtd. Quarterly Income Preferred Securities, Series A (Cost $3,000,000) 120,000 3,120,000 PRINCIPAL AMOUNT (1) - ----------------------------------------------------------------- STRUCTURED INSTRUMENTS - 3.9% - ----------------------------------------------------------------- Bankers Trust/Bear Stearns High Yield Composite Index Linked Nts., 8.135%, 6/1/99 $ 5,000,000 5,088,850 - ----------------------------------------------------------------- Bankers Trust/Lehman High Yield Composite Index Linked Nts., 7.70%, 5/4/99 1,000,000 1,033,950 - ----------------------------------------------------------------- Bayerische Landesbank Girozentrale (New York Branch), Lehman High Yield Index Nts., 8.50%, 3/8/99 6,000,000 5,655,000 - ----------------------------------------------------------------- Bear Stearns High Yield Composite Index Linked Nts., 8.50%, 4/9/99 3,000,000 2,788,140 - ----------------------------------------------------------------- Commerzbank International SA, Lehman High Yield Composite Index Linked Nts., 7.80%, 2/5/99-4/5/99 10,000,000 9,973,000 - ----------------------------------------------------------------- Merrill Lynch & Co., Inc., Units, 9.75%, 6/15/99 (representing debt of Chemical Banking Corp., sub. capital nts., and equity of Citicorp, 7.75% preferred, series 22)(3) 1,000,000 1,130,000 ------------- Total Structured Instruments (Cost $26,100,540) 25,668,940 - ----------------------------------------------------------------- REPURCHASE AGREEMENTS - 0.4% - ----------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98, to be repurchased at $2,601,372 on 1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%, 2/15/99-7/15/06, with a value of $2,653,050 (Cost $2,600,000) 2,600,000 2,600,000 - ----------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $681,813,086) 105.0% 688,013,848 - ----------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (5.0) (32,471,149) ------------- ------------- NET ASSETS 100.0% $655,542,699 ------------- ------------- ------------- -------------
1. Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: CAD - Canadian Dollar IDR - Indonesian Rupiah 49 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND STATEMENT OF INVESTMENTS (CONTINUED) - -------------------------------------------------------------------------------- 2. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. 3. Identifies issues considered to be illiquid or restricted - See applicable note of Notes to Financial Statements. 4. When-issued security to be delivered and settled after December 31, 1998. 5. Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. 6. Represents the current interest rate for a variable rate security. 7. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $60,469,812 or 9.22% of the Fund's net assets as of December 31, 1998. 8. Non-income producing - issuer is in default. 9. A sufficient amount of securities has been designated to cover outstanding forward foreign currency exchange contracts. See applicable note of Notes to Financial Statements. 10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 11. Securities with an aggregate market value of $5,115,075 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See applicable note of Notes to Financial Statements. 12. Non-income producing security. See accompanying Notes to Financial Statements. 50 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
MARKET VALUE SHARES NOTE 1 - ------------------------------------------------------------------------------------------ COMMON STOCKS - 88.6% - ------------------------------------------------------------------------------------------ CAPITAL GOODS - 9.8% - ------------------------------------------------------------------------------------------ AEROSPACE/DEFENSE - 1.2% Gulfstream Aerospace Corp.(1) 242,200 $ 12,897,150 - ------------------------------------------------------------------------------------------ INDUSTRIAL SERVICES - 4.9% Allied Waste Industries, Inc. (New)(1) 875,835 20,691,602 - ------------------------------------------------------------------------------------------ Republic Services, Inc., Cl. A(1) 325,200 5,995,875 - ------------------------------------------------------------------------------------------ United Rentals, Inc.(1) 294,693 9,761,706 - ------------------------------------------------------------------------------------------ Waste Management, Inc. (New) 344,600 16,066,975 - -------------- 52,516,158 - ------------------------------------------------------------------------------------------ MANUFACTURING - 3.7% Tyco International Ltd. 525,000 39,604,687 - ------------------------------------------------------------------------------------------ CONSUMER CYCLICALS - 10.5% - ------------------------------------------------------------------------------------------ MEDIA - 1.0% Infinity Broadcasting Corp., Cl. A(1) 391,900 10,728,262 - ------------------------------------------------------------------------------------------ RETAIL: GENERAL - 3.9% Fred Meyer, Inc.(1) 220,000 13,255,000 - ------------------------------------------------------------------------------------------ Kohl's Corp.(1) 200,000 12,287,500 - ------------------------------------------------------------------------------------------ Wal-Mart Stores, Inc. 200,000 16,287,500 - -------------- 41,830,000 - ------------------------------------------------------------------------------------------ RETAIL: SPECIALTY - 5.6% Abercrombie & Fitch Co., Cl. A(1) 105,000 7,428,750 - ------------------------------------------------------------------------------------------ Guitar Center, Inc.(1) 120,000 2,955,000 - ------------------------------------------------------------------------------------------ Home Depot, Inc. 375,000 22,945,312 - ------------------------------------------------------------------------------------------ Linens 'N Things, Inc.(1) 669,000 26,509,125 - -------------- 59,838,187 - ------------------------------------------------------------------------------------------ CONSUMER STAPLES - 7.5% - ------------------------------------------------------------------------------------------ CONSUMER SERVICES - 0.6% Young & Rubicam, Inc.(1) 186,300 6,031,462 - ------------------------------------------------------------------------------------------ ENTERTAINMENT - 3.5% Outback Steakhouse, Inc.(1) 210,000 8,373,750 - ------------------------------------------------------------------------------------------ SFX Entertainment, Inc., Cl. A(1) 275,000 15,090,625 - ------------------------------------------------------------------------------------------ Starbucks Corp.(1) 250,000 14,031,250 - -------------- 37,495,625 - ------------------------------------------------------------------------------------------ FOOD & DRUG RETAILERS - 3.4% CVS Corp. 665,000 36,575,000 - ------------------------------------------------------------------------------------------ FINANCIAL - 10.9% - ------------------------------------------------------------------------------------------ BANKS - 2.0% Fifth Third Bancorp 200,000 14,262,500 - ------------------------------------------------------------------------------------------ First Tennessee National Corp. 200,000 7,612,500 - -------------- 21,875,000
51 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ------------------------------------------------------------------------------------------ DIVERSIFIED FINANCIAL - 8.9% Associates First Capital Corp., Cl. A 432,000 $ 18,306,000 - ------------------------------------------------------------------------------------------ Freddie Mac 380,000 24,486,250 - ------------------------------------------------------------------------------------------ Providian Financial Corp. 375,000 28,125,000 - ------------------------------------------------------------------------------------------ Schwab (Charles) Corp. 450,000 25,284,375 - -------------- 96,201,625 - ------------------------------------------------------------------------------------------ HEALTHCARE - 12.1% - ------------------------------------------------------------------------------------------ HEALTHCARE/DRUGS - 4.7% Biogen, Inc.(1) 260,000 21,580,000 - ------------------------------------------------------------------------------------------ Bristol-Myers Squibb Co. 50,000 6,690,625 - ------------------------------------------------------------------------------------------ Pfizer, Inc. 75,000 9,407,812 - ------------------------------------------------------------------------------------------ Warner Lambert Co. 175,000 13,157,812 - -------------- 50,836,249 - ------------------------------------------------------------------------------------------ HEALTHCARE/SUPPLIES & SERVICES - 7.4% Cardinal Health, Inc. 450,000 34,143,750 - ------------------------------------------------------------------------------------------ Guidant Corp. 100,000 11,025,000 - ------------------------------------------------------------------------------------------ HEALTHSOUTH Corp.(1) 59,300 915,444 - ------------------------------------------------------------------------------------------ McKesson Corp. 230,000 18,184,375 - ------------------------------------------------------------------------------------------ Medtronic, Inc. 125,900 9,348,075 - ------------------------------------------------------------------------------------------ Sofamor Danek Group, Inc.(1) 50,000 6,087,500 - -------------- 79,704,144 - ------------------------------------------------------------------------------------------ TECHNOLOGY - 33.3% - ------------------------------------------------------------------------------------------ COMPUTER HARDWARE - 7.7% 3Com Corp.(1) 25,000 1,120,313 - ------------------------------------------------------------------------------------------ Ascend Communications, Inc.(1) 300,000 19,725,000 - ------------------------------------------------------------------------------------------ Cisco Systems, Inc.(1) 225,000 20,882,813 - ------------------------------------------------------------------------------------------ Dell Computer Corp.(1) 175,000 12,807,813 - ------------------------------------------------------------------------------------------ EMC Corp.(1) 340,000 28,900,000 - -------------- 83,435,939 - ------------------------------------------------------------------------------------------ COMPUTER SOFTWARE/SERVICES - 16.8% Affiliated Computer Services, Inc., Cl. A(1) 200,000 9,000,000 - ------------------------------------------------------------------------------------------ Cap Gemini SA 116,666 18,734,205 - ------------------------------------------------------------------------------------------ Citrix Systems, Inc.(1) 360,000 34,942,500 - ------------------------------------------------------------------------------------------ Compuware Corp.(1) 400,000 31,250,000 - ------------------------------------------------------------------------------------------ Electronic Arts, Inc.(1) 200,000 11,225,000 - ------------------------------------------------------------------------------------------ HBO & Co. 760,000 21,802,500 - ------------------------------------------------------------------------------------------ Lernout & Hauspie Speech Products NV(1) 317,600 10,361,700 - ------------------------------------------------------------------------------------------ Microsoft Corp.(1) 225,000 31,204,688 - ------------------------------------------------------------------------------------------ Visio Corp.(1) 345,000 12,614,063 - -------------- 181,134,656 - ------------------------------------------------------------------------------------------ COMMUNICATIONS EQUIPMENT - 1.3% General Instrument Corp.(1) 100,000 3,393,750 - ------------------------------------------------------------------------------------------ Lucent Technologies, Inc. 100,000 11,000,000 - -------------- 14,393,750
52 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ------------------------------------------------------------------------------------------ ELECTRONICS - 7.5% JDS Fitel, Inc.(1) 425,000 $ 10,545,217 - ------------------------------------------------------------------------------------------ Level One Communications, Inc.(1) 200,000 7,100,000 - ------------------------------------------------------------------------------------------ Uniphase Corp.(1)(2) 228,000 15,817,500 - ------------------------------------------------------------------------------------------ Vitesse Semiconductor Corp.(1) 420,000 19,162,500 - ------------------------------------------------------------------------------------------ Waters Corp.(1) 325,000 28,356,250 - -------------- 80,981,467 - ------------------------------------------------------------------------------------------ TELECOMMUNICATIONS - 4.5% - ------------------------------------------------------------------------------------------ TELECOMMUNICATIONS/TECHNOLOGY - 4.5% Global Crossing Ltd.(1) 362,700 16,366,838 - ------------------------------------------------------------------------------------------ MCI WorldCom, Inc.(1) 350,000 25,112,500 - ------------------------------------------------------------------------------------------ Qwest Communications International, Inc.(1) 146,610 7,330,500 - -------------- 48,809,838 - -------------- Total Common Stocks (Cost $603,144,720) 954,889,199 - ------------------------------------------------------------------------------------------ OTHER SECURITIES - 0.8% - ------------------------------------------------------------------------------------------ L & H Capital Trust, Inc., 4.75% Cv. Preferred Income Equity Redeemable Securities(3) 132,500 4,223,437 - ------------------------------------------------------------------------------------------ United Rental Trust I, 6.50% Cv. Quarterly Income Preferred Securities(3) 100,000 4,812,500 - -------------- Total Other Securities (Cost $11,695,000) 9,035,937 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------ CONVERTIBLE CORPORATE BONDS AND NOTES - 0.3% - ------------------------------------------------------------------------------------------ United Waste Systems, Inc., 4.50% Cv. Sub. Nts., 6/1/01 (Cost $2,000,000) $ 2,000,000 3,137,500 - ------------------------------------------------------------------------------------------ REPURCHASE AGREEMENTS - 10.4% - ------------------------------------------------------------------------------------------ Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98, to be repurchased at $112,559,375 on 1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%, 2/15/99-7/15/06, with a value of $114,795,454 (Cost $112,500,000) 112,500,000 112,500,000 - ------------------------------------------------------------------------------------------ TOTAL INVESTMENTS, AT VALUE (COST $729,339,720) 100.1% 1,079,562,636 - ------------------------------------------------------------------------------------------ LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (1,602,476) ------------ - -------------- NET ASSETS 100.0% $1,077,960,160 ------------ - -------------- ------------ - --------------
1. Non-income producing security. 2. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
SHARES MARKET SUBJECT EXPIRATION EXERCISE PREMIUM VALUE TO CALL DATE PRICE RECEIVED NOTE 1 - ------------------------------------------------------------------------------------------------------------ Uniphase Corp. 13,800 1/99 $70 $34,764 $32,775
3. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $9,035,937, or 0.84% of the Fund's net assets as of December 31, 1998. See accompanying Notes to Financial Statements. 53 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------- COMMON STOCKS - 91.5% - ----------------------------------------------------------------- BASIC MATERIALS - 1.7% - ----------------------------------------------------------------- CHEMICALS - 1.5% Crompton & Knowles Corp. 100,200 $ 2,072,887 - ----------------------------------------------------------------- Morton International, Inc. 139,000 3,405,500 - ----------------------------------------------------------------- PPG Industries, Inc. 100,000 5,825,000 ------------- 11,303,387 - ----------------------------------------------------------------- PAPER - 0.2% Rayonier, Inc. 32,400 1,488,375 - ----------------------------------------------------------------- CAPITAL GOODS - 4.1% - ----------------------------------------------------------------- ELECTRICAL EQUIPMENT - 1.4% Emerson Electric Co. 45,000 2,815,312 - ----------------------------------------------------------------- Sanmina Corp.(1) 128,500 8,031,250 ------------- 10,846,562 - ----------------------------------------------------------------- INDUSTRIAL SERVICES - 0.9% Coflexip SA, Sponsored ADR 49,200 1,580,550 - ----------------------------------------------------------------- Southdown, Inc. 95,500 5,652,406 ------------- 7,232,956 - ----------------------------------------------------------------- MANUFACTURING - 1.8% Herman Miller, Inc. 120,000 3,225,000 - ----------------------------------------------------------------- Illinois Tool Works, Inc. 57,500 3,335,000 - ----------------------------------------------------------------- Owens-Illinois, Inc.(1) 40,000 1,225,000 - ----------------------------------------------------------------- Tyco International Ltd. 75,022 5,659,472 ------------- 13,444,472 - ----------------------------------------------------------------- CONSUMER CYCLICALS - 16.8% - ----------------------------------------------------------------- AUTOS & HOUSING - 3.3% Arvin Industries, Inc. 99,300 4,139,569 - ----------------------------------------------------------------- Centex Corp. 136,000 6,128,500 - ----------------------------------------------------------------- Ethan Allen Interiors, Inc. 80,000 3,280,000 - ----------------------------------------------------------------- Magna International, Inc., Cl. A 22,000 1,364,000 - ----------------------------------------------------------------- Pulte Corp. 44,000 1,223,750 - ----------------------------------------------------------------- Toll Brothers, Inc.(1) 156,200 3,524,262 - ----------------------------------------------------------------- USG Corp. 110,000 5,603,125 ------------- 25,263,206 - ----------------------------------------------------------------- LEISURE & ENTERTAINMENT - 4.1% Callaway Golf Co. 95,000 973,750 - ----------------------------------------------------------------- Carnival Corp. 410,000 19,680,000 - ----------------------------------------------------------------- Harley-Davidson, Inc. 70,000 3,316,250 - ----------------------------------------------------------------- Harrah's Entertainment, Inc.(1) 153,000 2,400,187 - ----------------------------------------------------------------- International Game Technology 50,000 1,215,625
54 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------- LEISURE & ENTERTAINMENT (CONTINUED) Premier Parks, Inc.(1) 130,000 $ 3,932,500 ------------- 31,518,312 - ----------------------------------------------------------------- MEDIA - 3.2% CBS Corp. 150,000 4,912,500 - ----------------------------------------------------------------- Chancellor Media Corp.(1) 130,000 6,223,750 - ----------------------------------------------------------------- Infinity Broadcasting Corp., Cl. A(1) 223,900 6,129,262 - ----------------------------------------------------------------- New York Times Co., Cl. A 200,000 6,937,500 ------------- 24,203,012 - ----------------------------------------------------------------- RETAIL: GENERAL - 4.2% Dayton Hudson Corp. 65,000 3,526,250 - ----------------------------------------------------------------- Federated Department Stores, Inc.(1) 50,000 2,178,125 - ----------------------------------------------------------------- Fred Meyer, Inc.(1) 160,000 9,640,000 - ----------------------------------------------------------------- Jones Apparel Group, Inc.(1) 200,000 4,412,500 - ----------------------------------------------------------------- Nordstrom, Inc. 125,000 4,335,937 - ----------------------------------------------------------------- Tommy Hilfiger Corp.(1) 120,000 7,200,000 - ----------------------------------------------------------------- WestPoint Stevens, Inc.(1) 35,000 1,104,687 ------------- 32,397,499 - ----------------------------------------------------------------- RETAIL: SPECIALTY - 2.0% Barnes & Noble, Inc.(1) 80,000 3,400,000 - ----------------------------------------------------------------- Intimate Brands, Inc., Cl. A 62,000 1,852,250 - ----------------------------------------------------------------- Nine West Group, Inc.(1) 130,000 2,023,125 - ----------------------------------------------------------------- Republic Industries, Inc.(1) 206,000 3,038,500 - ----------------------------------------------------------------- TJX Cos., Inc. 184,000 5,336,000 ------------- 15,649,875 - ----------------------------------------------------------------- CONSUMER STAPLES - 12.6% - ----------------------------------------------------------------- CONSUMER SERVICES - 2.5% Budget Group, Inc., Cl. A(1) 271,800 4,314,825 - ----------------------------------------------------------------- Hertz Corp., Cl. A 73,000 3,330,625 - ----------------------------------------------------------------- Omnicom Group, Inc. 145,000 8,410,000 - ----------------------------------------------------------------- Young & Rubicam, Inc.(1) 94,500 3,059,437 ------------- 19,114,887 - ----------------------------------------------------------------- ENTERTAINMENT - 2.9% CKE Restaurants, Inc. 127,270 3,746,511 - ----------------------------------------------------------------- Royal Caribbean Cruises Ltd. 190,000 7,030,000 - ----------------------------------------------------------------- Time Warner, Inc. 180,000 11,171,250 ------------- 21,947,761 - ----------------------------------------------------------------- FOOD - 1.0% IBP, Inc. 72,800 2,120,300 - ----------------------------------------------------------------- Keebler Foods Co.(1) 145,000 5,455,625 ------------- 7,575,925
55 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------- FOOD & DRUG RETAILERS - 4.5% CVS Corp. 280,000 $ 15,400,000 - ----------------------------------------------------------------- Safeway, Inc.(1) 310,000 18,890,625 ------------- 34,290,625 - ----------------------------------------------------------------- HOUSEHOLD GOODS - 1.7% Avon Products, Inc. 287,000 12,699,750 - ----------------------------------------------------------------- ENERGY - 1.6% - ----------------------------------------------------------------- ENERGY SERVICES & PRODUCERS - 0.8% BJ Services Co.(1) 50,000 781,250 - ----------------------------------------------------------------- Global Industries Ltd.(1) 60,100 368,112 - ----------------------------------------------------------------- Halliburton Co. 129,800 3,845,325 - ----------------------------------------------------------------- Varco International, Inc.(1) 166,200 1,288,050 ------------- 6,282,737 - ----------------------------------------------------------------- OIL - DOMESTIC - 0.4% Mobil Corp. 18,200 1,585,675 - ----------------------------------------------------------------- Texaco, Inc. 29,000 1,533,375 ------------- 3,119,050 - ----------------------------------------------------------------- OIL - INTERNATIONAL - 0.4% Total SA, Sponsored ADR 60,000 2,985,000 - ----------------------------------------------------------------- FINANCIAL - 11.9% - ----------------------------------------------------------------- BANKS - 2.9% Bank One Corp. 124,488 6,356,668 - ----------------------------------------------------------------- BankBoston Corp. 30,000 1,168,125 - ----------------------------------------------------------------- Chase Manhattan Corp. (New) 31,280 2,128,995 - ----------------------------------------------------------------- Credito Italiano SpA 376,000 2,233,572 - ----------------------------------------------------------------- Fleet Financial Group, Inc. 150,000 6,703,125 - ----------------------------------------------------------------- Skandinaviska Enskilda Banken Group 177,500 1,872,330 - ----------------------------------------------------------------- Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR 133,000 1,920,188 ------------- 22,383,003 - ----------------------------------------------------------------- DIVERSIFIED FINANCIAL - 6.5% Associates First Capital Corp., Cl. A 180,000 7,627,500 - ----------------------------------------------------------------- Boston Properties, Inc. 110,000 3,355,000 - ----------------------------------------------------------------- Citigroup, Inc. 228,499 11,310,701 - ----------------------------------------------------------------- Fannie Mae 36,000 2,664,000 - ----------------------------------------------------------------- Finova Group, Inc. 60,800 3,279,400 - ----------------------------------------------------------------- Franklin Resources, Inc. 71,200 2,278,400 - ----------------------------------------------------------------- Freddie Mac 60,000 3,866,250 - ----------------------------------------------------------------- Merrill Lynch & Co., Inc. 70,000 4,672,500 - ----------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 80,000 5,680,000 - ----------------------------------------------------------------- Price (T. Rowe) Associates, Inc. 65,000 2,226,250
56 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------- DIVERSIFIED FINANCIAL (CONTINUED) Schwab (Charles) Corp. 60,000 $ 3,371,250 ------------- 50,331,251 INSURANCE - 2.5% CMAC Investment Corp. 30,000 1,378,125 - ----------------------------------------------------------------- Conseco, Inc. 190,000 5,806,875 - ----------------------------------------------------------------- Equitable Cos., Inc. 100,000 5,787,500 - ----------------------------------------------------------------- SunAmerica, Inc. 78,500 6,368,313 ------------- 19,340,813 - ----------------------------------------------------------------- HEALTHCARE - 8.7% - ----------------------------------------------------------------- HEALTHCARE/DRUGS - 5.2% Elan Corp. plc, ADR(1) 100,000 6,956,250 - ----------------------------------------------------------------- Lilly (Eli) & Co. 45,000 3,999,375 - ----------------------------------------------------------------- Pfizer, Inc. 142,000 17,812,125 - ----------------------------------------------------------------- Schering-Plough Corp. 205,600 11,359,400 ------------- 40,127,150 - ----------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES - 3.5% Baxter International, Inc. 63,000 4,051,688 - ----------------------------------------------------------------- Cardinal Health, Inc. 95,400 7,238,475 - ----------------------------------------------------------------- First Health Group Corp.(1) 157,600 2,610,250 - ----------------------------------------------------------------- HEALTHSOUTH Corp.(1) 88,000 1,358,500 - ----------------------------------------------------------------- Lincare Holdings, Inc.(1) 30,000 1,216,875 - ----------------------------------------------------------------- Medtronic, Inc. 55,000 4,083,750 - ----------------------------------------------------------------- Safeskin Corp.(1) 130,000 3,136,250 - ----------------------------------------------------------------- Total Renal Care Holdings, Inc.(1) 101,750 3,007,984 ------------- 26,703,772 - ----------------------------------------------------------------- TECHNOLOGY - 29.0% - ----------------------------------------------------------------- COMPUTER HARDWARE - 7.7% Cisco Systems, Inc.(1) 200,000 18,562,500 - ----------------------------------------------------------------- Compaq Computer Corp. 250,000 10,484,375 - ----------------------------------------------------------------- Data General Corp.(1) 159,000 2,613,563 - ----------------------------------------------------------------- Dell Computer Corp.(1) 25,000 1,829,688 - ----------------------------------------------------------------- EMC Corp.(1) 94,000 7,990,000 - ----------------------------------------------------------------- Gateway 2000, Inc.(1) 100,000 5,118,750 - ----------------------------------------------------------------- Seagate Technology, Inc.(1) 210,000 6,352,500 - ----------------------------------------------------------------- Sun Microsystems, Inc.(1) 74,000 6,336,250 ------------- 59,287,626 - ----------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES - 10.2% BMC Software, Inc.(1) 180,000 8,021,250 - ----------------------------------------------------------------- Cambridge Technology Partners, Inc.(1) 50,000 1,106,250 - ----------------------------------------------------------------- Gartner Group, Inc., Cl. A(1) 91,000 1,933,750
57 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES (CONTINUED) HBO & Co. 170,000 $ 4,876,875 - ----------------------------------------------------------------- Microsoft Corp.(1) 185,000 25,657,188 - ----------------------------------------------------------------- Network Associates, Inc.(1) 120,000 7,950,000 - ----------------------------------------------------------------- Oracle Corp.(1) 180,000 7,762,500 - ----------------------------------------------------------------- Peoplesoft, Inc.(1) 188,000 3,560,250 - ----------------------------------------------------------------- PLATINUM Technology, Inc.(1) 148,300 2,836,238 - ----------------------------------------------------------------- Saville Systems Ireland plc, Sponsored ADR(1) 85,000 1,615,000 - ----------------------------------------------------------------- Sungard Data Systems, Inc.(1) 163,300 6,480,969 - ----------------------------------------------------------------- Unisys Corp.(1) 110,000 3,788,125 - ----------------------------------------------------------------- Veritas Software Corp.(1) 50,000 2,996,875 ------------- 78,585,270 - ----------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 5.3% Alcatel SA, Sponsored ADR 140,000 3,421,250 - ----------------------------------------------------------------- CIENA Corp.(1) 100,000 1,462,500 - ----------------------------------------------------------------- General Instrument Corp.(1) 250,000 8,484,375 - ----------------------------------------------------------------- Lucent Technologies, Inc. 35,000 3,850,000 - ----------------------------------------------------------------- Premisys Communications, Inc.(1) 160,000 1,470,000 - ----------------------------------------------------------------- Tellabs, Inc.(1) 323,000 22,145,688 ------------- 40,833,813 - ----------------------------------------------------------------- ELECTRONICS - 5.8% Applied Materials, Inc.(1) 70,000 2,988,125 - ----------------------------------------------------------------- LSI Logic Corp.(1) 63,000 1,015,875 - ----------------------------------------------------------------- Micron Technology, Inc.(1) 105,000 5,309,063 - ----------------------------------------------------------------- Motorola, Inc. 70,000 4,274,375 - ----------------------------------------------------------------- Novellus Systems, Inc.(1) 78,000 3,861,000 - ----------------------------------------------------------------- Uniphase Corp.(1) 80,000 5,550,000 - ----------------------------------------------------------------- Vitesse Semiconductor Corp.(1) 286,100 13,053,313 - ----------------------------------------------------------------- Waters Corp.(1) 100,000 8,725,000 ------------- 44,776,751 - ----------------------------------------------------------------- TELECOMMUNICATIONS - 3.9% - ----------------------------------------------------------------- TELEPHONE UTILITIES - 1.2% Embratel Participacoes SA, ADR(1) 80,000 1,115,000 - ----------------------------------------------------------------- SBC Communications, Inc. 70,000 3,753,750 - ----------------------------------------------------------------- Telesp Celular Participacoes SA, ADR(1) 100,000 1,750,000 - ----------------------------------------------------------------- Telesp Participacoes SA, ADR(1) 115,000 2,544,375 ------------- 9,163,125 - ----------------------------------------------------------------- TELECOMMUNICATIONS/TECHNOLOGY - 2.7% MCI WorldCom, Inc.(1) 211,000 15,139,250 - ----------------------------------------------------------------- Qwest Communications International, Inc.(1) 113,942 5,697,100 ------------- 20,836,350
58 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------- TRANSPORTATION - 1.2% - ----------------------------------------------------------------- RAILROADS & TRUCKERS - 1.2% Kansas City Southern Industries, Inc. 190,000 $ 9,345,625 ------------- Total Common Stocks (Cost $511,894,542) 703,077,940
PRINCIPAL AMOUNT - ----------------------------------------------------------------- REPURCHASE AGREEMENTS - 8.4% - ----------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98, to be repurchased at $64,433,989 on 1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%, 2/15/99-7/15/06, with a value of $65,714,020 (Cost $64,400,000) $ 64,400,000 64,400,000 - ----------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $576,294,542) 99.9% 767,477,940 - ----------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.1 1,071,756 ------------ ------------- NET ASSETS 100.0% $768,549,696 ------------ ------------- ------------ -------------
1. Non-income producing security. See accompanying Notes to Financial Statements. 59 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------- COMMON STOCKS - 48.3% - -------------------------------------------------------------------------- BASIC MATERIALS - 1.5% - -------------------------------------------------------------------------- CHEMICALS - 0.9% Bayer AG, Sponsored ADR 47,000 $ 1,962,659 - -------------------------------------------------------------------------- Du Pont (E.I.) De Nemours & Co. 27,000 1,432,687 - -------------------------------------------------------------------------- Potash Corp. of Saskatchewan, Inc.(1) 32,500 2,075,937 --------------- 5,471,283 - -------------------------------------------------------------------------- METALS - 0.2% De Beers Consolidated Mines Ltd., ADR 100,000 1,275,000 - -------------------------------------------------------------------------- PAPER - 0.4% MacMillan Bloedel Ltd. 130,883 1,307,548 - -------------------------------------------------------------------------- Wausau-Mosinee Paper Corp. 77,000 1,361,937 --------------- 2,669,485 - -------------------------------------------------------------------------- CAPITAL GOODS - 1.8% - -------------------------------------------------------------------------- ELECTRICAL EQUIPMENT - 0.3% Rockwell International Corp. 42,500 2,063,906 - -------------------------------------------------------------------------- MANUFACTURING - 1.5% AGCO Corp. 90,000 708,750 - -------------------------------------------------------------------------- ASM Lithography Holding NV(1)(2) 50,400 1,537,200 - -------------------------------------------------------------------------- Cognex Corp.(2) 70,000 1,400,000 - -------------------------------------------------------------------------- Hexcel Corp. (New)(2) 125,000 1,046,875 - -------------------------------------------------------------------------- Hutchison Whampoa Ltd. 35,000 247,353 - -------------------------------------------------------------------------- JLK Direct Distribution, Inc.(2) 30,000 305,625 - -------------------------------------------------------------------------- Pall Corp. 105,000 2,657,812 - -------------------------------------------------------------------------- Tenneco, Inc. (New) 50,000 1,703,125 --------------- 9,606,740 - -------------------------------------------------------------------------- CONSUMER CYCLICALS - 8.1% - -------------------------------------------------------------------------- AUTOS & HOUSING - 1.3% Dana Corp. 37,500 1,532,812 - -------------------------------------------------------------------------- Ethan Allen Interiors, Inc. 10,000 410,000 - -------------------------------------------------------------------------- IRSA Inversiones y Representaciones SA 363,877 997,923 - -------------------------------------------------------------------------- Lear Corp.(2) 52,500 2,021,250 - -------------------------------------------------------------------------- Owens Corning 58,000 2,055,375 - -------------------------------------------------------------------------- Toll Brothers, Inc.(2) 46,000 1,037,875 --------------- 8,055,235 - -------------------------------------------------------------------------- LEISURE & ENTERTAINMENT - 2.9% Berjaya Sports Toto Berhad(3) 410,000 409,137 - -------------------------------------------------------------------------- Brunswick Corp. 65,000 1,608,750 - -------------------------------------------------------------------------- Callaway Golf Co. 87,000 891,750 - -------------------------------------------------------------------------- Carnival Corp. 27,500 1,320,000
60 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------- LEISURE & ENTERTAINMENT (CONTINUED) Crestline Capital Corp.(2) 9,000 $ 138,375 - -------------------------------------------------------------------------- Host Marriott Corp.(2) 90,000 1,243,125 - -------------------------------------------------------------------------- International Game Technology 120,000 2,917,500 - -------------------------------------------------------------------------- Marriott International, Inc., Cl. A 35,000 1,015,000 - -------------------------------------------------------------------------- Mattel, Inc. -- 6 - -------------------------------------------------------------------------- Mirage Resorts, Inc.(2) 170,000 2,539,375 - -------------------------------------------------------------------------- Nintendo Co. Ltd. 32,000 3,094,040 - -------------------------------------------------------------------------- Shimano, Inc. 100,000 2,573,951 --------------- 17,751,009 - -------------------------------------------------------------------------- MEDIA - 1.6% CBS Corp.(1) 110,000 3,602,500 - -------------------------------------------------------------------------- MediaOne Group, Inc.(2) 57,600 2,707,200 - -------------------------------------------------------------------------- RCN Corp.(2) 135,000 2,387,812 - -------------------------------------------------------------------------- South China Morning Post Holdings Ltd. 2,258,000 1,158,580 --------------- 9,856,092 - -------------------------------------------------------------------------- RETAIL: GENERAL - 1.6% Cone Mills Corp.(2) 154,000 866,250 - -------------------------------------------------------------------------- Dayton Hudson Corp. 28,000 1,519,000 - -------------------------------------------------------------------------- Federated Department Stores, Inc.(1)(2) 47,500 2,069,219 - -------------------------------------------------------------------------- Jones Apparel Group, Inc.(2) 77,000 1,698,812 - -------------------------------------------------------------------------- Neiman Marcus Group, Inc.(2) 79,000 1,970,062 - -------------------------------------------------------------------------- Saks, Inc.(2) 51,660 1,630,519 --------------- 9,753,862 - -------------------------------------------------------------------------- RETAIL: SPECIALTY - 0.7% AutoZone, Inc.(1)(2) 57,000 1,877,437 - -------------------------------------------------------------------------- General Nutrition Cos., Inc.(2) 104,000 1,690,000 - -------------------------------------------------------------------------- Petco Animal Supplies, Inc.(2) 60,000 603,750 --------------- 4,171,187 - -------------------------------------------------------------------------- CONSUMER STAPLES - 4.5% - -------------------------------------------------------------------------- BEVERAGES - 0.6% Coca-Cola Beverages plc(2) 55,000 95,750 - -------------------------------------------------------------------------- Diageo plc 155,800 1,744,928 - -------------------------------------------------------------------------- Whitman Corp.(1) 62,000 1,573,250 --------------- 3,413,928 - -------------------------------------------------------------------------- CONSUMER SERVICES - 0.4% Alternative Living Services, Inc.(2) 74,000 2,534,500 - -------------------------------------------------------------------------- Intermedia Communications, Inc.(2) 462 7,969 - -------------------------------------------------------------------------- Intermedia Communications, Inc.(2)(3) 58 800 --------------- 2,543,269
61 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------- ENTERTAINMENT - 1.0% Cracker Barrel Old Country Store, Inc. 76,000 $ 1,771,750 - -------------------------------------------------------------------------- Luby's Cafeterias, Inc. 90,000 1,389,375 - -------------------------------------------------------------------------- Time Warner, Inc. 48,000 2,979,000 --------------- 6,140,125 - -------------------------------------------------------------------------- FOOD - 0.7% Groupe Danone 10,000 2,864,300 - -------------------------------------------------------------------------- Nestle SA, Sponsored ADR 14,000 1,523,866 --------------- 4,388,166 - -------------------------------------------------------------------------- FOOD & DRUG RETAILERS - 0.0% Cia Brasileira de Distribuicao Grupo Pao de Acucar, Sponsored ADR 14,000 217,000 - -------------------------------------------------------------------------- HOUSEHOLD GOODS - 0.7% Fort James Corp. 43,000 1,720,000 - -------------------------------------------------------------------------- Rexall Sundown, Inc.(2) 52,100 729,400 - -------------------------------------------------------------------------- Wella AG 2,150 1,471,608 - -------------------------------------------------------------------------- Wella AG, Preference 200 168,115 --------------- 4,089,123 - -------------------------------------------------------------------------- TOBACCO - 1.1% Imperial Tobacco Group plc 225,400 2,406,714 - -------------------------------------------------------------------------- Philip Morris Cos., Inc.(1) 87,000 4,654,500 --------------- 7,061,214 - -------------------------------------------------------------------------- ENERGY - 2.2% - -------------------------------------------------------------------------- ENERGY SERVICES & PRODUCERS - 0.9% Baker Hughes, Inc. 33,750 596,953 - -------------------------------------------------------------------------- Input/Output, Inc.(2) 193,000 1,411,312 - -------------------------------------------------------------------------- Santa Fe International Corp. 99,000 1,447,875 - -------------------------------------------------------------------------- Schlumberger Ltd. 25,000 1,153,125 - -------------------------------------------------------------------------- Transocean Offshore, Inc. 44,000 1,179,750 --------------- 5,789,015 - -------------------------------------------------------------------------- OIL - DOMESTIC - 0.6% Comstock Resources, Inc.(2) 175,000 535,937 - -------------------------------------------------------------------------- Kerr-McGee Corp. 35,000 1,338,750 - -------------------------------------------------------------------------- Unocal Corp. 65,000 1,897,187 --------------- 3,771,874 - -------------------------------------------------------------------------- OIL - INTERNATIONAL - 0.7% Petroleo Brasileiro SA, Preference 3,330,000 377,595 - -------------------------------------------------------------------------- Talisman Energy, Inc.(2) 95,510 1,680,702 - -------------------------------------------------------------------------- Total SA, Sponsored ADR 17,501 870,675 - -------------------------------------------------------------------------- YPF SA, Cl. D, ADR 50,000 1,396,875 --------------- 4,325,847
62 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------- FINANCIAL - 11.1% - -------------------------------------------------------------------------- BANKS - 6.3% ABN Amro Holding NV 62,700 $ 1,319,707 - -------------------------------------------------------------------------- Banco Frances del Rio de la Plata SA 95,000 675,109 - -------------------------------------------------------------------------- Bank One Corp. 36,000 1,838,250 - -------------------------------------------------------------------------- BankAmerica Corp. (New)(1) 167,500 10,070,937 - -------------------------------------------------------------------------- Chase Manhattan Corp. (New) 165,000 11,230,312 - -------------------------------------------------------------------------- Credit Suisse Group 5,225 817,595 - -------------------------------------------------------------------------- Credito Italiano SpA 460,700 2,736,720 - -------------------------------------------------------------------------- J.P. Morgan & Co., Inc.(1) 18,500 1,943,656 - -------------------------------------------------------------------------- Societe Generale 26,200 4,244,714 - -------------------------------------------------------------------------- UBS AG 4,175 1,282,278 - -------------------------------------------------------------------------- Wells Fargo Co. 70,000 2,795,625 --------------- 38,954,903 - -------------------------------------------------------------------------- DIVERSIFIED FINANCIAL - 1.5% American Express Co.(1) 20,000 2,045,000 - -------------------------------------------------------------------------- Avalonbay Communities, Inc. 30,732 1,052,571 - -------------------------------------------------------------------------- ICICI Ltd., GDR(4) 35,500 236,963 - -------------------------------------------------------------------------- Merrill Lynch & Co., Inc.(1) 31,000 2,069,250 - -------------------------------------------------------------------------- Morgan Stanley Dean Witter & Co.(1) 40,000 2,840,000 - -------------------------------------------------------------------------- Simon Property Group, Inc. (New) 37,500 1,068,750 --------------- 9,312,534 - -------------------------------------------------------------------------- INSURANCE - 1.1% Everest Reinsurance Holdings, Inc. 56,000 2,180,500 - -------------------------------------------------------------------------- Skandia Forsakrings AB 162,000 2,478,305 - -------------------------------------------------------------------------- UNUM Corp. 40,000 2,335,000 --------------- 6,993,805 - -------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS - 2.2% Archstone Communities Trust 52,000 1,053,000 - -------------------------------------------------------------------------- Brandywine Realty Trust 56,000 1,001,000 - -------------------------------------------------------------------------- Camden Property Trust 40,000 1,040,000 - -------------------------------------------------------------------------- CarrAmerica Realty Corp. 48,000 1,152,000 - -------------------------------------------------------------------------- Chastain Capital Corp. 134,000 603,000 - -------------------------------------------------------------------------- Chelsea GCA Realty, Inc. 32,000 1,140,000 - -------------------------------------------------------------------------- Cornerstone Properties, Inc. 68,000 1,062,500 - -------------------------------------------------------------------------- CRIIMI MAE, Inc. 115,000 402,500 - -------------------------------------------------------------------------- Developers Diversified Realty Corp. 62,000 1,100,500 - -------------------------------------------------------------------------- JDN Realty Corp. 60,000 1,293,750 - -------------------------------------------------------------------------- Manufactured Home Communities, Inc. 44,000 1,102,750 - -------------------------------------------------------------------------- Post Properties, Inc. 28,000 1,076,250 - -------------------------------------------------------------------------- Shurgard Storage Centers, Inc. 44,000 1,135,750
63 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS (CONTINUED) Sunstone Hotel Investors, Inc. 80,000 $ 755,000 --------------- 13,918,000 - -------------------------------------------------------------------------- HEALTHCARE - 4.1% - -------------------------------------------------------------------------- HEALTHCARE/DRUGS - 3.4% Abbott Laboratories 42,000 2,058,000 - -------------------------------------------------------------------------- American Home Products Corp. 56,000 3,153,500 - -------------------------------------------------------------------------- Astra AB Free, Series A 120,000 2,450,176 - -------------------------------------------------------------------------- Centocor, Inc.(1)(2) 60,500 2,730,063 - -------------------------------------------------------------------------- Johnson & Johnson 21,000 1,761,375 - -------------------------------------------------------------------------- Mylan Laboratories, Inc.(1) 69,500 2,189,250 - -------------------------------------------------------------------------- Novartis AG 2,000 3,930,131 - -------------------------------------------------------------------------- SmithKline Beecham plc, Cl. A., Sponsored ADR 38,000 2,641,000 --------------- 20,913,495 - -------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES - 0.7% Acuson Corp.(2) 104,000 1,547,000 - -------------------------------------------------------------------------- Biomet, Inc. 20,000 805,000 - -------------------------------------------------------------------------- Innovasive Devices, Inc.(2) 110,000 371,250 - -------------------------------------------------------------------------- Pliva d.d., Sponsored GDR(4) 20,000 332,000 - -------------------------------------------------------------------------- United Healthcare Corp. 32,800 1,412,450 --------------- 4,467,700 - -------------------------------------------------------------------------- TECHNOLOGY - 10.8% - -------------------------------------------------------------------------- COMPUTER HARDWARE - 3.4% 3Com Corp.(2) 33,000 1,478,813 - -------------------------------------------------------------------------- Canon, Inc. 50,000 1,066,225 - -------------------------------------------------------------------------- Cisco Systems, Inc.(1)(2) 45,000 4,176,563 - -------------------------------------------------------------------------- Compaq Computer Corp. 17,500 733,906 - -------------------------------------------------------------------------- Hewlett-Packard Co. 39,000 2,664,188 - -------------------------------------------------------------------------- International Business Machines Corp.(1) 60,000 11,085,000 --------------- 21,204,695 - -------------------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES - 3.4% America Online, Inc.(1) 34,200 4,950,450 - -------------------------------------------------------------------------- Computer Associates International, Inc.(1) 62,999 2,685,354 - -------------------------------------------------------------------------- Electronic Arts, Inc.(1)(2) 25,000 1,403,125 - -------------------------------------------------------------------------- First Data Corp. 80,000 2,535,000 - -------------------------------------------------------------------------- Novell, Inc.(1)(2) 126,000 2,283,750 - -------------------------------------------------------------------------- PLATINUM Technology, Inc.(2) 70,000 1,338,750 - -------------------------------------------------------------------------- Rational Software Corp.(1)(2) 128,000 3,392,000 - -------------------------------------------------------------------------- Sabre Group Holdings, Inc.(1)(2) 60,000 2,670,000 - -------------------------------------------------------------------------- SELECT Software Tools Ltd., ADR(2) 100,000 106,250
64 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES (CONTINUED) Structural Dynamics Research Corp.(2) 167 $ 3,319 --------------- 21,367,998 - -------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 0.2% Tellabs, Inc.(1)(2) 17,500 1,199,844 - -------------------------------------------------------------------------- ELECTRONICS - 3.3% Analog Devices, Inc.(1)(2) 69,000 2,164,875 - -------------------------------------------------------------------------- General Motors Corp., Cl. H(1)(2) 40,200 1,595,438 - -------------------------------------------------------------------------- Intel Corp.(1) 86,000 10,196,375 - -------------------------------------------------------------------------- Keyence Corp. 9,000 1,104,636 - -------------------------------------------------------------------------- Methode Electronics, Inc., Cl. A 105,000 1,640,625 - -------------------------------------------------------------------------- STMicroelectronics NV, NY Shares(1)(2) 17,500 1,366,094 - -------------------------------------------------------------------------- Teradyne, Inc.(1)(2) 29,000 1,228,875 - -------------------------------------------------------------------------- Xilinx, Inc.(1)(2) 21,000 1,367,625 --------------- 20,664,543 - -------------------------------------------------------------------------- PHOTOGRAPHY - 0.5% Xerox Corp.(1) 24,000 2,832,000 - -------------------------------------------------------------------------- TELECOMMUNICATIONS - 1.8% - -------------------------------------------------------------------------- TELEPHONE UTILITIES - 0.4% SBC Communications, Inc. 44,000 2,359,500 - -------------------------------------------------------------------------- Telecomunicacoes Brasileiras SA 8,100,000 670 --------------- 2,360,170 - -------------------------------------------------------------------------- TELECOMMUNICATIONS/TECHNOLOGY - 1.4% Airtouch Communications, Inc.(1)(2) 35,000 2,524,375 - -------------------------------------------------------------------------- Embratel Participacoes SA(2) 8,100,000 70,394 - -------------------------------------------------------------------------- MCI WorldCom, Inc.(1)(2) 62,195 4,462,491 - -------------------------------------------------------------------------- Qwest Communications International, Inc.(2) 25,000 1,250,000 - -------------------------------------------------------------------------- Tele Celular Sul Participacoes SA(2) 8,100,000 7,509 - -------------------------------------------------------------------------- Tele Centro Oeste Celular Participacoes SA(2) 8,100,000 6,369 - -------------------------------------------------------------------------- Tele Centro Sul Participacoes SA(2) 8,100,000 53,634 - -------------------------------------------------------------------------- Tele Leste Celular Participacoes SA(2) 8,100,000 3,218 - -------------------------------------------------------------------------- Tele Nordeste Celular Participacoes SA(2) 8,100,000 4,090 - -------------------------------------------------------------------------- Tele Norte Celular Participacoes SA(2) 8,100,000 2,615 - -------------------------------------------------------------------------- Tele Norte Leste Participacoes SA(2) 8,100,000 66,372 - -------------------------------------------------------------------------- Tele Sudeste Celular Participacoes SA(2) 8,100,000 22,794 - -------------------------------------------------------------------------- Telemig Celular Participacoes SA(2) 8,100,000 5,699 - -------------------------------------------------------------------------- Telesp Celular Participacoes SA(2) 8,100,000 34,862 - -------------------------------------------------------------------------- Telesp Participacoes SA(2) 8,100,000 103,915 --------------- 8,618,337
65 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------- TRANSPORTATION - 1.2% - -------------------------------------------------------------------------- AIR TRANSPORTATION - 0.6% Alaska Air Group, Inc.(1)(2) 29,500 $ 1,305,375 - -------------------------------------------------------------------------- AMR Corp.(1)(2) 40,000 2,375,000 --------------- 3,680,375 - -------------------------------------------------------------------------- RAILROADS & TRUCKERS - 0.4% Burlington Northern Santa Fe Corp. 74,000 2,497,500 - -------------------------------------------------------------------------- SHIPPING - 0.2% Stolt-Nielsen SA 73,000 739,125 - -------------------------------------------------------------------------- Stolt-Nielsen SA, Sponsored ADR 17,650 180,913 - -------------------------------------------------------------------------- Transportacion Maritima Mexicana SA de CV, Sponsored ADR, L Shares(2) 75,700 406,888 --------------- 1,326,926 - -------------------------------------------------------------------------- UTILITIES - 1.2% - -------------------------------------------------------------------------- ELECTRIC UTILITIES - 1.0% Allegheny Energy, Inc. 48,000 1,656,000 - -------------------------------------------------------------------------- Houston Industries, Inc. 76,000 2,441,500 - -------------------------------------------------------------------------- Southern Co. 75,000 2,179,688 --------------- 6,277,188 - -------------------------------------------------------------------------- GAS UTILITIES - 0.2% Enron Corp. 25,600 1,460,800 --------------- Total Common Stocks (Cost $218,199,678) 300,464,173 - -------------------------------------------------------------------------- PREFERRED STOCKS - 0.9% - -------------------------------------------------------------------------- Budget Group, Inc., 6.25% Cv.(4) 20,000 775,000 - -------------------------------------------------------------------------- IGG Communications, Inc., 6.75% Cv. Preferred Stock 45,000 2,356,875 - -------------------------------------------------------------------------- Intermedia Communications, Inc.: 7% Cv. Preferred Securities(4) 5,000 71,250 Depositary Shares Representing one one-hundredth 7% Cum. Cv. Jr. Preferred Stock, Series D, Non-Vtg. 30,000 750,000 - -------------------------------------------------------------------------- Monsanto Co., 6.50% Cv.(2) 35,000 1,715,000 --------------- Total Preferred Stocks (Cost $6,872,031) 5,668,125 UNITS - -------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES - 0.0% - -------------------------------------------------------------------------- American Telecasting, Inc. Wts., Exp. 6/99(3) 6,000 60 - -------------------------------------------------------------------------- Covergent Communications, Inc. Wts., Exp. 4/08(3) 2,000 2,500 - -------------------------------------------------------------------------- Gaylord Container Corp. Wts., Exp. 11/02 9,232 50,776 - -------------------------------------------------------------------------- IHF Capital, Inc. Series I Wts., Exp. 11/99(3) 1,000 10 - -------------------------------------------------------------------------- Perkin-Elmer Corp. Wts., Exp. 9/03 249 1,992 - -------------------------------------------------------------------------- Terex Corp. Rts., Exp. 5/02(3) 4,000 56,500 --------------- Total Rights, Warrants and Certificates (Cost $20,772) 111,838
66 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(5) NOTE 1 - -------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS - 1.4% - -------------------------------------------------------------------------- Federal National Mortgage Assn., 6.50%, 11/1/27-12/1/27 $ 4,672,379 $ 4,704,386 - -------------------------------------------------------------------------- Government National Mortgage Assn., 8%, 7/15/22-4/15/23 2,948,105 3,074,413 - -------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates, Series 1994-C2, Cl. E, 8%, 4/25/25 651,810 649,060 --------------- Total Mortgage-Backed Obligations (Cost $8,273,574) 8,427,859 - -------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS - 11.0% - -------------------------------------------------------------------------- U.S. Treasury Bonds: 8.875%, 8/15/17 2,900,000 4,089,908 STRIPS, 7.26%, 11/15/18(6) 10,000,000 3,332,330 STRIPS, 7.10%, 11/15/18(6) 16,000,000 5,311,200 STRIPS, 7.30%, 8/15/19(6) 18,000,000 5,730,606 - -------------------------------------------------------------------------- U.S. Treasury Nts.: 5.875%, 9/30/02 15,000,000 15,600,000 6.125%, 9/30/00 15,000,000 15,375,000 6.25%, 2/15/07 8,800,000 9,655,254 6.375%, 8/15/02 5,000,000 5,275,000 6.50%, 10/15/06 3,710,000 4,119,261 --------------- Total U.S. Government Obligations (Cost $62,146,404) 68,488,559 - -------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS - 22.4% - -------------------------------------------------------------------------- ARGENTINA - 6.2% Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas, Series I, 5.010%, 4/1/01(7) 1,473,768 1,363,501 - -------------------------------------------------------------------------- Argentina (Republic of) Bonds, Series L, 6.188%, 3/31/05(7) 8,648,000 7,372,420 - -------------------------------------------------------------------------- Argentina (Republic of) Nts., 14.25%, 11/30/02(7) 13,125,000 12,895,312 - -------------------------------------------------------------------------- Argentina (Republic of) Par Bonds, 5.75%, 3/31/23(8) 23,750,000 17,129,687 --------------- 38,760,920 - -------------------------------------------------------------------------- AUSTRALIA - 0.5% New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04(AUD) 3,160,000 2,098,810 - -------------------------------------------------------------------------- Queensland Treasury Corp. Exchangeable Gtd. Nts., 10.50%, 5/15/03(AUD) 1,800,000 1,338,833 --------------- 3,437,643 - -------------------------------------------------------------------------- BRAZIL - 3.7% Brazil (Federal Republic of) Capitalization Bonds, 8%, 4/15/14 21,079,398 12,594,940 - -------------------------------------------------------------------------- Brazil (Federal Republic of) Eligible Interest Bonds, 6.125%, 4/15/06(7) 15,792,000 10,185,840 --------------- 22,780,780 - -------------------------------------------------------------------------- CANADA - 2.8% Canada (Government of) Bonds: 8.50%, 4/1/02(CAD) 1,500,000 1,089,060 8.75%, 12/1/05(CAD) 12,200,000 9,782,863 9.75%, 12/1/01(CAD) 3,000,000 2,220,607 9.75%, 6/1/01(CAD) 2,000,000 1,452,419 Series WL43, 5.75%, 6/1/29(CAD) 3,670,000 2,618,341 --------------- 17,163,290
67 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(5) NOTE 1 - -------------------------------------------------------------------------- DENMARK - 1.0% Denmark (Kingdom of) Bonds, 8%, 3/15/06(DKK) 32,100,000 $ 6,219,920 - -------------------------------------------------------------------------- GREAT BRITAIN - 1.3% United Kingdom Treasury Bonds, 6.75%, 11/26/04(GBP) 2,680,000 4,983,321 - -------------------------------------------------------------------------- United Kingdom Treasury Nts., 13%, 7/14/00(GBP) 1,590,000 2,939,123 --------------- 7,922,444 - -------------------------------------------------------------------------- IRELAND - 0.3% Ireland (Government of) Bonds, 9.25%, 7/11/03(IEP) 1,110,000 2,057,171 - -------------------------------------------------------------------------- MEXICO - 0.6% United Mexican States Collateralized Fixed Rate Par Bonds, Series W-A, 6.25%, 12/31/19 4,450,000 3,476,562 - -------------------------------------------------------------------------- NEW ZEALAND - 4.9% New Zealand (Government of) Bonds: 10%, 3/15/02(NZD) 16,800,000 10,045,321 8%, 2/15/01(NZD) 19,440,000 10,793,288 - -------------------------------------------------------------------------- New Zealand (Government of) Nts., 6.50%, 2/15/00(NZD) 18,600,000 9,937,733 --------------- 30,776,342 - -------------------------------------------------------------------------- PHILIPPINES - 0.4% Philippines (Republic of) Bonds, 8.60%, 6/15/27 1,500,000 1,265,625 - -------------------------------------------------------------------------- Philippines (Republic of) Par Bonds, Series B, 6.50%, 12/1/17 (3)(8) 1,675,000 1,461,437 --------------- 2,727,062 - -------------------------------------------------------------------------- POLAND - 0.4% Poland (Republic of) Bonds, 15%, 10/12/99(PLZ) 9,000,000 2,589,805 - -------------------------------------------------------------------------- SOUTH AFRICA - 0.3% Eskom Depositary Receipts, Series E168, 11%, 6/1/08(ZAR) 12,570,000 1,591,691 --------------- Total Foreign Government Obligations (Cost $140,372,132) 139,503,630
- -------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 6.2% - -------------------------------------------------------------------------- BASIC MATERIALS - 0.9% - -------------------------------------------------------------------------- CHEMICALS - 0.2% Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B, 9/15/07 500,000 402,500 - -------------------------------------------------------------------------- NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 85,000 90,737 - -------------------------------------------------------------------------- Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts., 8/15/06 535,000 462,775 --------------- 956,012 - -------------------------------------------------------------------------- METALS - 0.4% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 1,015,000 1,060,675 - -------------------------------------------------------------------------- Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 1,000,000 985,000 - -------------------------------------------------------------------------- Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 420,750 --------------- 2,466,425
68 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(5) NOTE 1 - -------------------------------------------------------------------------- PAPER - 0.3% Aracruz Celulose SA, 10.375% Debs., 1/31/02(3) $ 430,000 $ 363,350 - -------------------------------------------------------------------------- Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 500,000 497,500 - -------------------------------------------------------------------------- SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 750,000 820,312 --------------- 1,681,162 - -------------------------------------------------------------------------- CAPITAL GOODS - 0.3% - -------------------------------------------------------------------------- AEROSPACE/DEFENSE - 0.1% Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 522,500 - -------------------------------------------------------------------------- MANUFACTURING - 0.2% International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 528,750 - -------------------------------------------------------------------------- Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 500,000 497,500 --------------- 1,026,250 - -------------------------------------------------------------------------- CONSUMER CYCLICALS - 2.2% - -------------------------------------------------------------------------- AUTOS & HOUSING - 0.5% American Standard Cos., Inc., 10.875% Sr. Nts., 5/15/99 500,000 502,500 - -------------------------------------------------------------------------- Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 100,000 102,250 - -------------------------------------------------------------------------- Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 500,000 432,500 - -------------------------------------------------------------------------- Chrysler Financial LLC, 13.25% Debs., 10/15/99 500,000 529,524 - -------------------------------------------------------------------------- Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 500,000 557,500 - -------------------------------------------------------------------------- Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B, 7/15/02 610,000 369,050 - -------------------------------------------------------------------------- Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 400,000 404,000 --------------- 2,897,324 - -------------------------------------------------------------------------- LEISURE & ENTERTAINMENT - 0.3% Casino America, Inc., 12.50% Sr. Nts., 8/1/03 250,000 278,125 - -------------------------------------------------------------------------- Grand Casinos, Inc., 10.125% First Mtg. Sec. Nts., 12/1/03 460,000 503,700 - -------------------------------------------------------------------------- Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 500,000 502,500 - -------------------------------------------------------------------------- Rio Hotel & Casino, Inc., 9.50% Sr. Sub. Nts., 4/15/07 750,000 832,500 --------------- 2,116,825 - -------------------------------------------------------------------------- MEDIA - 1.4% American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(9) 129,908 20,136 - -------------------------------------------------------------------------- Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 400,000 416,000 - -------------------------------------------------------------------------- Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 1,000,000 1,030,000 - -------------------------------------------------------------------------- CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 250,000 273,750 - -------------------------------------------------------------------------- EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(9) 540,000 556,200 - -------------------------------------------------------------------------- Falcon Holding Group LP, 0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(9) 600,000 414,000 - -------------------------------------------------------------------------- Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts., Series B, 11/1/03(7) 550,000 574,750 - -------------------------------------------------------------------------- Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 1,000,000 1,125,000 - -------------------------------------------------------------------------- Sinclair Broadcast Group, Inc.: 8.75% Sr. Sub. Nts., 12/15/07 500,000 507,500 9% Sr. Unsec. Sub. Nts., 7/15/07 375,000 384,375 - -------------------------------------------------------------------------- Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 500,000 675,355 - -------------------------------------------------------------------------- Time Warner, Inc., 9.125% Debs., 1/15/13 500,000 634,470
69 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(5) NOTE 1 - -------------------------------------------------------------------------- MEDIA (CONTINUED) TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 $ 1,000,000 $ 1,088,796 - -------------------------------------------------------------------------- Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07 900,000 918,000 --------------- 8,618,332 - -------------------------------------------------------------------------- CONSUMER STAPLES - 0.5% - -------------------------------------------------------------------------- CONSUMER SERVICES - 0.1% Intermedia Communications, Inc., 8.50% Sr. Nts., Series B, 1/15/08 500,000 477,500 - -------------------------------------------------------------------------- Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 150,000 161,250 --------------- 638,750 - -------------------------------------------------------------------------- FOOD - 0.1% RJR Nabisco, Inc., 8.625% Medium-Term Nts., 12/1/02 500,000 509,414 - -------------------------------------------------------------------------- FOOD & DRUG RETAILERS - 0.2% Fleming Cos., Inc.: 10.50% Sr. Sub. Nts., Series B, 12/1/04 300,000 285,000 10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 525,000 - -------------------------------------------------------------------------- Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 500,000 543,750 --------------- 1,353,750 - -------------------------------------------------------------------------- HOUSEHOLD GOODS - 0.1% Revlon Consumer Products Corp., 8.625% Sr. Unsec. Sub. Nts., 2/1/08 500,000 457,500 - -------------------------------------------------------------------------- Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., Series B, 10.09%, 3/15/01(6) 465,000 267,375 --------------- 724,875 - -------------------------------------------------------------------------- ENERGY - 0.1% - -------------------------------------------------------------------------- ENERGY SERVICES & PRODUCERS - 0.1% Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 950,000 745,750 - -------------------------------------------------------------------------- FINANCIAL - 0.1% - -------------------------------------------------------------------------- BANKS - 0.1% First Chicago Corp.: 11.25% Sub. Nts., 2/20/01 250,000 278,226 9% Sub. Nts., 6/15/99 250,000 253,806 --------------- 532,032 - -------------------------------------------------------------------------- HEALTHCARE - 0.1% - -------------------------------------------------------------------------- HEALTHCARE/DRUGS - 0.0% Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 170,000 162,350 - -------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES - 0.1% Sun Healthcare Group, Inc., 9.375% Sr. Sub. Nts., 5/1/08(4) 1,000,000 805,000 - -------------------------------------------------------------------------- TELECOMMUNICATIONS - 1.3% - -------------------------------------------------------------------------- TELECOMMUNICATIONS/TECHNOLOGY - 1.3% Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 500,000 242,500 - -------------------------------------------------------------------------- FaciliCom International, Inc., 10.50% Sr. Nts., Series B, 1/15/08 245,000 197,225 - -------------------------------------------------------------------------- Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08 750,000 798,750 - -------------------------------------------------------------------------- GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(9) 415,000 299,838 - -------------------------------------------------------------------------- ICG Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(9) 765,000 634,950 - -------------------------------------------------------------------------- Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(9) 750,000 534,375
70 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(5) NOTE 1 - -------------------------------------------------------------------------- TELECOMMUNICATIONS/TECHNOLOGY (CONTINUED) NTL, Inc., 0%/9.75% Sr. Deferred Coupon Nts., 4/1/08(4)(9) $ 500,000 $ 312,500 - -------------------------------------------------------------------------- Omnipoint Corp.: 11.625% Sr. Nts., 8/15/06 590,000 413,000 11.625% Sr. Nts., Series A, 8/15/06 110,000 77,000 - -------------------------------------------------------------------------- ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 200,000 207,000 - -------------------------------------------------------------------------- PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 1,250,000 1,243,750 - -------------------------------------------------------------------------- Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 750,000 755,625 - -------------------------------------------------------------------------- TeleWest Communications plc: 0%/11% Sr. Disc. Debs., 10/1/07(9) 1,000,000 840,000 9.625% Sr. Debs., 10/1/06 500,000 517,500 - -------------------------------------------------------------------------- USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 1,000,000 905,000 --------------- 7,979,013 - -------------------------------------------------------------------------- TRANSPORTATION - 0.2% - -------------------------------------------------------------------------- AIR TRANSPORTATION - 0.1% Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,000,000 845,000 - -------------------------------------------------------------------------- SHIPPING - 0.1% Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 500,000 442,500 - -------------------------------------------------------------------------- UTILITIES - 0.5% - -------------------------------------------------------------------------- ELECTRIC UTILITIES - 0.3% California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 750,000 788,438 - -------------------------------------------------------------------------- Calpine Corp.: 10.50% Sr. Nts., 5/15/06 800,000 886,000 8.75% Sr. Nts., 7/15/07 400,000 406,000 --------------- 2,080,438 - -------------------------------------------------------------------------- GAS UTILITIES - 0.2% Beaver Valley II Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 989,000 1,117,570 --------------- Total Non-Convertible Corporate Bonds and Notes (Cost $39,457,840) 38,221,272 - -------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 10.1% - -------------------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98, to be repurchased at $63,033,250 on 1/4/99, collateralized by U.S. Treasury Nts., 4% - 8.875%, 2/15/99 - 7/15/06, with a value of $64,285,454 (Cost $63,000,000) 63,000,000 63,000,000 - -------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $538,342,432) 100.3% 623,885,456 - -------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (0.3) (1,552,155 ) --------------- --------------- NET ASSETS 100.0% $ 622,333,301 --------------- --------------- --------------- ---------------
71 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED) - -------------------------------------------------------------------------------- 1. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
SHARES SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE TO CALL DATE PRICE RECEIVED NOTE 1 - ----------------------------------------------------------------------------------------------------------------------------- Airtouch Communications, Inc. 10,500 4/99 $ 65.00 $ 41,684 $122,063 Alaska Air Group, Inc. 14,500 4/99 45.00 32,189 68,875 America Online, Inc. 16,000 1/99 52.50 119,756 1,516,000 America Online, Inc. 18,200 1/99 72.50 63,425 1,319,500 American Express Co. 6,000 4/99 105.00 18,569 49,500 AMR Corp. 12,000 2/99 75.00 25,889 3,750 Analog Devices, Inc. 20,000 3/99 30.00 20,649 90,000 ASM Lithography Holding NV 27,000 4/99 30.00 72,517 111,375 AutoZone, Inc. 14,000 3/99 30.00 27,579 54,250 BankAmerica Corp. (New) 24,000 5/99 75.00 54,778 40,500 CBS Corp. 22,500 1/99 40.00 33,074 1,406 CBS Corp. 33,000 4/99 32.50 56,758 107,250 Centocor, Inc. 11,000 4/99 60.00 40,919 15,125 Cisco Systems, Inc. 22,000 4/99 70.00 114,836 583,000 Computer Associates International, Inc. 19,000 2/99 50.00 25,554 19,000 Electronic Arts, Inc. 5,000 3/99 55.00 14,225 27,500 Federated Department Stores, Inc. 13,500 5/99 45.00 43,469 47,250 General Motors Corp., Cl. H 10,000 3/99 40.00 39,699 35,000 Intel Corp. 17,000 4/99 105.00 69,613 333,625 International Business Machines Corp. 2,000 4/99 180.00 9,940 33,500 J.P. Morgan & Co. 5,500 3/99 110.00 25,959 41,938 MCI WorldCom, Inc. 13,000 6/99 65.00 51,608 160,875 Merrill Lynch & Co., Inc. 7,000 4/99 95.00 22,539 7,875 Morgan Stanley Dean Witter & Co. 9,000 1/99 90.00 28,979 1,125 Morgan Stanley Dean Witter & Co. 9,000 4/99 80.00 41,354 45,000 Mylan Laboratories, Inc. 19,000 4/99 40.00 40,338 15,438 Novell, Inc. 37,000 5/99 20.00 77,512 67,063 Philip Morris Cos., Inc. 16,000 3/99 60.00 20,519 19,000 Potash Corp. of Saskatchewan, Inc. 5,500 1/99 75.00 10,835 344 Rational Software Corp. 37,000 4/99 22.50 113,224 208,125 Rational Software Corp. 37,000 4/99 30.00 100,637 90,188 Sabre Group Holdings, Inc. 2,100 2/99 45.00 3,218 3,938 STMicroelectronics NV 2,500 1/99 85.00 7,112 2,813 STMicroelectronics NV 1,800 4/99 85.00 10,746 11,250 Tellabs, Inc. 17,500 3/99 75.00 45,411 74,375 Teradyne, Inc. 15,000 4/99 35.00 67,048 146,250 Whitman Corp. 17,000 3/99 25.00 19,677 32,938 Xerox Corp. 4,000 4/99 105.00 26,879 70,000 Xilinx, Inc. 10,000 1/99 55.00 19,699 102,500 Xilinx, Inc. 5,000 3/99 55.00 27,971 61,246 - --------------- --------------- $ 1,686,387 $5,740,750 - --------------- --------------- - --------------- ---------------
2. Non-income producing security. 3. Identifies issues considered to be illiquid or restricted - See applicable note of Notes to Financial Statements. 72 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND STATEMENT OF INVESTMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $3,720,963 or 0.60% of the Fund's net assets as of December 31, 1998. 5. Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: AUD - Australian Dollar CAD - Canadian Dollar DKK - Danish Krone GBP - British Pound Sterling IEP - Irish Punt NZD - New Zealand Dollar PLZ - Polish Zloty ZAR - South African Rand 6. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 7. Represents the current interest rate for a variable rate security. 8. Represents the current interest rate for an increasing rate security. 9. Denotes a step bond; a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. See accompanying Notes to Financial Statements. 73 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
MARKET VALUE SHARES NOTE 1 - --------------------------------------------------------------- COMMON STOCKS - 98.5% - --------------------------------------------------------------- BASIC MATERIALS - 1.5% - --------------------------------------------------------------- CHEMICALS - 1.4% Cresud SA, Sponsored ADR 475,171 $ 5,702,052 - --------------------------------------------------------------- International Flavors & Fragrances, Inc. 144,200 6,371,837 - --------------------------------------------------------------- Minerals Technologies, Inc. 100,000 4,093,750 ------------- 16,167,639 - --------------------------------------------------------------- METALS - 0.1% Cia de Minas Buenaventura SA, Sponsored ADR, B Shares 46,000 598,000 - --------------------------------------------------------------- CAPITAL GOODS - 7.9% - --------------------------------------------------------------- AEROSPACE/DEFENSE - 1.3% Rolls-Royce plc 3,502,838 14,461,194 - --------------------------------------------------------------- INDUSTRIAL SERVICES - 4.9% Adecco SA 10,303 4,701,587 - --------------------------------------------------------------- Coflexip SA, Sponsored ADR 43,800 1,407,075 - --------------------------------------------------------------- Grupo Elektra SA de CV 3,159,000 1,590,726 - --------------------------------------------------------------- McDermott International, Inc. 240,000 5,925,000 - --------------------------------------------------------------- Rentokil Initial plc 2,950,000 22,107,783 - --------------------------------------------------------------- Service Corp. International 186,400 7,094,850 - --------------------------------------------------------------- WPP Group plc 2,000,000 12,302,366 ------------- 55,129,387 - --------------------------------------------------------------- MANUFACTURING - 1.7% Bombardier, Inc., Cl. B 506,000 7,268,691 - --------------------------------------------------------------- Societe BIC SA 224,032 12,432,838 ------------- 19,701,529 - --------------------------------------------------------------- CONSUMER CYCLICALS - 26.5% - --------------------------------------------------------------- AUTOS & HOUSING - 12.0% Autoliv, Inc. SDR 170,000 6,103,232 - --------------------------------------------------------------- Brazil Realty SA, GDR(1) 260,000 3,250,000 - --------------------------------------------------------------- Brisa-Auto Estradas de Portugal SA 70,300 4,138,276 - --------------------------------------------------------------- Granada Group plc 482,100 8,492,798 - --------------------------------------------------------------- Hanson plc 1,608,400 12,726,962 - --------------------------------------------------------------- Hasbro, Inc. 300,000 10,837,500 - --------------------------------------------------------------- International Game Technology 494,000 12,010,375 - --------------------------------------------------------------- IRSA Inversiones y Representaciones SA 1,796,108 4,925,779 - --------------------------------------------------------------- Nintendo Co. Ltd. 64,000 6,188,079 - --------------------------------------------------------------- Porsche AG, Preference 14,700 33,803,756 - --------------------------------------------------------------- Solidere, GDR(2) 110,000 1,119,250 - --------------------------------------------------------------- Volkswagen AG 400,000 32,374,176 ------------- 135,970,183
74 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - --------------------------------------------------------------- MEDIA - 11.2% Canal Plus 170,000 $ 46,410,611 - --------------------------------------------------------------- Carlton Communications plc 2,747,300 25,212,067 - --------------------------------------------------------------- Grupo Televisa SA, Sponsored GDR(2)(3) 349,200 8,620,875 - --------------------------------------------------------------- Prosieben Media AG, Preferred 54,000 2,587,292 - --------------------------------------------------------------- Publicis SA 28,000 5,012,525 - --------------------------------------------------------------- Reed International plc 200,000 1,636,447 - --------------------------------------------------------------- Singapore Press Holdings Ltd. 560,000 6,075,310 - --------------------------------------------------------------- Television Broadcasts Ltd. 1,200,000 3,097,964 - --------------------------------------------------------------- Television Francaise 1 50,000 8,906,183 - --------------------------------------------------------------- TeleWest Communications plc(3) 6,999,970 19,991,260 ------------- 127,550,534 - --------------------------------------------------------------- RETAIL: GENERAL - 1.1% Sonae Investimentos 260,000 12,640,071 - --------------------------------------------------------------- RETAIL: SPECIALTY - 2.2% Best Buy Co., Inc.(3) 50,200 3,081,025 - --------------------------------------------------------------- Circuit City Stores-Circuit City Group 207,800 10,377,013 - --------------------------------------------------------------- Dixons Group plc 800,000 11,247,878 ------------- 24,705,916 - --------------------------------------------------------------- CONSUMER STAPLES - 6.7% - --------------------------------------------------------------- BEVERAGES - 2.5% Cadbury Schweppes plc 1,500,000 25,491,763 - --------------------------------------------------------------- Cia Cervejaria Brahma, Preference 7,335,000 3,156,933 ------------- 28,648,696 - --------------------------------------------------------------- ENTERTAINMENT - 0.3% Corporacion Interamericana de Entretenimiento SA(3) 140,101 290,410 - --------------------------------------------------------------- Corporacion Interamericana de Entretenimiento SA, Cl. B(3) 1,050,764 2,868,702 - --------------------------------------------------------------- Resorts World Berhad(1) 563,000 519,145 ------------- 3,678,257 - --------------------------------------------------------------- FOOD - 0.2% Raisio Group plc 249,400 2,758,366 - --------------------------------------------------------------- FOOD & DRUG RETAILERS - 1.7% Carrefour Supermarche SA 12,000 9,063,361 - --------------------------------------------------------------- Dairy Farm International Holdings Ltd. 9,080,216 10,442,248 ------------- 19,505,609 - --------------------------------------------------------------- HOUSEHOLD GOODS - 1.5% Wella AG, Preference 20,000 16,811,516 - --------------------------------------------------------------- TOBACCO - 0.5% Cie Financiere Richemont AG, A Units 4,000 5,653,566 - --------------------------------------------------------------- ENERGY - 0.7% - --------------------------------------------------------------- ENERGY SERVICES & PRODUCERS - 0.3% Transocean Offshore, Inc. 120,818 3,239,433
75 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - --------------------------------------------------------------- OIL - INTERNATIONAL - 0.4% British Petroleum Co. plc, ADR 46,894 $ 4,202,875 - --------------------------------------------------------------- FINANCIAL - 14.1% - --------------------------------------------------------------- BANKS - 6.9% Banco Bradesco SA, Preference 983,276,747 5,452,711 - --------------------------------------------------------------- Banco Espirito Santo e Comercial de Lisboa SA 180,000 5,586,818 - --------------------------------------------------------------- Banco Frances del Rio de la Plata SA, Sponsored ADR 317,250 6,582,938 - --------------------------------------------------------------- Banco Latinoamericano de Exportaciones SA, Cl. E 146,200 2,430,575 - --------------------------------------------------------------- Credito Italiano SpA 2,291,900 13,614,690 - --------------------------------------------------------------- Istituto Mobiliare Italiano 671,000 11,882,643 - --------------------------------------------------------------- National Westminster Bank plc 618,070 11,866,728 - --------------------------------------------------------------- UBS AG 50,000 15,356,623 - --------------------------------------------------------------- Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR 390,000 5,630,625 ------------- 78,404,351 - --------------------------------------------------------------- DIVERSIFIED FINANCIAL - 5.4% American Express Co. 99,000 10,122,750 - --------------------------------------------------------------- Associates First Capital Corp., Cl. A 320,000 13,560,000 - --------------------------------------------------------------- Credit Saison Co. Ltd. 390,000 9,590,728 - --------------------------------------------------------------- Fannie Mae 190,000 14,060,000 - --------------------------------------------------------------- Housing Development Finance Corp. Ltd. 22,290 1,142,693 - --------------------------------------------------------------- ICICI Ltd., GDR(2) 405,300 2,705,378 - --------------------------------------------------------------- ICICI Ltd., GDR 6,000 40,050 - --------------------------------------------------------------- Merrill Lynch & Co., Inc. 19,400 1,294,950 - --------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 15,300 1,086,300 - --------------------------------------------------------------- Nichiei Co. Ltd. 98,000 7,788,079 ------------- 61,390,928 - --------------------------------------------------------------- INSURANCE - 1.8% Allianz AG 20,000 7,445,100 - --------------------------------------------------------------- American International Group, Inc. 45,550 4,401,269 - --------------------------------------------------------------- Chubb Corp. 140,000 9,082,500 ------------- 20,928,869 - --------------------------------------------------------------- HEALTHCARE - 11.2% - --------------------------------------------------------------- HEALTHCARE/DRUGS - 7.8% Agouron Pharmaceuticals, Inc.(3) 68,600 4,030,250 - --------------------------------------------------------------- Amgen, Inc.(3) 85,000 8,887,813 - --------------------------------------------------------------- BioChem Pharma, Inc.(3) 161,000 4,608,625 - --------------------------------------------------------------- Elan Corp. plc, ADR(3) 80,000 5,565,000 - --------------------------------------------------------------- Fresenius AG, Preference 90,000 18,912,955 - --------------------------------------------------------------- Genzyme Corp. (General Division)(3) 240,000 11,940,000 - --------------------------------------------------------------- Gilead Sciences, Inc.(3) 172,700 7,091,494 - --------------------------------------------------------------- Glaxo Wellcome plc, Sponsored ADR 140,000 9,730,000
76 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - --------------------------------------------------------------- HEALTHCARE/DRUGS (CONTINUED) Incyte Pharmaceuticals, Inc.(3) 83,250 $ 3,111,469 - --------------------------------------------------------------- Millennium Pharmaceuticals, Inc.(3) 123,000 3,182,625 - --------------------------------------------------------------- Pfizer, Inc. 90,000 11,289,375 ------------- 88,349,606 - --------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES - 3.4% Fresenius Medical Care AG 179,600 12,508,728 - --------------------------------------------------------------- Pliva d.d., Sponsored GDR(2) 800,000 13,280,000 - --------------------------------------------------------------- Quintiles Transnational Corp.(3) 250,000 13,343,750 ------------- 39,132,478 - --------------------------------------------------------------- TECHNOLOGY - 17.3% - --------------------------------------------------------------- COMPUTER HARDWARE - 4.7% Ascend Communications, Inc.(3) 10,000 657,500 - --------------------------------------------------------------- Cisco Systems, Inc.(3) 132,475 12,295,336 - --------------------------------------------------------------- International Business Machines Corp. 100,000 18,475,000 - --------------------------------------------------------------- Sun Microsystems, Inc.(3) 250,000 21,406,250 ------------- 52,834,086 - --------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES - 4.3% Cap Gemini SA 150,000 24,086,973 - --------------------------------------------------------------- Lernout & Hauspie Speech Products NV(3) 250,100 8,159,513 - --------------------------------------------------------------- Microsoft Corp.(3) 66,000 9,153,375 - --------------------------------------------------------------- SAP AG, Preference 15,000 7,200,432 ------------- 48,600,293 - --------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 5.0% General Instrument Corp.(3) 600,000 20,362,500 - --------------------------------------------------------------- Lucent Technologies, Inc. 20,000 2,200,000 - --------------------------------------------------------------- QUALCOMM, Inc.(3) 240,000 12,435,000 - --------------------------------------------------------------- Scientific-Atlanta, Inc. 934,200 21,311,438 ------------- 56,308,938 - --------------------------------------------------------------- ELECTRONICS - 3.3% Advanced Micro Devices, Inc.(3) 500,000 14,468,750 - --------------------------------------------------------------- National Semiconductor Corp.(3) 1,000,000 13,500,000 - --------------------------------------------------------------- Royal Philips Electronics NV 100,000 6,714,031 - --------------------------------------------------------------- STMicroelectronics NV, NY Shares(3) 34,000 2,654,125 ------------- 37,336,906 - --------------------------------------------------------------- TELECOMMUNICATIONS - 11.7% - --------------------------------------------------------------- TELEPHONE UTILITIES - 7.3% Cable & Wireless Communications plc(3) 380,000 3,462,072 - --------------------------------------------------------------- Energis plc(3) 620,000 13,826,069 - --------------------------------------------------------------- Hellenic Telecommunication Organization SA 488,888 13,005,978 - --------------------------------------------------------------- Olivetti SpA(3) 5,000,000 17,435,946
77 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - --------------------------------------------------------------- TELEPHONE UTILITIES (CONTINUED) SK Telecom Co. Ltd. 8,710 $ 6,384,602 - --------------------------------------------------------------- Telecom Italia Mobile SpA 2,500,000 18,497,264 - --------------------------------------------------------------- Telecomunicacoes de Sao Paulo SA, Preference 41,995,329 5,724,749 - --------------------------------------------------------------- Telesp Celular SA, Cl. B(3) 35,902,000 1,634,343 - --------------------------------------------------------------- Videsh Sanchar Nigam Ltd., GDR(2) 250,000 3,093,750 ------------- 83,064,773 - --------------------------------------------------------------- TELECOMMUNICATIONS/TECHNOLOGY - 4.4% AT&T Corp. 200,000 15,050,000 - --------------------------------------------------------------- Ericsson LM, B Shares 295,200 7,028,969 - --------------------------------------------------------------- Kinnevik Investments AB Free, Series B 150,000 3,516,113 - --------------------------------------------------------------- MCI WorldCom, Inc.(3) 326,200 23,404,850 - --------------------------------------------------------------- Societe Europeene de Communication SA, A Shares, Sponsored ADR(3) 6,000 111,750 - --------------------------------------------------------------- Societe Europeene de Communication SA, B Shares, Sponsored ADR(3) 54,000 985,500 ------------- 50,097,182 - --------------------------------------------------------------- UTILITIES - 0.9% - --------------------------------------------------------------- ELECTRIC UTILITIES - 0.9% Vivendi (Ex-Generale des Eaux) 40,000 10,383,088 ------------- Total Common Stocks (Cost $915,181,348) 1,118,254,269 UNITS - --------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES - 0.0% - --------------------------------------------------------------- American Satellite Network, Inc. Wts., Exp. 6/99 6,250 -- - --------------------------------------------------------------- Banco Bradesco SA Rts., Exp. 2/99 40,755,977 -- - --------------------------------------------------------------- Industrial Finance Corp. of Thailand (The) Rts., Exp. 6/99 528,500 -- - --------------------------------------------------------------- PT Pan Indonesia Bank Wts., Exp. 6/00 423,810 3,708 ------------- Total Rights, Warrants and Certificates (Cost $0) 3,708
PRINCIPAL AMOUNT - ---------------------------------------------------------------- REPURCHASE AGREEMENTS - 2.5% - ---------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98, to be repurchased at $27,914,725 on 1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%, 2/15/99-7/15/06, with a value of $28,469,272 (Cost $27,900,000) $27,900,000 27,900,000 - ---------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $943,081,348) 101.0% 1,146,157,977 - ---------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (1.0) (11,128,843) ----------- -------------- NET ASSETS 100.0% $1,135,029,134 ----------- -------------- ----------- --------------
1. Identifies issues considered to be illiquid or restricted - See applicable note of Notes to Financial Statements. 2. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $28,819,253 or 2.54% of the Fund's net assets as of December 31, 1998. 3. Non-income producing security. 78 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND STATEMENT OF INVESTMENTS (CONTINUED) - -------------------------------------------------------------------------------- Distribution of investments by a country of issue, as a percentage of total investments at value, is as follows:
COUNTRY MARKET VALUE PERCENT - ---------------------------------------------------------- United States $ 392,135,325 34.1% - ---------------------------------------------------------- Great Britain 196,758,262 17.1 - ---------------------------------------------------------- Germany 131,643,956 11.5 - ---------------------------------------------------------- France 120,356,779 10.5 - ---------------------------------------------------------- Italy 61,430,543 5.4 - ---------------------------------------------------------- Switzerland 25,711,777 2.2 - ---------------------------------------------------------- Brazil 24,849,361 2.2 - ---------------------------------------------------------- Japan 23,566,887 2.1 - ---------------------------------------------------------- Portugal 22,365,165 2.0 - ---------------------------------------------------------- Argentina 17,210,768 1.5 - ---------------------------------------------------------- Sweden 16,648,315 1.5 - ---------------------------------------------------------- Singapore 16,517,558 1.4 - ---------------------------------------------------------- Mexico 13,370,713 1.2 - ---------------------------------------------------------- Croatia 13,280,000 1.2 - ---------------------------------------------------------- Greece 13,005,978 1.1 - ---------------------------------------------------------- Canada 11,877,316 1.0 - ---------------------------------------------------------- Belgium 8,159,513 0.7 - ---------------------------------------------------------- India 6,981,871 0.6 - ---------------------------------------------------------- The Netherlands 6,714,031 0.6 - ---------------------------------------------------------- Korea, Republic of (South) 6,384,602 0.6 - ---------------------------------------------------------- Ireland 5,565,000 0.5 - ---------------------------------------------------------- Other 11,624,257 1.0 -------------- ----- Total $1,146,157,977 100.0% -------------- ----- -------------- ----- See accompanying Notes to Financial Statements.
79 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS - 13.9% - ----------------------------------------------------------------------- GOVERNMENT AGENCY - 10.2% - ----------------------------------------------------------------------- FHLMC/FNMA/SPONSORED - 1.6% Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 $ 1,299,790 $ 1,369,238 - ----------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security, Series 177, Cl. B, 0.62%, 7/1/26(2) 4,943,848 947,056 - ----------------------------------------------------------------------- Federal National Mortgage Assn., 7.50%, 8/1/25 625,857 643,062 - ----------------------------------------------------------------------- Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security, Trust 276, Cl. 2, 4.43%, 10/1/24(2) 3,292,524 722,298 - ----------------------------------------------------------------------- Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 277-C1, 10.59%, 4/1/27(3) 803,069 705,446 --------------- 4,387,100 - ----------------------------------------------------------------------- GUARANTEED - 8.6% Government National Mortgage Assn.: 7%, 11/20/25 - 7/15/28 17,119,028 17,521,752 7.50%, 2/15/27 3,316,976 3,420,035 8%, 11/15/25 - 5/15/26 3,076,718 3,197,849 --------------- 24,139,636 - ----------------------------------------------------------------------- PRIVATE - 3.7% - ----------------------------------------------------------------------- COMMERCIAL - 2.5% AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg. Pass-Through Certificates, Series 1997-C1, Cl. G, 7%, 6/17/29(4) 100,000 79,844 - ----------------------------------------------------------------------- Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1997-D4, Cl. B1, 7.525%, 4/14/29(5) 375,000 300,703 Series 1997-D5, Cl. B1, 6.93%, 2/14/41 300,000 225,891 Series 1997-D5, Cl. B2, 6.93%, 2/14/41 1,250,000 903,906 - ----------------------------------------------------------------------- CRIMMI MAE Trust I, Collateralized Mtg. Obligations, Series 1996-C1, Cl. A2, 8/30/05(6) 100,000 98,095 - ----------------------------------------------------------------------- CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates, Series 1997-C2, Cl. F, 7.46%, 5/17/14 150,000 127,078 - ----------------------------------------------------------------------- FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1994-C1, Cl. 2-G, 8.70%, 9/25/25(4) 153,594 158,490 - ----------------------------------------------------------------------- General Motors Acceptance Corp., Collateralized Mtg. Obligations: Series 1997-C1, Cl. G, 7.414%, 11/15/11 440,000 334,262 Series 1997-C2, Cl. F, 6.75%, 4/16/29 250,000 170,234 - ----------------------------------------------------------------------- General Motors Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1, Cl. X, 8.80%, 7/15/27(2) 4,157,596 371,585 - ----------------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates, Series 1995-C2, Cl. D, 7.863%, 6/15/21(5) 289,584 295,240
80 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- COMMERCIAL (CONTINUED) Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates: Series 1996-C1, Cl. F, 7.436%, 2/15/28(4)(5) $ 162,744 $ 139,350 Series 1997-HF1, Cl. F, 6.86%, 2/15/10(4) 150,000 134,625 Series 1997-RR, Cl. D, 7.67%, 4/30/39(4) 450,000 424,406 Series 1997-RR, Cl. E, 7.762%, 4/30/39(4)(5) 300,000 271,875 Series 1997-RR, Cl. F, 7.79%, 4/30/39(4) 600,000 435,750 Series 1997-XL1, Cl. G, 7.695%, 10/3/30(4)(5) 390,000 373,425 - ----------------------------------------------------------------------- NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates, Series-DMC, Cl. C, 8.921%, 8/12/11(4) 200,000 210,000 - ----------------------------------------------------------------------- Nykredit AS, 8% Cv. Bonds, 10/1/26(DKK) 3,474,000 562,229 - ----------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1992-CHF, Cl. D, 8.25%, 12/25/20 64,223 63,953 Series 1993-C1, Cl. D, 9.45%, 5/25/24 91,000 90,147 Series 1994-C2, Cl. E, 8%, 4/25/25 998,084 993,874 - ----------------------------------------------------------------------- Structured Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1997-LLI, Cl. F, 7.30%, 4/12/12(4) 200,000 160,188 - ----------------------------------------------------------------------- Structured Asset Securities Corp., Multiclass Pass-Through Certificates, Series 1995-C4, Cl. E, 8.559%, 6/25/26(4)(5) 46,290 43,744 --------------- 6,968,894 - ----------------------------------------------------------------------- MULTI-FAMILY - 0.6% Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(4) 63,720 52,940 - ----------------------------------------------------------------------- Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(6) 800,000 659,375 - ----------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-CL, Cl. F, 9.175%, 1/20/06(5) 1,000,000 840,000 --------------- 1,552,315 - ----------------------------------------------------------------------- RESIDENTIAL - 0.6% CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates: Series 1997-C1, Cl. F, 7.50%, 6/20/13(4) 100,000 77,969 Series 1997-C1, Cl. G, 7.50%, 6/20/14(4) 100,000 71,594 Series 1997-C1, Cl. H, 7.50%, 8/20/14(4) 60,000 41,175 Series 1997-C2, Cl. H, 7.46%, 1/17/35 100,000 68,000 - ----------------------------------------------------------------------- First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates, Series 1997-CHL1, 8.098%, 5/25/08 - 2/25/11(4)(5) 950,000 766,985 - ----------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.132%, 4/25/26(4) 387,444 285,982 - ----------------------------------------------------------------------- Salomon, Inc., Commercial Mtg. Pass-Through Certificates, Series 1998-A1, 5%, 12/25/00(4) 340,798 327,166 --------------- 1,638,871 --------------- Total Mortgage-Backed Obligations (Cost $39,666,758) 38,686,816
81 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS - 25.5% - ----------------------------------------------------------------------- U.S. Treasury Bonds: 6%, 2/15/26(7) $ 1,730,000 $ 1,888,404 6.125%, 11/15/27(8)(9) 2,500,000 2,800,782 6.50%, 11/15/26 7,000,000 8,148,441 8%, 11/15/21 300,000 402,000 8.125%, 8/15/19 500,000 668,750 9.375%, 2/15/06 4,700,000 6,005,721 10.75%, 8/15/05 3,260,000 4,347,008 11.875%, 11/15/03 4,950,000 6,459,750 STRIPS, 5.75%, 2/15/19(10) 6,500,000 2,131,805 STRIPS, 5.30%, 5/15/17(10) 6,000,000 2,180,208 - ----------------------------------------------------------------------- U.S. Treasury Nts.: 5.375%, 6/30/00 3,600,000 3,638,250 6.50%, 5/15/05 - 10/15/06 25,420,000 28,145,263 6.875%, 5/15/06 3,900,000 4,409,438 --------------- Total U.S. Government Obligations (Cost $68,599,709) 71,225,820 - ----------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS - 20.2% - ----------------------------------------------------------------------- ARGENTINA - 3.7% Argentina (Republic of) Bonds, 5%, 12/20/02(JPY) 60,000,000 467,259 - ----------------------------------------------------------------------- Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas, Series I: 3.011%, 4/1/07(5)(ARP) 3,474,104 2,239,458 5.010%, 4/1/01(5) 100,836 93,292 - ----------------------------------------------------------------------- Argentina (Republic of) Bonds, Series L, 6.188%, 3/31/05(5) 1,297,200 1,105,863 - ----------------------------------------------------------------------- Argentina (Republic of) Global Unsec. Unsub. Bonds., Series BGL5, 11.375%, 1/30/17 2,380,000 2,380,000 - ----------------------------------------------------------------------- Argentina (Republic of) Nts: 11%, 12/4/05 1,065,000 1,065,000 Series REGS, 11.75%, 2/12/07(ARP) 450,000 379,467 - ----------------------------------------------------------------------- Argentina (Republic of) Sr. Unsec. Unsub. Bonds, 11%, 10/9/06 50,000 49,125 - ----------------------------------------------------------------------- Argentina (Republic of) Unsec. Unsub. Medium-Term Nts.: 5.50%, 3/27/01(4)(JPY) 170,000,000 1,445,354 8.75%, 7/10/02(ARP) 660,000 541,689 - ----------------------------------------------------------------------- Banco Hipotecario Nacional (Argentina) Medium-Term Unsec. Nts., Series 3, 10.625%, 8/7/06 400,000 388,000 - ----------------------------------------------------------------------- City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04(ARP) 160,000 124,913 --------------- 10,279,420 - ----------------------------------------------------------------------- AUSTRALIA - 0.3% Australia (Government of) Bonds, Series 904, 9%, 9/15/04(AUD) 1,335,000 986,654 - ----------------------------------------------------------------------- BRAZIL - 1.5% Brazil (Federal Republic of) Bonds, Series RG, 6.188%, 4/15/12(5) 1,000,000 502,500 - ----------------------------------------------------------------------- Brazil (Federal Republic of) Capitalization Bonds, 8%, 4/15/14 1,731,101 1,034,333 - ----------------------------------------------------------------------- Brazil (Federal Republic of) Debt Conversion Bonds, 6.188%, 4/15/12(5) 2,660,000 1,336,650 - ----------------------------------------------------------------------- Brazil (Federal Republic of) Eligible Interest Bonds, 6.125%, 4/15/12(5) 672,000 433,440
82 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- BRAZIL (CONTINUED) Brazil (Federal Republic of) Gtd. Disc. Bonds, 6.125%, 4/15/24(5) $ 1,400,000 $ 822,500 --------------- 4,129,423 - ----------------------------------------------------------------------- BULGARIA - 0.4% Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.688%, 7/28/24(5) 690,000 484,725 - ----------------------------------------------------------------------- Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 2.50%, 7/28/12(11) 1,080,000 618,300 - ----------------------------------------------------------------------- Bulgaria (Republic of) Interest Arrears Bonds, 6.688%, 7/28/11(5) 160,000 107,600 --------------- 1,210,625 - ----------------------------------------------------------------------- DENMARK - 0.5% Denmark (Kingdom of) Bonds: 7%, 11/10/24(DKK) 1,190,000 239,333 8%, 5/15/03(DKK) 5,740,000 1,046,294 - ----------------------------------------------------------------------- Denmark (Kingdom of) Bullet Bonds, 7%, 11/15/07(DKK) 1,190,000 224,506 --------------- 1,510,133 - ----------------------------------------------------------------------- ECUADOR - 0.1% Ecuador (Republic of) Debs., 6.625%, 2/27/15(5) 441,347 178,746 - ----------------------------------------------------------------------- Ecuador (Republic of) Disc. Bonds, 6.625%, 2/28/25(5) 50,000 25,125 - ----------------------------------------------------------------------- Ecuador (Republic of) Past Due Interest Bonds, 6.625%, 2/27/15(5) 56,578 22,914 --------------- 226,785 - ----------------------------------------------------------------------- FINLAND - 0.3% Finland (Republic of) Bonds, 9.50%, 3/15/04(FIM) 3,000,000 756,285 - ----------------------------------------------------------------------- FRANCE - 2.2% France (Government of) Bonds: Obligations Assimilables du Tresor, 5.25%, 4/25/08(FRF) 23,780,000 4,704,484 Obligations Assimilables du Tresor, 5.50%, 10/25/07(FRF) 7,720,000 1,543,583 --------------- 6,248,067 - ----------------------------------------------------------------------- GERMANY - 1.2% Germany (Republic of) Bonds, 4.50%, 2/18/03(DEM) 1,070,000 670,258 - ----------------------------------------------------------------------- Germany (Republic of) Nts., Series 98, 4%, 3/17/00(DEM) 4,390,000 2,662,954 --------------- 3,333,212 - ----------------------------------------------------------------------- GREAT BRITAIN - 0.7% United Kingdom Treasury Bonds: 8.50%, 12/7/05(GBP) 880,000 1,810,378 9%, 8/6/12(GBP) 40,000 96,462 --------------- 1,906,840 - ----------------------------------------------------------------------- GREECE - 0.2% Hellenic Republic Government Bonds, 8.90%, 4/1/03(GRD) 158,200,000 587,513 - ----------------------------------------------------------------------- HUNGARY - 0.3% Hungary (Government of) Bonds: Series 00/G, 16%, 11/24/00(HUF) 60,900,000 290,858 Series 03/I, 13%, 7/24/03(HUF) 61,190,000 289,011
83 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- HUNGARY (CONTINUED) Hungary (Government of) Bonds: (Continued) Series 99-G, 16.50%, 7/24/99(HUF) 44,000,000 $ 204,949 --------------- 784,818 - ----------------------------------------------------------------------- INDONESIA - 0.1% PT Bank Negara Indonesia Sr. Nts., 7.625%, 2/15/07 317,000 175,142 - ----------------------------------------------------------------------- ITALY - 1.8% Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali: 8.50%, 1/1/04(ITL) 2,855,000,000 2,112,388 8.75%, 7/1/06(ITL) 3,575,000,000 2,823,979 10.50%, 4/1/05(ITL) 175,000,000 144,392 --------------- 5,080,759 - ----------------------------------------------------------------------- IVORY COAST - 0.1% Ivory Coast (Government of) Past Due Interest Bonds, 2%, 3/29/18(6)(11) 579,662 169,551 - ----------------------------------------------------------------------- JORDAN - 0.0% Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5%, 12/23/23(11) 210,000 120,225 - ----------------------------------------------------------------------- KOREA, REPUBLIC OF (SOUTH) - 0.4% Export-Import Bank of Korea Unsec. Nts., 7.10%, 3/15/07 300,000 267,750 - ----------------------------------------------------------------------- Korea (Republic of) Nts., 7.813%, 4/8/00(4)(5) 580,000 537,225 - ----------------------------------------------------------------------- Korea Electric Power Unsec. Unsub. Nts., 6.375%, 12/1/03 300,000 255,509 --------------- 1,060,484 - ----------------------------------------------------------------------- MEXICO - 2.9% United Mexican States Bills, Zero Coupon, 32.91%, 5/6/99(10)(MXP) 13,850,000 1,262,555 - ----------------------------------------------------------------------- United Mexican States Bonds: 6.63%, 12/31/19(FRF) 7,500,000 1,087,539 8.125%, 9/10/04(11)(DEM) 750,000 461,791 10.375%, 1/29/03(DEM) 725,000 466,857 11.50%, 5/15/26 1,920,000 2,040,000 16.50%, 9/1/08(4)(GBP) 20,000 39,792 - ----------------------------------------------------------------------- United Mexican States Collateralized Fixed Rate Par Bonds: Series B, 6.25%, 12/31/19 600,000 468,750 Series W-A, 6.25%, 12/31/19 550,000 429,687 Series W-B, 6.25%, 12/31/19 2,100,000 1,640,625 - ----------------------------------------------------------------------- United Mexican States Petroleos Mexicanos Unsec. Unsub. Nts., 7.875%, 3/2/99(CAD) 200,000 130,101 --------------- 8,027,697 - ----------------------------------------------------------------------- NIGERIA - 0.0% Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 68,192 43,288 - ----------------------------------------------------------------------- PANAMA - 0.1% Panama (Government of) Past Due Interest Debs., 6.688%, 7/17/16(5) 232,025 172,279
84 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- PERU - 0.6% Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4%, 3/7/17(11) $ 600,000 $ 378,000 - ----------------------------------------------------------------------- Peru (Republic of) Sr. Nts., Zero Coupon, 4.50%, 2/28/16(10) 3,305,417 1,422,982 --------------- 1,800,982 - ----------------------------------------------------------------------- POLAND - 0.7% Poland (Republic of) Bonds, 12%, 10/12/03(PLZ) 1,010,000 300,921 - ----------------------------------------------------------------------- Poland (Republic of) Bonds, Series 2 yr., 14%, 2/12/00(PLZ) 1,000,000 289,181 - ----------------------------------------------------------------------- Poland (Republic of) Past Due Interest Bonds, 5%, 10/27/14(11) 1,155,000 1,081,369 - ----------------------------------------------------------------------- Poland (Republic of) Treasury Bills, Series 52, Zero Coupon, 14.86%, 10/13/99(10)(PLZ) 770,000 199,244 - ----------------------------------------------------------------------- Poland (Republic of) Treasury Bills, Series 52, Zero Coupon, 15.13%, 8/11/99(10)(PLZ) 450,000 119,013 --------------- 1,989,728 - ----------------------------------------------------------------------- RUSSIA - 0.1% City of St. Petersburg Sr. Unsub. Nts., 9.50%, 6/18/02(4) 180,000 43,650 - ----------------------------------------------------------------------- Russia (Government of) Bonds: 18.29%, 4/28/99(4)(12)(RUR) 860,000 9,091 29.80%, 7/14/99(4)(12)(RUR) 1,500,000 19,031 Series 2, 29.80%, 7/14/99(4)(12)(RUR) 745,000 9,452 Series 3, 18.29%, 4/28/99(4)(12)(RUR) 790,000 8,351 - ----------------------------------------------------------------------- Russia (Government of) Debs., 5.969%, 12/15/15(5) 24,195 2,677 - ----------------------------------------------------------------------- Russia (Government of) Federal Loan Bonds, Series 5022, 15%, 2/23/00(4)(12)(RUR) 5,417,000 98,866 - ----------------------------------------------------------------------- Russia (Government of) Principal Loan Debs., Series 24 yr., 5.969%, 12/15/20(5) 1,730,000 107,066 --------------- 298,184 - ----------------------------------------------------------------------- SPAIN - 1.5% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado: 4.50%, 7/30/04(ESP) 271,340,000 1,969,251 5.25%, 1/31/03(ESP) 273,920,000 2,073,278 6%, 1/31/08(ESP) 12,200,000 98,609 --------------- 4,141,138 - ----------------------------------------------------------------------- THAILAND - 0.1% Industrial Finance Corp. of Thailand (The) Sr. Nts., 6.875%, 4/1/03(6) 200,000 174,373 - ----------------------------------------------------------------------- TURKEY - 0.2% Turkey (Republic of) Treasury Bills, Zero Coupon, 85.01%, 1/27/99(10)(TRL) 20,300,000,000 641,495 - ----------------------------------------------------------------------- VENEZUELA - 0.2% Venezuela (Republic of) Bonds, 9.25%, 9/15/27 380,000 224,200 - ----------------------------------------------------------------------- Venezuela (Republic of) Disc. Bonds, Series DL, 5.938%, 12/18/07(5) 214,285 136,339
85 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- VENEZUELA (CONTINUED) Venezuela (Republic of) Front-Loaded Interest Reduction Bonds, Series B, 6.75%, 3/31/07(5) $ 202,380 $ 126,361 - ----------------------------------------------------------------------- Venezuela (Republic of) New Money Bonds, Series A, 6.063%, 12/18/05(5) 205,883 128,548 --------------- 615,448 - ----------------------------------------------------------------------- VIETNAM - 0.0% Vietnam (Government of) Bonds, 3%, 3/12/28(5) 54,000 13,770 --------------- Total Foreign Government Obligations (Cost $58,599,197) 56,484,318 - ----------------------------------------------------------------------- LOAN PARTICIPATIONS - 0.2% - ----------------------------------------------------------------------- Jamaica (Government of) 1990 Refinancing Agreement Nts., Tranche A, 6.188%, 10/16/00(4)(5) 25,000 21,625 - ----------------------------------------------------------------------- Morocco (Kingdom of) Loan Participation Agreement, Tranche A, 6.312%, 1/1/09(4)(5) 740,000 586,450 --------------- Total Loan Participations (Cost $680,509) 608,075 - ----------------------------------------------------------------------- CORPORATE BONDS AND NOTES - 27.2% - ----------------------------------------------------------------------- AEROSPACE/DEFENSE - 0.9% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 450,000 470,250 - ----------------------------------------------------------------------- Amtran, Inc.: 9.625% Nts., 12/15/05 100,000 100,500 10.50% Sr. Nts., 8/1/04 150,000 156,750 - ----------------------------------------------------------------------- Atlas Air, Inc.: 9.25% Sr. Nts., 4/15/08(4) 300,000 300,750 9.375% Sr. Nts., 11/15/06(6) 300,000 307,500 10.75% Sr. Nts., 8/1/05 125,000 131,875 12.25% Pass-Through Certificates, 12/1/02 350,000 378,000 - ----------------------------------------------------------------------- Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts., Series 1997-1, 1/1/01(4) 175,000 171,500 - ----------------------------------------------------------------------- Greater Toronto Airport, 5.40% Debs., 12/3/02(CAD) 240,000 158,014 - ----------------------------------------------------------------------- Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts., Series 1997-A, Cl. B, 6/15/04(4) 90,586 96,601 - ----------------------------------------------------------------------- SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07 200,000 201,000 --------------- 2,472,740 - ----------------------------------------------------------------------- CHEMICALS - 0.5% ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 150,000 151,500 - ----------------------------------------------------------------------- ICO, Inc., 10.375% Sr. Nts., 6/1/07 50,000 46,750 - ----------------------------------------------------------------------- Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B, 9/15/07 150,000 120,750 - ----------------------------------------------------------------------- NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 140,000 149,450 - ----------------------------------------------------------------------- PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 175,000 135,625 - ----------------------------------------------------------------------- Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 150,000 120,750 - ----------------------------------------------------------------------- Polytama International Finance BV, 11.25% Sec. Nts., 6/15/07 125,047 27,823 - ----------------------------------------------------------------------- Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts., Series B, 8/1/07 425,000 433,500
86 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- CHEMICALS (CONTINUED) Sterling Chemicals, Inc.: 11.25% Sr. Sub. Nts., 4/1/07 $ 50,000 $ 42,250 11.75% Sr. Unsec. Sub. Nts., 8/15/06 190,000 164,350 --------------- 1,392,748 - ----------------------------------------------------------------------- CONSUMER DURABLES - 0.1% Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 200,000 190,000 - ----------------------------------------------------------------------- Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B, 7/15/02 125,000 75,625 - ----------------------------------------------------------------------- TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(4) 100,000 116,101 --------------- 381,726 - ----------------------------------------------------------------------- CONSUMER NON-DURABLES - 0.7% AKI Holdings, Inc.: 0%/13.50% Sr. Disc. Debs., 7/1/09(6)(13) 150,000 59,250 10.50% Sr. Nts., 7/1/08(6) 100,000 95,500 - ----------------------------------------------------------------------- American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05 295,000 169,625 - ----------------------------------------------------------------------- Bell Sports, Inc., 11% Sr. Sub. Nts., 8/15/08(6) 305,000 311,100 - ----------------------------------------------------------------------- Chattem, Inc., 8.875% Sr. Unsec. Sub. Nts., Series B, 4/1/08 100,000 103,000 - ----------------------------------------------------------------------- Globe Manufacturing, Inc., 10% Sr. Sub. Nts., 8/1/08(6) 315,000 286,650 - ----------------------------------------------------------------------- Indorayon International Finance Co. BV, 10% Gtd. Unsec. Unsub. Nts., 3/29/01(4) 100,000 29,000 - ----------------------------------------------------------------------- Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 200,000 201,000 - ----------------------------------------------------------------------- Revlon Consumer Products Corp.: 8.625% Sr. Unsec. Sub. Nts., 2/1/08 100,000 91,500 9% Sr. Nts., 11/1/06(6) 100,000 100,000 - ----------------------------------------------------------------------- Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., Series B, 9.89%, 3/15/01(10) 220,000 126,500 - ----------------------------------------------------------------------- Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08 70,000 66,850 - ----------------------------------------------------------------------- William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 135,000 143,100 - ----------------------------------------------------------------------- Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 100,000 105,500 --------------- 1,888,575 - ----------------------------------------------------------------------- ENERGY - 1.9% AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(6) 250,000 248,125 - ----------------------------------------------------------------------- Chesapeake Energy Corp.: 9.125% Sr. Unsec. Nts., 4/15/06 100,000 75,500 9.625% Sr. Unsec. Nts., Series B, 5/1/05 155,000 117,025 - ----------------------------------------------------------------------- Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 245,000 219,275 - ----------------------------------------------------------------------- Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 125,000 115,625 - ----------------------------------------------------------------------- Dailey International, Inc., 9.50% Sr. Unsec. Nts., Series B, 2/15/08 400,000 178,000 - ----------------------------------------------------------------------- Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 400,000 338,000 - ----------------------------------------------------------------------- Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(6) 100,000 68,500 - ----------------------------------------------------------------------- Forcenergy, Inc.: 8.50% Sr. Sub. Nts., Series B, 2/15/07 90,000 67,050
87 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- ENERGY (CONTINUED) Forcenergy, Inc.: (Continued) 9.50% Sr. Sub. Nts., 11/1/06 $ 400,000 $ 310,000 - ----------------------------------------------------------------------- Gothic Energy Corp., 0%/14.125% Sr. Disc. Nts., 5/1/06(13) 275,000 90,750 - ----------------------------------------------------------------------- Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(6) 200,000 157,000 - ----------------------------------------------------------------------- Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 560,000 383,600 - ----------------------------------------------------------------------- Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 250,000 201,250 - ----------------------------------------------------------------------- P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 600,000 609,000 - ----------------------------------------------------------------------- Petroleum Heat & Power Co., Inc., 9.375% Sr. Sub. Debs., 2/1/06 425,000 399,500 - ----------------------------------------------------------------------- Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 370,000 344,100 - ----------------------------------------------------------------------- RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 630,000 444,150 - ----------------------------------------------------------------------- Statia Terminals International/Statia Terminals (Canada), Inc., 11.75% First Mtg. Nts., Series B, 11/15/03 175,000 175,875 - ----------------------------------------------------------------------- Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 270,000 261,900 - ----------------------------------------------------------------------- Universal Compression Holdings, Inc.: 0%/9.875% Sr. Disc. Nts., 2/15/08(13) 500,000 302,500 0%/11.375% Sr. Disc. Nts., 2/15/09(13) 400,000 240,000 --------------- 5,346,725 - ----------------------------------------------------------------------- FINANCIAL - 3.6% AMRESCO, Inc.: 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 300,000 205,500 10% Sr. Sub. Nts., Series 97-A, 3/15/04 100,000 71,250 - ----------------------------------------------------------------------- Bakrie Investindo, Zero Coupon Promissory Nts., 7/10/98(4)(12)(IDR) 1,000,000,000 31,250 - ----------------------------------------------------------------------- Banco Nacional de Mexico SA, 11% Sub. Exchangeable Capital Debs., 7/15/03(4) 130,000 113,750 - ----------------------------------------------------------------------- Bank Plus Corp., 12% Sr. Nts., 7/18/07 7,000 5,635 - ----------------------------------------------------------------------- Bayerische Vereinsbank AG, 5% Sec. Nts., Series 661, 7/28/04(DEM) 4,055,000 2,584,400 - ----------------------------------------------------------------------- CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 246,250 - ----------------------------------------------------------------------- Deutsche Pfandbrief & Hypobank, 4.75% Sec. Nts., Series 452, 3/20/03(DEM) 2,800,000 1,755,458 - ----------------------------------------------------------------------- Emergent Group, Inc., 10.75% Sr. Nts., Series B, 9/15/04 80,000 40,400 - ----------------------------------------------------------------------- Federal Home Loan Bank, 5.625%, 6/10/03(GBP) 115,000 193,244 - ----------------------------------------------------------------------- Federal National Mortgage Assn., 6.875% Sr. Unsec. Nts., 6/7/02(GBP) 325,000 566,803 - ----------------------------------------------------------------------- Ford Motor Credit Co., 5.25% Bonds, 6/16/08(DEM) 1,350,000 840,444 - ----------------------------------------------------------------------- Hypothekenbank in Essen AG: 4.50% Sec. Nts., Series 478, 5/2/03(DEM) 575,000 357,044 - ----------------------------------------------------------------------- 5.25% Sec. Nts., Series 502, 1/22/08(DEM) 890,000 571,772 - ----------------------------------------------------------------------- 5.50% Sec. Nts., Series 459, 2/20/07(DEM) 830,000 544,936 - ----------------------------------------------------------------------- Industrial Bank of Japan Preferred Capital Co. (The) LLC, 8.79% Bonds, 12/29/49(5)(6) 400,000 344,624 - ----------------------------------------------------------------------- Kreditanstalt fuer Wiederaufbau, 5% Bonds, 1/4/09(DEM) 650,000 416,610 - ----------------------------------------------------------------------- Local Financial Corp., 11% Sr. Nts., 9/8/04(6) 150,000 152,250 - ----------------------------------------------------------------------- Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 150,000 120,750
88 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- FINANCIAL (CONTINUED) Ocwen Financial Corp., 11.875% Nts., 10/1/03 $ 150,000 $ 134,250 - ----------------------------------------------------------------------- Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(4)(12) 90,000 5,625 - ----------------------------------------------------------------------- PT Polysindo Eka Perkasa: 11% Nts., 6/27/01-6/18/03(4) 100,000 12,000 24% Nts., 6/27/01-6/19/03(IDR) 164,300,000 2,464 - ----------------------------------------------------------------------- Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 350,000 327,250 - ----------------------------------------------------------------------- SBS Agro Finance BV Bonds, 10.25%, 7/21/00 339,000 26,272 - ----------------------------------------------------------------------- Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(12) 100,000 27,000 - ----------------------------------------------------------------------- Veritas Capital Trust, 10% Nts., 1/1/28 100,000 90,250 - ----------------------------------------------------------------------- Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 129,000 129,000 - ----------------------------------------------------------------------- Wilshire Financial Services Group, Inc., 13% Nts., 1/1/04 60,000 18,000 --------------- 9,934,481 - ----------------------------------------------------------------------- FOOD & DRUG - 0.5% Ameriking, Inc., 10.75% Sr. Nts., 12/1/06(12) 125,000 130,937 - ----------------------------------------------------------------------- Fleming Cos., Inc.: 10.50% Sr. Sub. Nts., Series B, 12/1/04 50,000 47,500 10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 525,000 - ----------------------------------------------------------------------- Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(13) 260,000 214,500 - ----------------------------------------------------------------------- Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 350,000 380,625 - ----------------------------------------------------------------------- Shoppers Food Warehouse Corp., 9.75% Sr. Nts., 6/15/04 155,000 169,725 --------------- 1,468,287 - ----------------------------------------------------------------------- FOOD/TOBACCO - 0.4% Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 150,000 156,750 - ----------------------------------------------------------------------- Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(13) 100,000 69,000 - ----------------------------------------------------------------------- Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 200,000 201,000 - ----------------------------------------------------------------------- Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10 200,000 205,000 - ----------------------------------------------------------------------- SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 400,000 404,000 - ----------------------------------------------------------------------- Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 200,000 194,000 --------------- 1,229,750 - ----------------------------------------------------------------------- FOREST PRODUCTS/CONTAINERS - 0.7% Ball Corp.: 7.75% Sr. Nts., 8/1/06(6) 125,000 131,250 8.25% Sr. Sub. Nts., 8/1/08(6) 125,000 130,625 - ----------------------------------------------------------------------- Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05 250,000 268,750 - ----------------------------------------------------------------------- Fletcher Challenge Finance U.S.A., Inc., 8.05% Debs., 6/15/03(NZD) 80,000 43,838 - ----------------------------------------------------------------------- Fletcher Challenge Ltd.: 10% Cv. Unsec. Sub. Nts., 4/30/05(NZD) 60,000 34,074 14.50% Cv. Sub. Nts., 9/30/00(NZD) 60,000 34,967
89 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- FOREST PRODUCTS/CONTAINERS (CONTINUED) Florida Coast Paper Co. LLC, 12.75% First Mtg. Nts., Series B, 6/1/03(12) $ 230,000 $ 124,200 - ----------------------------------------------------------------------- Four M Corp., 12% Sr. Sec. Nts., Series B, 6/1/06 105,000 78,225 - ----------------------------------------------------------------------- Indah Kiat International Finance Co. BV, 11.375% Sec. Nts., Series A, 6/15/99(4) 205,000 182,450 - ----------------------------------------------------------------------- Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 400,000 398,000 - ----------------------------------------------------------------------- SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 200,000 218,750 - ----------------------------------------------------------------------- SF Holdings Group, Inc., 0%/12.75% Sr. Disc. Nts., 3/15/08(13) 100,000 35,500 - ----------------------------------------------------------------------- U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 150,000 151,500 --------------- 1,832,129 - ----------------------------------------------------------------------- GAMING/LEISURE - 1.6% AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(13) 50,000 27,250 - ----------------------------------------------------------------------- Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 100,000 92,500 - ----------------------------------------------------------------------- Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 275,000 269,500 - ----------------------------------------------------------------------- Casino America, Inc., 12.50% Sr. Nts., 8/1/03 50,000 55,625 - ----------------------------------------------------------------------- Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 120,000 136,200 - ----------------------------------------------------------------------- Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 400,000 400,000 - ----------------------------------------------------------------------- Grand Casinos, Inc., 10.125% First Mtg. Sec. Nts., 12/1/03 325,000 355,875 - ----------------------------------------------------------------------- Grupo Posadas SA de CV, 10.375% Bonds, 2/13/02 50,000 43,312 - ----------------------------------------------------------------------- Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 300,000 301,500 - ----------------------------------------------------------------------- Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 425,000 440,938 - ----------------------------------------------------------------------- Intrawest Corp., 9.75% Sr. Nts., 8/15/08 350,000 360,500 - ----------------------------------------------------------------------- Majestic Star Casino LLC (The), 12.75% Sr. Sec. Nts., 5/15/03 400,000 417,000 - ----------------------------------------------------------------------- Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts., Series B, 11/15/02 200,000 241,000 - ----------------------------------------------------------------------- Outboard Marine Corp., 10.75% Sr. Nts., 6/1/08(6) 110,000 107,800 - ----------------------------------------------------------------------- Premier Cruise Ltd., 11% Sr. Nts., 3/15/08(6) 250,000 126,250 - ----------------------------------------------------------------------- Premier Parks, Inc.: 0%/10% Sr. Disc. Nts., 4/1/08(13) 200,000 136,500 9.25% Sr. Nts., 4/1/06 100,000 103,875 - ----------------------------------------------------------------------- Rio Hotel & Casino, Inc., 9.50% Sr. Sub. Nts., 4/15/07 200,000 222,000 - ----------------------------------------------------------------------- Showboat Marina Casino Partnership/Showboat Marina Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 350,000 397,250 - ----------------------------------------------------------------------- Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 200,000 206,250 - ----------------------------------------------------------------------- Venetian Casino Resort LLC/Las Vegas Sands, Inc., 10% Sr. Unsec. Sub. Nts., 11/15/05 (11) 150,000 132,750 --------------- 4,573,875 - ----------------------------------------------------------------------- HEALTHCARE - 0.8% Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 500,000 495,000 - ----------------------------------------------------------------------- Fresenius Medical Care Capital Trust III, 7.375% Nts., 2/1/08(DEM) 400,000 253,374
90 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- HEALTHCARE (CONTINUED) ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(6) $ 350,000 $ 355,250 - ----------------------------------------------------------------------- Integrated Health Services, Inc.: 10.25% Sr. Sub. Nts., 4/30/06 15,000 14,775 9.50% Sr. Sub. Nts., 9/15/07 115,000 109,825 - ----------------------------------------------------------------------- Kinetic Concepts, Inc., 9.625% Sr. Unsec. Sub. Nts., Series B, 11/1/07 500,000 481,250 - ----------------------------------------------------------------------- Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 250,000 221,250 - ----------------------------------------------------------------------- Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(6) 150,000 141,750 - ----------------------------------------------------------------------- Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07 250,000 203,750 --------------- 2,276,224 - ----------------------------------------------------------------------- HOUSING - 0.5% Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 50,000 51,125 - ----------------------------------------------------------------------- Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07 100,000 90,500 - ----------------------------------------------------------------------- Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 50,000 53,000 - ----------------------------------------------------------------------- Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 300,000 303,000 - ----------------------------------------------------------------------- Nortek, Inc.: 9.125% Sr. Nts., Series B, 9/1/07 650,000 672,750 9.25% Sr. Nts., Series B, 3/15/07 150,000 154,500 --------------- 1,324,875 - ----------------------------------------------------------------------- INFORMATION TECHNOLOGY - 0.6% Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(13) 600,000 333,000 - ----------------------------------------------------------------------- Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 250,000 238,750 - ----------------------------------------------------------------------- DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 20,000 19,900 - ----------------------------------------------------------------------- Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 350,000 351,750 - ----------------------------------------------------------------------- Iron Mountain, Inc., 8.75% Sr. Sub. Nts., 9/30/09 150,000 155,250 - ----------------------------------------------------------------------- Unisys Corp., 11.75% Sr. Nts., 10/15/04 150,000 174,750 - ----------------------------------------------------------------------- WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(13) 500,000 275,000 - ----------------------------------------------------------------------- Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 175,000 167,125 --------------- 1,715,525 - ----------------------------------------------------------------------- MANUFACTURING - 0.8% Axia, Inc. (New), 10.75% Sr. Sub. Nts., 7/15/08 125,000 127,500 - ----------------------------------------------------------------------- Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 150,000 146,250 - ----------------------------------------------------------------------- Cia Latino Americana de Infraestructura & Servicios SA - CLISA, 11.625% Sr. Unsec. Nts., 6/1/04(4) 30,000 19,650 - ----------------------------------------------------------------------- Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 250,000 261,875 - ----------------------------------------------------------------------- Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 300,000 283,500 - ----------------------------------------------------------------------- Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 100,000 90,500 - ----------------------------------------------------------------------- Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 143,250
91 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- MANUFACTURING (CONTINUED) Insilco Corp., Units (each unit consists of $1,000 principal amount of 12% Sr. Sub. Nts., 8/15/07 and one warrant to purchase 0.52 shares of common stock)(6)(14) $ 270,000 $ 280,800 - ----------------------------------------------------------------------- International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 125,000 132,188 - ----------------------------------------------------------------------- Mechala Group Jamaica Ltd., 12.75% Gtd. Sr. Sec. Sub. Nts., Series B, 12/30/99 85,000 58,013 - ----------------------------------------------------------------------- MOLL Industries, Inc., 10.50% Sr. Sub. Nts., 7/1/08(6) 200,000 197,000 - ----------------------------------------------------------------------- Paragon Corp. Holdings, Inc., 9.625% Sr. Unsec. Nts., Series B, 4/1/08 125,000 106,563 - ----------------------------------------------------------------------- Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 100,000 99,500 - ----------------------------------------------------------------------- Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 140,000 136,500 - ----------------------------------------------------------------------- Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08 150,000 147,750 - ----------------------------------------------------------------------- Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03 50,000 52,250 --------------- 2,283,089 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-BROADCASTING - 1.2% Azteca Holdings SA, 11% Sr. Sec. Nts., 6/15/02 155,000 131,750 - ----------------------------------------------------------------------- Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 275,000 286,000 - ----------------------------------------------------------------------- CBS Radio, Inc., 11.375% Unsec. Sub. Debs., 1/15/09(15) 75,100 89,745 - ----------------------------------------------------------------------- Chancellor Media Corp.: 8.125% Sr. Sub. Nts., Series B, 12/15/07 200,000 200,500 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 400,000 412,000 10.50% Sr. Sub. Nts., Series B, 1/15/07 90,000 99,000 - ----------------------------------------------------------------------- Jacor Communications, Inc.: 8% Sr. Sub. Nts., 2/15/10 500,000 530,000 8.75% Gtd. Sr. Sub. Nts., Series B, 6/15/07 100,000 108,250 - ----------------------------------------------------------------------- Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 95,000 97,850 - ----------------------------------------------------------------------- Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(11) 100,000 100,500 - ----------------------------------------------------------------------- Sinclair Broadcast Group, Inc.: 8.75% Sr. Sub. Nts., 12/15/07 150,000 152,250 9% Sr. Unsec. Sub. Nts., 7/15/07 210,000 215,250 10% Sr. Sub. Nts., 9/30/05 100,000 106,500 - ----------------------------------------------------------------------- Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 100,000 106,500 - ----------------------------------------------------------------------- TV Azteca SA de CV: 10.125% Sr. Nts., Series A, 2/15/04 100,000 85,250 10.50% Sr. Nts., Series B, 2/15/07 150,000 123,750 - ----------------------------------------------------------------------- Young Broadcasting, Inc.: 8.75% Sr. Sub. Debs., 6/15/07 275,000 280,500 9% Sr. Sub. Nts., Series B, 1/15/06 100,000 101,500 --------------- 3,227,095 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-CABLE/WIRELESS VIDEO - 1.2% Adelphia Communications Corp.: 8.375% Sr. Nts., Series B, 2/1/08 100,000 103,750
92 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-CABLE/WIRELESS VIDEO (CONTINUED) Adelphia Communications Corp.: (Continued) 9.25% Sr. Nts., 10/1/02 $ 100,000 $ 106,000 10.50% Sr. Unsec. Nts., Series B, 7/15/04 70,000 78,750 - ----------------------------------------------------------------------- American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(13) 40,545 6,284 - ----------------------------------------------------------------------- CSC Holdings, Inc.: 9.875% Sr. Sub. Debs., 4/1/23 150,000 167,625 9.875% Sr. Sub. Nts., 5/15/06 250,000 273,750 - ----------------------------------------------------------------------- EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(13) 40,000 41,200 - ----------------------------------------------------------------------- EchoStar DBS Corp., 12.50% Sr. Sec. Nts., 7/1/02 250,000 288,750 - ----------------------------------------------------------------------- EchoStar I, 8.25% Bonds, 2/26/01(4) 111,983 111,983 - ----------------------------------------------------------------------- EchoStar II, 8.25% Sinking Fund Bonds, 11/9/01(4) 114,318 114,318 - ----------------------------------------------------------------------- EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts., 3/15/04(13) 400,000 401,000 - ----------------------------------------------------------------------- Falcon Holding Group LP, 0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(13) 350,000 241,500 - ----------------------------------------------------------------------- Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts., Series B, 11/1/03(5) 175,000 182,875 - ----------------------------------------------------------------------- Marcus Cable Operating Co. LP/Marcus Cable Capital Corp., 0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(13) 200,000 202,500 - ----------------------------------------------------------------------- Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 310,000 308,450 - ----------------------------------------------------------------------- Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 200,000 225,000 - ----------------------------------------------------------------------- Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 400,000 252,239 - ----------------------------------------------------------------------- United International Holdings, Inc.: 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(13) 70,000 38,150 0%/14% Sr. Disc. Nts., Series B, 5/15/06(13) 400,000 210,000 --------------- 3,354,124 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-DIVERSIFIED MEDIA - 0.6% Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07 100,000 74,250 - ----------------------------------------------------------------------- IPC Magazines Group plc, 9.625% Bonds, 3/15/08(GBP) 300,000 435,225 - ----------------------------------------------------------------------- Regal Cinemas, Inc., 8.875% Sr. Sub. Nts., 12/15/10(6) 250,000 249,375 - ----------------------------------------------------------------------- SFX Entertainment, Inc., 9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 500,000 497,500 - ----------------------------------------------------------------------- Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 300,000 367,990 --------------- 1,624,340 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS - -4.0% Amazon.Com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(13) 260,000 172,900 - ----------------------------------------------------------------------- COLT Telecom Group plc: 0%/12% Sr. Unsec. Disc. Nts., 12/15/06(13) 200,000 169,000 7.625% Bonds, 7/31/08(DEM) 500,000 297,016 8.875% Sr. Nts., 11/30/07(DEM) 100,000 61,692 10.125% Sr. Nts., 11/30/07(GBP) 170,000 297,362
93 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS (CONTINUED) COLT Telecom Group plc: (Continued) Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase 7.8 ordinary shares)(13)(14) $ 200,000 $ 169,000 - ----------------------------------------------------------------------- Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07(13) 250,000 212,500 - ----------------------------------------------------------------------- Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 80,000 82,000 - ----------------------------------------------------------------------- Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 250,000 121,250 - ----------------------------------------------------------------------- Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(13) 825,000 686,813 - ----------------------------------------------------------------------- Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 50,000 48,000 - ----------------------------------------------------------------------- e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07 110,000 103,125 - ----------------------------------------------------------------------- Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08 165,000 165,825 - ----------------------------------------------------------------------- FaciliCom International, Inc., 10.50% Sr. Nts., Series B, 1/15/08 340,000 273,700 - ----------------------------------------------------------------------- FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(13) 190,000 57,950 - ----------------------------------------------------------------------- Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(13) 515,000 275,525 - ----------------------------------------------------------------------- Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08 210,000 223,650 - ----------------------------------------------------------------------- Globix Corp., 13% Sr. Unsec. Nts., 5/1/05 325,000 268,125 - ----------------------------------------------------------------------- GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(6)(13) 25,000 19,844 - ----------------------------------------------------------------------- GST Telecommunications, Inc./GST Network Funding Corp., Inc., 0%/10.50% Sr. Disc. Nts., 5/1/08(6)(13) 75,000 32,625 - ----------------------------------------------------------------------- GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(13) 355,000 256,488 - ----------------------------------------------------------------------- ICG Holdings, Inc.: 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(13) 195,000 146,250 0%/13.50% Sr. Disc. Nts., 9/15/05(13) 120,000 99,600 - ----------------------------------------------------------------------- ICG Services, Inc., 0%/10% Sr. Unsec. Disc. Nts., 2/15/08(13) 115,000 61,525 - ----------------------------------------------------------------------- Intermedia Communications, Inc.: 8.60% Sr. Unsec. Nts., Series B, 6/1/08 225,000 214,875 8.875% Sr. Nts., 11/1/07 200,000 194,000 - ----------------------------------------------------------------------- KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(13) 725,000 351,625 - ----------------------------------------------------------------------- Level 3 Communications, Inc., 9.125% Sr. Unsec. Nts., 5/1/08 450,000 446,625 - ----------------------------------------------------------------------- Long Distance International, Inc., 12.25% Sr. Nts., 4/15/08(6) 200,000 167,000 - ----------------------------------------------------------------------- McLeodUSA, Inc., 9.25% Sr. Nts., 7/15/07 75,000 78,750 - ----------------------------------------------------------------------- Netia Holdings BV: 10.25% Sr. Nts., Series B, 11/1/07 50,000 42,625 0%/11% Sr. Disc. Nts., 11/1/07(13)(DEM) 400,000 137,494 0%/11% Sr. Disc. Nts., Series B, 11/1/07(13)(DEM) 200,000 68,747 0%/11.25% Sr. Disc. Nts., Series B, 11/1/07(13) 100,000 57,250 - ----------------------------------------------------------------------- NEXTLINK Communications, Inc.: 0%/9.45% Sr. Disc. Unsec. Nts., 4/15/08(13) 260,000 149,500 9% Sr. Nts., 3/15/08 200,000 189,000
94 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS (CONTINUED) - ----------------------------------------------------------------------- NEXTLINK Communications, Inc.: (Continued) 9.625% Sr. Nts., 10/1/07 $ 350,000 $ 336,000 10.75% Sr. Nts., 11/15/08(6) 100,000 102,250 - ----------------------------------------------------------------------- NorthEast Optic Network, Inc., 12.75% Sr. Nts., 8/15/08 200,000 197,000 - ----------------------------------------------------------------------- NTL, Inc.: 0%/9.75% Sr. Deferred Coupon Nts., 4/1/08(6)(13) 300,000 187,500 0%/10.75% Sr. Unsec. Unsub. Nts., Series REGS, 4/1/08(13)(GBP) 200,000 208,079 7% Cv. Sub. Nts., 12/15/08(6) 400,000 433,000 10% Sr. Nts., Series B, 2/15/07 100,000 103,000 - ----------------------------------------------------------------------- PLD Telekom, Inc., 0%/14% Sr. Disc. Nts., 6/1/04(13) 300,000 160,500 - ----------------------------------------------------------------------- PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 750,000 746,250 - ----------------------------------------------------------------------- PTC International Finance BV, 0%/10.75% Gtd. Sr. Unsec. Sub. Bonds, 7/1/07(4)(13) 134,000 92,795 - ----------------------------------------------------------------------- Qwest Communications International, Inc.: 0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(13) 365,000 277,400 0%/9.47% Sr. Disc. Nts., 10/15/07(13) 495,000 384,863 - ----------------------------------------------------------------------- RSL Communications plc: 0%/10% Bonds, 3/15/08(13)(DEM) 350,000 116,236 0%/10.125% Sr. Disc. Nts., 3/1/08(13) 300,000 173,250 10.50% Sr. Nts., 11/15/08(6) 250,000 244,375 - ----------------------------------------------------------------------- Shaw Communications, Inc., 8.54% Debs., 9/30/27(CAD) 340,000 230,225 - ----------------------------------------------------------------------- TeleWest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07(13) 200,000 168,000 - ----------------------------------------------------------------------- Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 100,000 105,500 - ----------------------------------------------------------------------- Verio, Inc.: 10.375% Sr. Unsec. Nts., 4/1/05 225,000 221,625 13.50% Sr. Unsec. Nts., 6/15/04 65,000 70,525 - ----------------------------------------------------------------------- Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 300,000 308,250 --------------- 11,265,879 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS - 2.3% Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(6) 100,000 100,500 - ----------------------------------------------------------------------- Celcaribe SA, 13.50% Sr. Sec. Nts., 3/15/04 150,000 143,250 - ----------------------------------------------------------------------- CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(13) 500,000 127,500 - ----------------------------------------------------------------------- Cellular Communications International, Inc., 0%/9.50% Bonds, 4/1/05(13)(XEU) 650,000 644,959 - ----------------------------------------------------------------------- Clearnet Communications, Inc., 0%/14.75% Sr. Disc. Nts., 12/15/05(13) 50,000 43,000 - ----------------------------------------------------------------------- Comunicacion Celular SA, 0%/14.125% Sr. Unsec. Deferred Bonds, 3/1/05(4)(13) 350,000 245,000 - ----------------------------------------------------------------------- Crown Castle International Corp., 0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(13) 500,000 352,500 - ----------------------------------------------------------------------- CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(13) 175,000 79,625 - ----------------------------------------------------------------------- Geotek Communications, Inc.: 0%/15% Sr. Sec. Disc. Nts., Series B, 7/15/05(12)(13) 90,000 18,450 12% Cv. Sr. Sub. Nts., 2/15/01(12) 210,000 --
95 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS (CONTINUED) ICO Global Communications (Holdings) Ltd., Units (each unit consists of $1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant to buy 19.85 shares of common stock)(14) $ 100,000 $ 75,000 - ----------------------------------------------------------------------- Microcell Telecommunications, Inc., 0%/11.125% Sr. Disc. Nts., Series B, 10/15/07(13)(CAD) 300,000 108,227 - ----------------------------------------------------------------------- Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(13) 210,000 149,625 - ----------------------------------------------------------------------- Nextel Communications, Inc.: 0%/9.75% Sr. Disc. Nts., 10/31/07(13) 345,000 210,450 0%/9.95% Sr. Disc. Nts., 2/15/08(13) 245,000 146,388 0%/10.65% Sr. Disc. Nts., 9/15/07(13) 480,000 308,400 - ----------------------------------------------------------------------- Omnipoint Corp.: 11.625% Sr. Nts., 8/15/06 365,000 255,500 11.625% Sr. Nts., Series A, 8/15/06 265,000 185,500 - ----------------------------------------------------------------------- Orange plc, 8% Sr. Nts., 8/1/08 250,000 253,750 - ----------------------------------------------------------------------- ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 300,000 310,500 - ----------------------------------------------------------------------- Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(13) 550,000 346,500 - ----------------------------------------------------------------------- Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(13) 325,000 190,938 - ----------------------------------------------------------------------- Price Communications Cellular Holdings, Inc., 11.25% Sr. Nts., 8/15/08(15) 150,000 142,500 - ----------------------------------------------------------------------- Price Communications Wireless, Inc.: 11.75% Sr. Sub. Nts., 7/15/07 275,000 291,500 9.125% Sr. Sec. Nts., 12/15/06(6) 250,000 253,750 - ----------------------------------------------------------------------- Real Time Data, Inc., Units (each unit consists of $1,000 principal amount of 0%/13.50% sub. disc. nts., 8/15/06 and one warrant to purchase six ordinary shares)(6)(13)(14) 300,000 139,500 - ----------------------------------------------------------------------- Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 300,000 302,250 - ----------------------------------------------------------------------- Satelites Mexicanos SA, 10.125% Sr. Nts., 11/1/04 100,000 80,250 - ----------------------------------------------------------------------- SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(13) 700,000 406,000 - ----------------------------------------------------------------------- Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(6)(13) 500,000 252,500 - ----------------------------------------------------------------------- Sprint Spectrum LP/Sprint Spectrum Finance Corp., 0%/12.50% Sr. Disc. Nts., 8/15/06(13) 65,000 58,825 - ----------------------------------------------------------------------- USA Mobile Communications, Inc. II: 9.50% Sr. Nts., 2/1/04 100,000 90,500 14% Sr. Nts., 11/1/04 200,000 207,000 --------------- 6,520,137 - ----------------------------------------------------------------------- METALS/MINERALS - 0.7% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 220,000 229,900 - ----------------------------------------------------------------------- Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 45,000 34,425 - ----------------------------------------------------------------------- Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 45,000 48,263 - ----------------------------------------------------------------------- Centaur Mining & Exploration Ltd., 11% Sr. Nts., 12/1/07 100,000 91,500 - ----------------------------------------------------------------------- Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 500,000 506,250
96 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- METALS/MINERALS (CONTINUED) International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 $ 50,000 $ 47,250 - ----------------------------------------------------------------------- Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07 200,000 192,000 - ----------------------------------------------------------------------- Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(13) 250,000 86,250 - ----------------------------------------------------------------------- Metallurg, Inc., 11% Sr. Nts., 12/1/07 745,000 696,575 --------------- 1,932,413 - ----------------------------------------------------------------------- RETAIL - 0.5% Boyds Collection Ltd., 9% Sr. Sub. Nts., 5/15/08(6) 400,000 410,000 - ----------------------------------------------------------------------- Central Termica Guemes, 12% Bonds, 11/26/01(4) 100,000 56,875 - ----------------------------------------------------------------------- Eye Care Centers of America, Inc., 9.125% Sr. Sub. Nts., 5/1/08(6) 300,000 286,500 - ----------------------------------------------------------------------- Finlay Enterprises, Inc., 9% Debs., 5/1/08 100,000 88,500 - ----------------------------------------------------------------------- Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 100,000 92,500 - ----------------------------------------------------------------------- Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(6) 225,000 223,875 - ----------------------------------------------------------------------- Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 200,000 210,500 --------------- 1,368,750 - ----------------------------------------------------------------------- SERVICE - 0.9% Allied Waste North America, Inc., 7.875% Sr. Nts., 1/1/09(6) 335,000 340,863 - ----------------------------------------------------------------------- Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07 100,000 108,500 - ----------------------------------------------------------------------- Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(13) 100,000 82,500 - ----------------------------------------------------------------------- Fisher Scientific International, Inc.: 9% Sr. Sub. Nts., 2/1/08(6) 105,000 105,525 9% Sr. Unsec. Sub. Nts., 2/1/08 600,000 603,000 - ----------------------------------------------------------------------- Great Lakes Dredge & Dock Corp., 11.25% Sr. Sub. Nts., 8/15/08(6) 375,000 382,500 - ----------------------------------------------------------------------- Intermedia Communications, Inc., 8.50% Sr. Nts., Series B, 1/15/08 250,000 238,750 - ----------------------------------------------------------------------- Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 50,000 50,000 - ----------------------------------------------------------------------- Lamar Advertising Co.: 8.625% Sr. Sub. Nts., 9/15/07 150,000 158,250 9.625% Sr. Sub. Nts., 12/1/06 50,000 53,750 - ----------------------------------------------------------------------- Protection One Alarm Monitoring, Inc., 6.75% Cv. Sr. Sub. Nts., 9/15/03 125,000 128,281 - ----------------------------------------------------------------------- United Rentals, Inc., 9.25% Sr. Sub. Nts., 1/15/09(6) 250,000 251,875 --------------- 2,503,794 - ----------------------------------------------------------------------- TRANSPORTATION - 1.8% Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 75,000 64,875 - ----------------------------------------------------------------------- Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 80,000 82,000 - ----------------------------------------------------------------------- Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06 300,000 313,500 - ----------------------------------------------------------------------- Federal-Mogul Corp., 7.875% Nts., 7/1/10 300,000 307,741 - ----------------------------------------------------------------------- Hayes Wheels International, Inc.: 9.125% Sr. Sub. Nts., 7/15/07 100,000 104,250 11% Sr. Sub. Nts., 7/15/06 225,000 250,875 - ----------------------------------------------------------------------- HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(6) 250,000 226,250
97 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- TRANSPORTATION (CONTINUED) Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 $ 300,000 $ 282,000 - ----------------------------------------------------------------------- Lear Corp., 9.50% Sub. Nts., 7/15/06 200,000 221,000 - ----------------------------------------------------------------------- Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal amount of 12% first priority ship mtg. nts., 7/15/05 and one warrant to purchase five shares of common stock)(6)(14) 250,000 201,250 - ----------------------------------------------------------------------- Navigator Gas Transport plc: 10.50% First Priority Ship Mtg. Nts., 6/30/07(6) 275,000 243,375 Units (each unit consists of $1,000 principal amount of 12% second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(6)(14) 150,000 135,750 - ----------------------------------------------------------------------- Oxford Automotive, Inc.: 10.125% Sr. Sub. Nts., 6/15/07(4) 400,000 418,000 10.125% Sr. Unsec. Sub. Nts., 6/15/07 900,000 936,000 - ----------------------------------------------------------------------- Pycsa Panama SA, 10.28% Sr. Sec. Bonds, 12/15/12(4) 200,000 156,500 - ----------------------------------------------------------------------- TFM SA de CV, 10.25% Sr. Nts., 6/15/07 200,000 165,000 - ----------------------------------------------------------------------- Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 580,000 490,100 - ----------------------------------------------------------------------- Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(13) 300,000 289,500 - ----------------------------------------------------------------------- Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(6) 192,214 116,770 --------------- 5,004,736 - ----------------------------------------------------------------------- UTILITY - 0.4% Beaver Valley II Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 199,000 224,870 - ----------------------------------------------------------------------- California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 150,000 157,688 - ----------------------------------------------------------------------- Calpine Corp.: 8.75% Sr. Nts., 7/15/07 230,000 233,450 10.50% Sr. Nts., 5/15/06 100,000 110,750 - ----------------------------------------------------------------------- El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 250,000 290,625 --------------- 1,017,383 --------------- Total Corporate Bonds and Notes (Cost $80,568,681) 75,939,400 SHARES - ----------------------------------------------------------------------- PREFERRED STOCKS - 2.2% - ----------------------------------------------------------------------- AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(15) 2,638 66,609 - ----------------------------------------------------------------------- BankUnited Capital Trust, 10.25% Gtd. Bonds, 12/31/26 100,000 100,250 - ----------------------------------------------------------------------- CGA Group Ltd., Preferred Stock, Series A(4)(15) 19,110 477,750 - ----------------------------------------------------------------------- Chesapeake Energy Corp., 7% Cum. Cv.(6) 4,000 41,000 - ----------------------------------------------------------------------- Clark USA, Inc., 11.50% Cum. Exchangeable(15) 55 46,337 - ----------------------------------------------------------------------- Concentric Network Corp., 13.50% Preferred, Series B(15) 212 181,790 - ----------------------------------------------------------------------- CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg. 46,000 644,000 - ----------------------------------------------------------------------- Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. 2,000 97,750 - ----------------------------------------------------------------------- Doane Products Co., 14.25% Exchangeable, Non-Vtg.(4)(16) 5,000 191,875 - ----------------------------------------------------------------------- Dobson Communications Corp., 12.25% Sr. Exchangeable(15) 218 194,565
98 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------------- PREFERRED STOCKS (CONTINUED) - ----------------------------------------------------------------------- e.spire Communications, Inc., 12.75% Jr. Redeemable Preferred Stock 163 $ 80,277 - ----------------------------------------------------------------------- Eagle-Picher Holdings, Inc., Cum. Exchangeable, Series B, 3/1/08, Non-Vtg. (16) 50 253,750 - ----------------------------------------------------------------------- Earthwatch, Inc., 12% Cum. Cv., Series C, Non-Vtg.(6)(15) 10,000 15,000 - ----------------------------------------------------------------------- EchoStar Communications Corp., 12.125% Sr. Redeemable Exchangeable, Series B, Non-Vtg.(15) 144 167,400 - ----------------------------------------------------------------------- Fidelity Federal Bank FSB Glendale California, l2% Non-Cum. Exchangeable Perpetual Preferred Stock, Series A 20 465 - ----------------------------------------------------------------------- ICG Holdings, Inc., 14.25% Exchangeable(15) 115 126,787 - ----------------------------------------------------------------------- Intermedia Communications, Inc., Depositary Shares Representing one one-hundredth 7% Cum. Cv. Jr. Preferred Stock, Series E, Non-Vtg.(6) 2,100 38,325 - ----------------------------------------------------------------------- International Utility Structures, Inc.: 13% Preferred(6)(15) 3 2,588 Units (each unit consists of $1,000 principal amount of 13% sr. exchangeable preferred stock and one warrant to purchase 30 shares of common stock)(4)(15) 50 43,250 - ----------------------------------------------------------------------- Kelley Oil & Gas Corp., $2.625 Cv. 1,800 16,200 - ----------------------------------------------------------------------- Nebco Evans Holdings, Inc., 11.25% Cum. Exchangeable(15) 5,425 272,606 - ----------------------------------------------------------------------- Nextel Communications, Inc., 11.125% Exchangeable, Series E(15) 109 98,373 - ----------------------------------------------------------------------- NEXTLINK Communications, Inc., 14% Cum. Exchangeable, Vtg.(15) 16,584 883,098 - ----------------------------------------------------------------------- Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(15) 21 179,025 - ----------------------------------------------------------------------- Petroleum Heat & Power Co., Inc., Jr. Cv. Preferred Stock(16) 1,434 2,510 - ----------------------------------------------------------------------- PRIMEDIA, Inc.: 8.625% Exchangeable 8,000 772,000 9.20% Exchangeable, Series F 1,000 98,500 - ----------------------------------------------------------------------- Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(15) 210 195,825 - ----------------------------------------------------------------------- SD Warren Co., 14% Cum. Exchangeable, Series B, Non-Vtg.(16) 9,000 461,250 - ----------------------------------------------------------------------- SF Holdings Group, Inc., 13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(15) 10 43,250 - ----------------------------------------------------------------------- Spanish Broadcasting Systems, Inc., 14.25% Cum. Exchangeable, Non-Vtg.(6)(15) 121 123,723 - ----------------------------------------------------------------------- Viatel, Inc., 10% Cv., Series A(15) 148 16,317 - ----------------------------------------------------------------------- Walden Residential Properties, Inc.: 9.16% Cv., Series B 10,000 230,000 9.20% Preferred 1,000 21,750 --------------- Total Preferred Stocks (Cost $8,171,525) 6,184,195 - ----------------------------------------------------------------------- COMMON STOCKS - 0.4% - ----------------------------------------------------------------------- Celcaribe SA(6)(16) 24,390 51,829 - ----------------------------------------------------------------------- Coinstar, Inc.(16) 700 7,525 - ----------------------------------------------------------------------- Golden State Bancorp, Inc.(16) 2,404 39,966
99 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ----------------------------------------------------------------------- COMMON STOCKS (CONTINUED) - ----------------------------------------------------------------------- Horizon Group Properties, Inc.(16) 358 $ 1,387 - ----------------------------------------------------------------------- Intermedia Communications, Inc.(16) 112 1,932 - ----------------------------------------------------------------------- MCI WorldCom, Inc.(16) 6,885 493,999 - ----------------------------------------------------------------------- Optel, Inc.(16) 210 2 - ----------------------------------------------------------------------- SF Holdings Group, Inc., Cl. C(16) 570 1,140 - ----------------------------------------------------------------------- Vail Resorts, Inc.(16) 15,500 341,000 --------------- Total Common Stocks (Cost $378,715) 938,780 UNITS - ----------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES - 0.1% - ----------------------------------------------------------------------- American Telecasting, Inc. Wts., Exp. 6/99(4) 1,500 15 - ----------------------------------------------------------------------- Argentina (Republic of) Wts., Exp. 12/99 1,065 4,659 - ----------------------------------------------------------------------- Central Bank of Nigeria Wts., Exp. 11/20 250 -- - ----------------------------------------------------------------------- CGA Group Ltd. Wts., Exp. 12/49(4) 16,000 4,800 - ----------------------------------------------------------------------- Clearnet Communications, Inc. Wts., Exp. 9/05 165 392 - ----------------------------------------------------------------------- Comunicacion Celular SA Wts., Exp. 11/03 200 12,025 - ----------------------------------------------------------------------- Concentric Network Corp. Wts., Exp. 12/07(4) 100 14,891 - ----------------------------------------------------------------------- Covad Communications Group, Inc. Wts., Exp. 3/08(4) 600 30,000 - ----------------------------------------------------------------------- Covergent Communications, Inc. Wts., Exp. 4/08(4) 1,000 1,250 - ----------------------------------------------------------------------- FirstWorld Communications, Inc. Wts., Exp. 4/08(4) 190 1,900 - ----------------------------------------------------------------------- Geotek Communications, Inc. Wts., Exp. 7/05(4) 7,500 75 - ----------------------------------------------------------------------- Globix Corp. Wts., Exp. 5/05(4) 325 3,250 - ----------------------------------------------------------------------- Golden State Bancorp, Inc. Wts., Exp. 1/01 2,404 10,968 - ----------------------------------------------------------------------- Gothic Energy Corp. Wts.: Exp. 1/03(6) 2,621 26 Exp. 9/04(4) 2,800 3,150 Exp. 5/05(4) 2,181 218 - ----------------------------------------------------------------------- Hyperion Telecommunications, Inc. Wts., Exp. 4/01 60 3,687 - ----------------------------------------------------------------------- ICG Communications, Inc. Wts., Exp. 9/05(4) 825 11,307 - ----------------------------------------------------------------------- IHF Capital, Inc. Series I Wts., Exp. 11/99(4) 200 2 - ----------------------------------------------------------------------- In-Flight Phone Corp. Wts., Exp. 8/02 200 -- - ----------------------------------------------------------------------- KMC Telecom Holdings, Inc. Wts., Exp. 4/08(4) 725 1,903 - ----------------------------------------------------------------------- Long Distance International, Inc. Wts., 4/08(4) 200 500 - ----------------------------------------------------------------------- Mexican Value Rts., Exp. 6/03 1,100,000 -- - ----------------------------------------------------------------------- Microcell Telecommunications, Inc. Wts., Exp. 6/06(4) 600 10,875 - ----------------------------------------------------------------------- Millenium Seacarriers, Inc. Wts., Exp. 7/05(4) 250 1,563 - ----------------------------------------------------------------------- Occidente y Caribe Celular SA Wts., Exp. 3/04(4) 800 6,100 - ----------------------------------------------------------------------- Orion Network Systems, Inc. Wts., Exp. 1/07(4) 150 1,875 - ----------------------------------------------------------------------- PLD Telekom, Inc. Wts., Exp. 6/06(4) 300 30 - ----------------------------------------------------------------------- Price Communications Corp. Wts., Exp. 8/07(4) 3,096 147,834
100 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE UNITS NOTE 1 - ----------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED) - ----------------------------------------------------------------------- United International Holdings, Inc. Wts., Exp. 11/99(4) 200 $ 3,025 - ----------------------------------------------------------------------- WAM!NET, Inc. Wts., Exp. 3/05(4) 1,500 12,000 --------------- Total Rights, Warrants and Certificates (Cost $47,541) 288,320 PRINCIPAL AMOUNT(1) - ----------------------------------------------------------------------- STRUCTURED INSTRUMENTS - 6.1% - ----------------------------------------------------------------------- Bankers Trust/Bear Stearns High Yield Composite Index Linked Nts., 8.55%, 5/4/99 $ 1,000,000 959,570 - ----------------------------------------------------------------------- Bayerische Landesbank Girozentrale (New York Branch), Lehman High Yield Index Nts., 8.50%, 3/8/99 1,000,000 942,500 - ----------------------------------------------------------------------- Bear Stearns High Yield Composite Index Linked Nts.: 8.50%, 4/9/99 1,000,000 929,380 9%, 2/16/99 1,600,000 1,474,306 - ----------------------------------------------------------------------- Beta Finance Corp., Japanese Yen Linked Nts., 2.11%, 9/10/99 1,520,000 1,639,624 - ----------------------------------------------------------------------- Credit Suisse First Boston Corp. (New York Branch), Russian OFZ Linked Nts., 15%, 2/23/00(4)(12)(RUR) 8,008,000 146,154 - ----------------------------------------------------------------------- Credit Suisse First Boston Corp. (New York Branch), Turkish Lira Currency Linked Nts., 92.556%, 2/2/99(5)(TRL) 18,302,400,000 692,571 - ----------------------------------------------------------------------- Deutsche Bank AG, Turkish Lira O/N Rate Linked Nts., 91.727%, 2/4/99(5)(TRL) 19,564,000,000 696,165 - ----------------------------------------------------------------------- Deutsche Morgan Grenfell, Russian Federal Loan Floating Rate Linked Nts.: 5.20%, 10/25/00(4)(12) 240,000 2,400 5.12%, 2/23/00(4)(12) 240,000 2,400 - ----------------------------------------------------------------------- Deutsche Morgan Grenfell, Russian OFZ Linked Nts., 14%, 9/27/00(4)(12)(RUR) 3,610,000 33,504 - ----------------------------------------------------------------------- Goldman, Sachs & Co. Argentina Local Market Securities Trust, 11.30%, 4/1/00 representing debt of Argentina (Republic of) Bonos del Tesoro Bonds, Series 10, 11.30%, 4/1/00 and an interest rate swap between Goldman Sachs and the Trust(4) 78,260 76,649 - ----------------------------------------------------------------------- J.P. Morgan & Co., Inc., The Emerging Markets Bond Plus Index Linked Nts., 9.50%, 7/16/99(17) 2,700,000 2,229,034 - ----------------------------------------------------------------------- Korea Development Bank, Industrial Bank Finance Linked Nts., Zero Coupon, 3/5/99 470,000 514,462 - ----------------------------------------------------------------------- Lehman Brothers Holdings, Inc., Chilean Peso/Japanese Yen Linked Nts., 18.50%, 1/28/99 600,000 596,520 - ----------------------------------------------------------------------- Lehman Brothers Holdings, Inc., Greek Drachma/European Currency Unit Linked Nts., Zero Coupon, 3/26/99 280,000 320,684 - ----------------------------------------------------------------------- Lehman Brothers Holdings, Inc., Greek Drachma/Swiss Franc Linked Nts., Zero Coupon, 3/31/99 175,000 202,143 - ----------------------------------------------------------------------- Morgan Guaranty Trust Co. of New York, The Emerging Markets Bond Index Linked Nts.: 9.50%, 5/7/99(17) 1,300,000 1,303,719 9.50%, 8/10/99(17) 1,400,000 1,215,850
101 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET VALUE AMOUNT(1) NOTE 1 - ----------------------------------------------------------------------- STRUCTURED INSTRUMENTS (CONTINUED) - ----------------------------------------------------------------------- Salomon Smith Barney, Inc., Brazil Credit Linked Nts., 6%, 4/2/03 $ 620,000 $ 317,440 - ----------------------------------------------------------------------- Salomon Smith Barney, Inc., United Mexican States 2016 Linked Nts., 14.076%, 3/18/99 749,000 747,247 - ----------------------------------------------------------------------- Shoshone Partners Loan Trust Sr. Nts., 6.97%, 4/28/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(4)(5) 750,000 672,606 - ----------------------------------------------------------------------- Standard Chartered Bank, Philippines Peso/Japanese Yen Currency Linked Nts., 16.45%, 1/21/99 116,000 126,858 - ----------------------------------------------------------------------- Standard Chartered Bank, Philippines Peso/Japanese Yen Linked Nts.: 20.45%, 2/9/99 240,000 237,360 21.83%, 1/19/99 270,000 219,888 - ----------------------------------------------------------------------- Standard Chartered Bank, Philippines Peso/Singapore Dollar Linked Nts.: 18.70%, 3/8/99 150,000 149,340 18.90%, 3/4/99 460,000 458,666 --------------- Total Structured Instruments (Cost $19,421,140) 16,907,040
DATE STRIKE CONTRACTS - -------------------------------------------------------------------------------------- CALL OPTIONS PURCHASED - 0.0% - -------------------------------------------------------------------------------------- U.S. Treasury Bonds, 6.125%, 11/15/27 Call Opt.(4) (Cost $65,234) 2/99 111.375% 2,500 52,344 - -------------------------------------------------------------------------------------- PUT OPTIONS PURCHASED - 0.0% - -------------------------------------------------------------------------------------- Japanese Yen Put Opt. 1/99 121.00(JPY) 146,410,000 1,025 - -------------------------------------------------------------------------------------- Japanese Yen Put Opt.(4) 2/99 125(JPY) 78,000,000 1,404 - -------------------------------------------------------------------------------------- Mexican Peso Put Opt.(4) 2/99 10.75(MXP) 13,100,000 5,240 - --------------- Total Put Options Purchased (Cost $55,514) 7,669
PRINCIPAL AMOUNT(1) - ----------------------------------------------------------------------- REPURCHASE AGREEMENTS - 2.2% - ----------------------------------------------------------------------- Repurchase agreement with PaineWebber, Inc., 4.85%, dated 12/31/98, to be repurchased at $6,203,341 on 1/4/99, collateralized by U.S. Treasury Nts., 4.625%--5.875%, 12/31/00--11/30/01, with a value of $6,335,417 (Cost $6,200,000) $ 6,200,000 6,200,000 - ----------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $282,454,523) 98.0% 273,522,777 - ----------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 2.0 5,677,619 ------------ --------------- NET ASSETS 100.0% $ 279,200,396 ------------ --------------- ------------ ---------------
102 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED) 1. Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP - Argentine Peso AUD - Australian Dollar CAD - Canadian Dollar DEM - German Mark DKK - Danish Krone ESP - Spanish Peseta FIM - Finnish Markka FRF - French Franc GBP - British Pound Sterling GRD - Greek Drachma HUF - Hungarian Forint IDR - Indonesian Rupiah ITL - Italian Lira JPY - Japanese Yen MXP - Mexican Peso NZD - New Zealand Dollar PLZ - Polish Zloty RUR - Russian Ruble TRL - Turkish Lira XEU - European Currency Units 2. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. 3. Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. 4. Identifies issues considered to be illiquid or restricted -- See applicable note of Notes to Financial Statements. 5. Represents the current interest rate for a variable rate security. 6. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $10,081,861 or 3.61% of the Fund's net assets as of December 31, 1998. 7. A sufficient amount of securities has been designated to cover outstanding forward foreign currency exchange contracts. See applicable note of Notes to Financial Statements. 8. Securities with an aggregate market value of $672,188 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See applicable note of Notes to Financial Statements. 9. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows:
CONTRACTS/PRINCIPAL EXPIRATION EXERCISE PREMIUM MARKET VALUE SUBJECT TO CALL DATE PRICE RECEIVED NOTE 1 - -------------------------------------------------------------------------------------------- Japanese Yen Call Option 134,503,600 1/99 111(JPY) $10,236 $10,357 - -------------------------------------------------------------------------------------------- Mexican Peso Call Option 13,100,000 2/99 10(MXP) 9,140 3,930 - -------------------------------------------------------------------------------------------- U.S. Treasury Bonds, 6.125%, 11/15/27 Call Opt. 2,500,000 2/99 122% 5,859 1,758 - ------- ------ $25,235 $16,045 - ------- ------ - ------- ------
10. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 11. Represents the current interest rate for an increasing rate security. 12. Non-income producing -- issuer is in default. 13. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 103 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND STATEMENT OF INVESTMENTS (CONTINUED) - -------------------------------------------------------------------------------- 14. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units which represent debt securities, principal amount disclosed represents total underlying principal. 15. Interest or dividend is paid in kind. 16. Non-income producing security. 17. Security is linked to the Emerging Markets Bond Index (EMBI). The EMBI tracks total returns for currency denominated debt instruments of the emerging markets. Countries covered are Argentina, Brazil, Bulgaria, Ecuador, Mexico, Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia and Venezuela. See accompanying Notes to Financial Statements. 104 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
MARKET VALUE SHARES NOTE 1 - ---------------------------------------------------------------- COMMON STOCKS - 91.6% - ---------------------------------------------------------------- BASIC MATERIALS - 0.6% - ---------------------------------------------------------------- CHEMICALS - 0.6% Delta & Pine Land Co. 22,500 $ 832,500 - ---------------------------------------------------------------- IMC Global, Inc. 50,000 1,068,750 --------------- 1,901,250 - ---------------------------------------------------------------- CAPITAL GOODS - 11.9% - ---------------------------------------------------------------- ELECTRICAL EQUIPMENT - 0.8% CommScope, Inc.(1) 67,500 1,134,844 - ---------------------------------------------------------------- Etec Systems, Inc.(1) 2,500 100,000 - ---------------------------------------------------------------- Raychem Corp. 40,000 1,292,500 --------------- 2,527,344 - ---------------------------------------------------------------- INDUSTRIAL SERVICES - 7.2% Allied Waste Industries, Inc. (New)(1) 235,000 5,551,875 - ---------------------------------------------------------------- Coflexip SA, Sponsored ADR 60,000 1,927,500 - ---------------------------------------------------------------- Republic Services, Inc., Cl. A(1) 185,000 3,410,937 - ---------------------------------------------------------------- United Rentals, Inc.(1) 25,000 828,125 - ---------------------------------------------------------------- Waste Management, Inc. (New) 227,500 10,607,187 --------------- 22,325,624 - ---------------------------------------------------------------- MANUFACTURING - 3.9% American Standard Cos., Inc.(1) 75,000 2,700,000 - ---------------------------------------------------------------- Halter Marine Group, Inc.(1) 360,000 1,755,000 - ---------------------------------------------------------------- MascoTech, Inc. 30,000 513,750 - ---------------------------------------------------------------- Mettler-Toledo International, Inc.(1) 220,000 6,173,750 - ---------------------------------------------------------------- Owens-Illinois, Inc.(1) 22,500 689,062 - ---------------------------------------------------------------- Tyco International Ltd. 2,500 188,594 --------------- 12,020,156 - ---------------------------------------------------------------- CONSUMER CYCLICALS - 22.8% - ---------------------------------------------------------------- AUTOS & HOUSING - 2.5% Champion Enterprises, Inc.(1) 32,500 889,687 - ---------------------------------------------------------------- General Motors Corp. 17,500 1,252,344 - ---------------------------------------------------------------- Lear Corp.(1) 42,500 1,636,250 - ---------------------------------------------------------------- Lennar Corp. 115,000 2,903,750 - ---------------------------------------------------------------- Owens Corning 27,500 974,531 --------------- 7,656,562 - ---------------------------------------------------------------- LEISURE & ENTERTAINMENT - 1.7% Crestline Capital Corp.(1) 8,000 123,000 - ---------------------------------------------------------------- Host Marriott Corp.(1) 80,000 1,105,000 - ---------------------------------------------------------------- Mirage Resorts, Inc.(1) 95,000 1,419,062 - ---------------------------------------------------------------- Rio Hotel & Casino, Inc.(1) 155,000 2,460,625 --------------- 5,107,687
105 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ---------------------------------------------------------------- MEDIA - 9.0% Capstar Broadcasting Corp., Cl. A(1) 210,000 $ 4,803,750 - ---------------------------------------------------------------- CBS Corp. 205,000 6,713,750 - ---------------------------------------------------------------- Emmis Communications Corp., Cl. A(1) 77,500 3,361,562 - ---------------------------------------------------------------- Fox Entertainment Group, Inc., A Shares(1) 171,500 4,319,656 - ---------------------------------------------------------------- Infinity Broadcasting Corp., Cl. A(1) 70,300 1,924,462 - ---------------------------------------------------------------- Jacor Communications, Inc.(1) 37,500 2,414,062 - ---------------------------------------------------------------- RCN Corp.(1) 232,500 4,112,344 --------------- 27,649,586 - ---------------------------------------------------------------- RETAIL: GENERAL - 2.0% Federated Department Stores, Inc.(1) 87,500 3,811,719 - ---------------------------------------------------------------- Fred Meyer, Inc.(1) 41,000 2,470,250 --------------- 6,281,969 - ---------------------------------------------------------------- RETAIL: SPECIALTY - 7.6% AutoZone, Inc.(1) 95,000 3,129,062 - ---------------------------------------------------------------- CSK Auto Corp.(1) 475,000 12,676,562 - ---------------------------------------------------------------- Republic Industries, Inc.(1) 525,000 7,743,750 --------------- 23,549,374 - ---------------------------------------------------------------- CONSUMER STAPLES - 16.5% - ---------------------------------------------------------------- BEVERAGES - 0.9% Anheuser-Busch Cos., Inc.(2) 41,000 2,690,625 - ---------------------------------------------------------------- CONSUMER SERVICES - 2.9% Budget Group, Inc., Cl. A(1) 225,000 3,571,875 - ---------------------------------------------------------------- Intermedia Communications, Inc.(1) 11,338 195,580 - ---------------------------------------------------------------- Intermedia Communications, Inc.(1)(3) 292 4,030 - ---------------------------------------------------------------- United Road Services, Inc.(1) 277,500 5,099,062 --------------- 8,870,547 - ---------------------------------------------------------------- ENTERTAINMENT - 8.0% Brinker International, Inc.(1) 85,000 2,454,375 - ---------------------------------------------------------------- News Corp. Ltd., Sponsored ADR, Preference 107,500 2,653,906 - ---------------------------------------------------------------- SFX Entertainment, Inc., Cl. A(1) 225,000 12,346,875 - ---------------------------------------------------------------- Time Warner, Inc.(2) 70,000 4,344,375 - ---------------------------------------------------------------- Viacom, Inc.(1)(2) 40,000 2,960,000 --------------- 24,759,531 - ---------------------------------------------------------------- FOOD - 1.7% RJR Nabisco Holdings Corp. 130,000 3,859,375 - ---------------------------------------------------------------- Unilever NV(2) 15,000 1,244,062 --------------- 5,103,437 - ---------------------------------------------------------------- HOUSEHOLD GOODS - 0.7% Fort James Corp. 50,000 2,000,000 - ---------------------------------------------------------------- TOBACCO - 2.3% Philip Morris Cos., Inc. 130,000 6,955,000
106 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ---------------------------------------------------------------- ENERGY - 2.1% - ---------------------------------------------------------------- ENERGY SERVICES & PRODUCERS - 2.1% BJ Services Co.(1) 45,000 $ 703,125 - ---------------------------------------------------------------- Cooper Cameron Corp.(1) 45,000 1,102,500 - ---------------------------------------------------------------- Marine Drilling Cos., Inc.(1) 40,000 307,500 - ---------------------------------------------------------------- Santa Fe International Corp. 80,000 1,170,000 - ---------------------------------------------------------------- Stolt Comex Seaway SA, ADR(1) 300,000 1,687,500 - ---------------------------------------------------------------- Transocean Offshore, Inc. 27,500 737,344 - ---------------------------------------------------------------- Weatherford International, Inc. (New)(1) 35,000 678,125 --------------- 6,386,094 - ---------------------------------------------------------------- FINANCIAL - 19.2% - ---------------------------------------------------------------- BANKS - 9.2% Bank One Corp. 42,500 2,170,156 - ---------------------------------------------------------------- BankAmerica Corp. (New) 42,500 2,555,313 - ---------------------------------------------------------------- Chase Manhattan Corp. (New) 90,000 6,125,625 - ---------------------------------------------------------------- Commercial Federal Corp. 165,000 3,825,938 - ---------------------------------------------------------------- Compass Bancshares, Inc. 37,500 1,427,344 - ---------------------------------------------------------------- First Union Corp. 72,500 4,408,906 - ---------------------------------------------------------------- Fleet Financial Group, Inc. 50,000 2,234,375 - ---------------------------------------------------------------- Hubco, Inc. 57,500 1,732,188 - ---------------------------------------------------------------- KeyCorp 20,000 640,000 - ---------------------------------------------------------------- Prosperity Bancshares, Inc.(1) 103,100 1,275,863 - ---------------------------------------------------------------- Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR 60,000 866,250 - ---------------------------------------------------------------- Union Planters Corp. 25,000 1,132,813 --------------- 28,394,771 - ---------------------------------------------------------------- DIVERSIFIED FINANCIAL - 3.2% American Express Co.(2) 15,000 1,533,750 - ---------------------------------------------------------------- C.I.T. Group, Inc., Cl. A 78,000 2,481,375 - ---------------------------------------------------------------- Citigroup, Inc. 57,750 2,858,625 - ---------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 20,000 1,420,000 - ---------------------------------------------------------------- UniCapital Corp.(1) 210,000 1,548,750 --------------- 9,842,500 - ---------------------------------------------------------------- INSURANCE - 5.7% Allstate Corp.(2) 80,000 3,090,000 - ---------------------------------------------------------------- Arm Financial Group, Inc., Cl. A 50,000 1,109,375 - ---------------------------------------------------------------- Everest Reinsurance Holdings, Inc. 285,000 11,097,188 - ---------------------------------------------------------------- Scottish Annuity & Life Holdings Ltd.(1) 155,000 2,131,250 --------------- 17,427,813 - ---------------------------------------------------------------- SAVINGS & LOANS - 1.1% Sovereign Bancorp, Inc. 150,000 2,137,500
107 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ---------------------------------------------------------------- SAVINGS & LOANS (CONTINUED) Washington Mutual, Inc. 30,000 $ 1,145,625 --------------- 3,283,125 - ---------------------------------------------------------------- HEALTHCARE - 1.0% - ---------------------------------------------------------------- HEALTHCARE/DRUGS - 1.0% BioChem Pharma, Inc.(1) 50,000 1,431,250 - ---------------------------------------------------------------- Centocor, Inc.(1)(2) 37,500 1,692,188 --------------- 3,123,438 - ---------------------------------------------------------------- TECHNOLOGY - 12.0% - ---------------------------------------------------------------- COMPUTER HARDWARE - 1.5% Compaq Computer Corp. 7,500 314,531 - ---------------------------------------------------------------- International Business Machines Corp.(2) 20,000 3,695,000 - ---------------------------------------------------------------- Seagate Technology, Inc.(1)(2) 20,000 605,000 --------------- 4,614,531 - ---------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES - 6.8% First Data Corp. 110,000 3,485,625 - ---------------------------------------------------------------- Microsoft Corp.(1) 2,500 346,719 - ---------------------------------------------------------------- Network Associates, Inc.(1) 10,000 662,500 - ---------------------------------------------------------------- PLATINUM Technology, Inc.(1) 315,000 6,024,375 - ---------------------------------------------------------------- Structural Dynamics Research Corp.(1) 397,500 7,900,313 - ---------------------------------------------------------------- Unigraphics Solutions, Inc.(1) 185,000 2,682,500 --------------- 21,102,032 - ---------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 0.3% Tellabs, Inc.(1)(2) 15,000 1,028,438 - ---------------------------------------------------------------- ELECTRONICS - 3.4% Waters Corp.(1) 120,000 10,470,000 - ---------------------------------------------------------------- TELECOMMUNICATIONS - 4.2% - ---------------------------------------------------------------- TELEPHONE UTILITIES - 0.0% Embratel Participacoes SA, ADR(1) 750 10,453 - ---------------------------------------------------------------- TELECOMMUNICATIONS/TECHNOLOGY - 4.2% MCI WorldCom, Inc.(1) 95,000 6,816,250 - ---------------------------------------------------------------- Newbridge Networks Corp.(1) 10,000 303,750 - ---------------------------------------------------------------- Qwest Communications International, Inc.(1) 90,000 4,500,000 - ---------------------------------------------------------------- Telecomunicacoes Brasileiras SA, Sponsored ADR(1) 19,500 1,417,406 --------------- 13,037,406 - ---------------------------------------------------------------- TRANSPORTATION - 1.4% - ---------------------------------------------------------------- AIR TRANSPORTATION - 1.4% AMR Corp.(1) 27,500 1,632,813 - ---------------------------------------------------------------- Continental Airlines, Inc., Cl. B(1) 25,339 848,857 - ---------------------------------------------------------------- Delta Air Lines, Inc. 35,000 1,820,000 --------------- 4,301,670 --------------- Total Common Stocks (Cost $257,894,535) 282,420,963
108 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - ---------------------------------------------------------------- PREFERRED STOCKS - 3.5% - ---------------------------------------------------------------- Evergreen Media Corp., 6% Cv. Preferred(4) 20,000 $ 1,867,500 - ---------------------------------------------------------------- Host Marriott Corp., 6.75% Preferred Stock 17,500 708,750 - ---------------------------------------------------------------- ICG Communications, Inc.: 6.75% Cv. Preferred Stock(4) 37,500 1,964,063 6.75% Cv. Preferred Stock 35,000 1,833,125 - ---------------------------------------------------------------- Intermedia Communications, Inc.: 7% Cv. Preferred Stock(4) 32,500 463,125 7% Cv. Preferred Stock(4) 40,000 1,000,000 - ---------------------------------------------------------------- Intermedia Communications, Inc.: Depositary Shares Representing one one-hundredth 7% Cum. Cv. Jr. Preferred Stock, Series D, Non-Vtg. 30,000 750,000 Depositary Shares Representing one one-hundredth 7% Cum. Cv. Jr. Preferred Stock, Series E, Non-Vtg.(4) 2,500 45,625 - ---------------------------------------------------------------- Monsanto Co., 6.50% Cv.(1) 25,000 1,225,000 - ---------------------------------------------------------------- Nextel Communications, Inc., Cv.(1)(4) 3,900 989,625 --------------- Total Preferred Stocks (Cost $11,167,364) 10,846,813 - ---------------------------------------------------------------- OTHER SECURITIES - 3.5% - ---------------------------------------------------------------- Automatic Commission Exchange Security Trust II, 6.50% Cv. Preferred (exchangeable to common stock of Republic Industries, Inc., Trust Automatic Common Exchange Securities effective 5/15/00) 125,700 1,916,925 - ---------------------------------------------------------------- Continental Airlines Finance Trust, 8.50% Cv. Trust Originated Preferred Securities 5,000 348,125 - ---------------------------------------------------------------- Host Marriott Financial Trust, 6.75% Cv. Preferred Stock(4) 10,000 405,000 - ---------------------------------------------------------------- Houston Industries, Inc., 7% Automatic Common Exchange Securities, Exchangeable for Time Warner, Inc. Common Stock, 7/1/00 25,000 2,659,375 - ---------------------------------------------------------------- Merrill Lynch & Co., Inc., 6.25% Structured Yield Product Exchangeable for Stock of IMC Global, Inc. 17,500 415,625 - ---------------------------------------------------------------- Qwest Trends Trust, $43 Cv.(1)(4) 16,700 780,725 - ---------------------------------------------------------------- United Rental Trust I, 6.50% Cv. Quarterly Income Preferred Securities(4) 85,000 4,090,625 --------------- Total Other Securities (Cost $10,045,078) 10,616,400 PRINCIPAL AMOUNT - ---------------------------------------------------------------- CONVERTIBLE CORPORATE BONDS AND NOTES - 1.4% - ---------------------------------------------------------------- Continental Airlines, Inc.: 6.75% Cv. Sub. Nts., 4/15/06(4) $ 350,000 426,125 6.75% Cv. Sub. Nts., 4/15/06 150,000 182,625 - ---------------------------------------------------------------- PLATINUM Technology, Inc.: 6.25% Cv. Sub. Nts., 12/15/02(4) 2,000,000 1,795,000 6.25%. Cv. Unsec. Sub. Nts., 12/15/02 1,500,000 1,346,250 6.75% Cv. Sub. Nts., 11/15/01 500,000 683,750 --------------- Total Convertible Corporate Bonds and Notes (Cost $4,266,795) 4,433,750 - ---------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $283,373,772) 100.0% 308,317,926 - ---------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.0 35,388 ---------- --------------- NET ASSETS 100.0% $ 308,353,314 ---------- --------------- ---------- ---------------
109 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND STATEMENT OF INVESTMENTS (CONTINUED) - -------------------------------------------------------------------------------- 1. Non-income producing security. 2. A sufficient amount of liquid assets has been designated to cover outstanding written call and put options, as follows:
SHARES SUBJECT TO EXPIRATION EXERCISE PREMIUM MARKET VALUE CALL DATE PRICE RECEIVED NOTE 1 - ----------------------------------------------------------------------------------------------- Allstate Corp. 30,000 1/99 $ 55.00 $ 49,849 $ 1,875 - ----------------------------------------------------------------------------------------------- American Express Co. 7,500 1/99 110.00 11,337 6,563 - ----------------------------------------------------------------------------------------------- American Express Co. 7,500 1/99 115.00 10,712 2,344 - ----------------------------------------------------------------------------------------------- Anheuser-Busch Cos. 7,500 1/99 65.00 11,025 12,188 - ----------------------------------------------------------------------------------------------- Centocor, Inc. 10,000 1/99 45.00 41,574 18,750 - ----------------------------------------------------------------------------------------------- International Business Machines Corp. 5,000 4/99 160.00 88,600 155,000 - ----------------------------------------------------------------------------------------------- International Business Machines Corp. 4,500 4/99 155.00 89,862 159,188 - ----------------------------------------------------------------------------------------------- International Business Machines Corp. 5,500 1/99 160.00 59,646 137,500 - ----------------------------------------------------------------------------------------------- International Business Machines Corp. 5,000 1/99 150.00 46,723 171,250 - ----------------------------------------------------------------------------------------------- Seagate Technology, Inc. 10,000 1/99 32.50 22,199 5,623 - ----------------------------------------------------------------------------------------------- Tellabs, Inc. 15,000 3/99 65.00 110,171 135,000 - ----------------------------------------------------------------------------------------------- Time Warner, Inc. 10,000 1/99 55.00 16,724 80,000 - ----------------------------------------------------------------------------------------------- Unilever NV 15,000 1/99 85.00 24,862 33,750 - ----------------------------------------------------------------------------------------------- Viacom, Inc. 10,000 1/99 70.00 28,449 48,750 $ 611,733 $967,781
3. Identifies issues considered to be illiquid or restricted - See applicable note of Notes to Financial Statements. 4. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $13,827,413 or 4.48% of the Fund's net assets as of December 31, 1998. See accompanying Notes to Financial Statements. 110 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND STATEMENT OF INVESTMENTS DECEMBER 31, 1998
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------------- COMMON STOCKS - 85.0% - -------------------------------------------------------------------------------- BASIC MATERIALS - 1.5% - -------------------------------------------------------------------------------- PAPER - 1.5% Daisytek International Corp.(1) 800 $ 15,200 - -------------------------------------------------------------------------------- CAPITAL GOODS - 13.1% - -------------------------------------------------------------------------------- INDUSTRIAL SERVICES - 11.9% Casella Waste Systems, Inc., Cl. A(1) 400 14,850 - -------------------------------------------------------------------------------- Eastern Environmental Services, Inc.(1) 400 11,850 - -------------------------------------------------------------------------------- Group Maintenance America Corp.(1) 500 6,062 - -------------------------------------------------------------------------------- Kendle International, Inc.(1) 400 9,350 - -------------------------------------------------------------------------------- Maximus, Inc.(1) 600 22,200 - -------------------------------------------------------------------------------- Metzler Group, Inc.(1) 400 19,475 - -------------------------------------------------------------------------------- Service Experts, Inc.(1) 200 5,850 - -------------------------------------------------------------------------------- Stericycle, Inc.(1) 400 6,450 - -------------------------------------------------------------------------------- Tetra Tech, Inc.(1) 600 16,237 - -------------------------------------------------------------------------------- United Rentals, Inc.(1) 192 6,360 - -------- 118,684 - -------------------------------------------------------------------------------- MANUFACTURING - 1.2% Zebra Technologies Corp., Cl. A(1) 400 11,500 - -------------------------------------------------------------------------------- CONSUMER CYCLICALS - 13.7% - -------------------------------------------------------------------------------- AUTOS & HOUSING - 2.3% Fairfield Communities, Inc.(1) 1,000 11,062 - -------------------------------------------------------------------------------- Kroll-O'Gara Co. (The)(1) 300 11,831 - -------- 22,893 - -------------------------------------------------------------------------------- LEISURE & ENTERTAINMENT - 2.8% Handleman Co.(1) 2,000 28,125 - -------------------------------------------------------------------------------- MEDIA - 1.0% Penton Media, Inc.(1) 500 10,125 - -------------------------------------------------------------------------------- RETAIL: GENERAL - 1.5% Cutter & Buck, Inc.(1) 400 14,900 - -------------------------------------------------------------------------------- RETAIL: SPECIALTY - 6.1% Chico's Fas, Inc.(1) 800 18,700 - -------------------------------------------------------------------------------- O'Reilly Automotive, Inc.(1) 400 18,900 - -------------------------------------------------------------------------------- School Specialty, Inc.(1) 1,100 23,512 - -------- 61,112 - -------------------------------------------------------------------------------- CONSUMER STAPLES - 18.9% - -------------------------------------------------------------------------------- CONSUMER SERVICES - 10.0% Applied Analytical Industries, Inc.(1) 1,200 20,850 - -------------------------------------------------------------------------------- Boron, LePore & Associates, Inc.(1) 300 10,350 - -------------------------------------------------------------------------------- Core Laboratories NV(1) 300 5,737
111 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------------- CONSUMER SERVICES (CONTINUED) Cornell Corrections, Inc.(1) 1,000 $ 19,000 - -------------------------------------------------------------------------------- CORT Business Services Corp.(1) 500 12,125 - -------------------------------------------------------------------------------- Getty Images, Inc.(1) 600 10,312 - -------------------------------------------------------------------------------- Rent-Way, Inc.(1) 200 4,862 - -------------------------------------------------------------------------------- Renters Choice, Inc.(1) 500 15,875 - -------- 99,111 - -------------------------------------------------------------------------------- EDUCATION - 6.3% Career Education Corp.(1) 500 15,000 - -------------------------------------------------------------------------------- Education Management Corp.(1) 1,000 23,625 - -------------------------------------------------------------------------------- ITT Educational Services, Inc.(1) 400 13,600 - -------------------------------------------------------------------------------- Strayer Education, Inc. 300 10,575 - -------- 62,800 - -------------------------------------------------------------------------------- ENTERTAINMENT - 2.6% Cinar Films, Inc., Cl. B(1) 1,000 25,375 - -------------------------------------------------------------------------------- ENERGY - 0.4% - -------------------------------------------------------------------------------- ENERGY SERVICES & PRODUCERS - 0.4% Cross Timbers Oil Co. 500 3,750 - -------------------------------------------------------------------------------- FINANCIAL - 5.8% - -------------------------------------------------------------------------------- BANKS - 1.2% Investors Financial Services Corp. 200 11,925 - -------------------------------------------------------------------------------- INSURANCE - 4.6% Advance Paradigm, Inc.(1) 300 10,500 - -------------------------------------------------------------------------------- Annuity & Life RE Holdings Ltd. 500 13,500 - -------------------------------------------------------------------------------- Medical Assurance, Inc. 660 21,821 - -------- 45,821 - -------------------------------------------------------------------------------- HEALTHCARE - 11.8% - -------------------------------------------------------------------------------- HEALTHCARE/DRUGS - 3.1% Serologicals Corp.(1) 800 24,000 - -------------------------------------------------------------------------------- Ventana Medical Systems, Inc.(1) 300 6,488 - -------- 30,488 - -------------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES - 8.7% Covance, Inc.(1) 500 14,563 - -------------------------------------------------------------------------------- Hanger Orthopedic Group, Inc.(1) 700 15,750 - -------------------------------------------------------------------------------- Parexel International Corp.(1) 300 7,500 - -------------------------------------------------------------------------------- Pharmaceutical Product Development, Inc.(1) 800 24,050 - -------------------------------------------------------------------------------- Renal Care Group, Inc.(1) 600 17,288 - -------------------------------------------------------------------------------- VWR Scientific Products Corp.(1) 400 6,950 - -------- 86,101 - -------------------------------------------------------------------------------- TECHNOLOGY - 19.8% - -------------------------------------------------------------------------------- COMPUTER HARDWARE - 2.1% SCM Microsystems, Inc.(1) 300 21,319
112 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE SHARES NOTE 1 - -------------------------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES - 17.0% Aspen Technologies, Inc.(1) 300 $ 4,350 - -------------------------------------------------------------------------------- Aware, Inc.(1) 1,000 27,188 - -------------------------------------------------------------------------------- Brio Technology, Inc.(1) 1,000 17,688 - -------------------------------------------------------------------------------- Concord Communications, Inc.(1) 200 11,350 - -------------------------------------------------------------------------------- Documentum, Inc.(1) 400 21,375 - -------------------------------------------------------------------------------- Engineering Animation, Inc.(1) 100 5,400 - -------------------------------------------------------------------------------- Medical Manager Corp.(1) 400 12,550 - -------------------------------------------------------------------------------- New Era of Networks, Inc.(1) 200 8,800 - -------------------------------------------------------------------------------- Phoenix International Ltd.(1) 1,000 14,750 - -------------------------------------------------------------------------------- Segue Software, Inc.(1) 500 10,125 - -------------------------------------------------------------------------------- Software AG Systems, Inc.(1) 600 10,875 - -------------------------------------------------------------------------------- SPR, Inc.(1) 1,000 17,250 - -------------------------------------------------------------------------------- Visio Corp.(1) 200 7,313 - -------- 169,014 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 0.7% Pittway Corp., Cl. A 200 6,613 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $739,885) 85.0% 844,856 - -------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 15.0 149,448 ------- - -------- NET ASSETS 100.0% $994,304 ------- - -------- ------- - --------
1. Non-income producing security. See accompanying Notes to Financial Statements. 113 OPPENHEIMER VARIABLE ACCOUNT FUNDS STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1998
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER AGGRESSIVE OPPENHEIMER MONEY HIGH INCOME BOND GROWTH GROWTH FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at value (cost *) (including repurchase agreements **) - see accompanying statements $ 151,269,014 $ 320,913,385 $ 688,013,848 $ 1,079,562,636 $ 767,477,940 - ------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on forward foreign currency exchange contracts - see applicable note -- 50,410 -- -- -- - ------------------------------------------------------------------------------------------------------------------------- Cash 152,071 1,918,277 178,353 96,737 119,623 - ------------------------------------------------------------------------------------------------------------------------- Receivables: Dividends, interest and principal paydowns 445,414 6,408,876 8,526,057 226,583 298,939 Daily variation on futures contracts - see applicable note -- 7,650 2,108 -- -- Shares of beneficial interest sold 638,924 226,088 1,613,778 748,053 3,312,716 Investments sold -- 1,426,850 5,246,858 1,182,183 469,735 - ------------------------------------------------------------------------------------------------------------------------- Other 5,225 6,817 9,388 11,926 9,025 ------------- ------------- - ------------- --------------- ------------- Total assets 152,510,648 330,958,353 703,590,390 1,081,828,118 771,687,978 - ------------------------------------------------------------------------------------------------------------------------- LIABILITIES Options written, at value (premiums received ***) - see accompanying statements and notes -- - -- -- 32,775 -- - ------------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on forward foreign exchange contracts - see applicable note -- 2,014 14,916 -- -- - ------------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Dividends 285,552 - -- -- -- -- Custodian fees 1,969 9,396 11,345 12,130 8,092 Registration and filing fees 9,020 14,555 32,077 30,980 52,813 Shareholder reports 21,635 41,202 58,125 74,868 49,376 Legal and auditing fees 8,787 14,151 14,192 18,160 13,773 Investments purchased (including those purchased on a when-issued basis****) - see applicable note -- -- 47,434,432 -- -- Shares of beneficial interest redeemed 380,917 2,311,170 392,473 3,694,484 3,010,700 Transfer and shareholder servicing agent fees 2,905 2,317 2,303 2,905 2,483 Other 1,063 891 87,828 1,656 1,045 ------------- ------------- - ------------- --------------- ------------- Total liabilities 711,848 2,395,696 48,047,691 3,867,958 3,138,282 - ------------------------------------------------------------------------------------------------------------------------- NET ASSETS $ 151,798,800 $ 328,562,657 $ 655,542,699 $ 1,077,960,160 $ 768,549,696 ------------- ------------- - ------------- --------------- ------------- ------------- ------------- - ------------- --------------- ------------- - ------------------------------------------------------------------------------------------------------------------------- COMPOSITIONS OF NET ASSETS Paid-in capital $ 151,805,834 $ 323,273,405 $ 616,406,705 $ 797,996,718 $ 542,115,494 - ------------------------------------------------------------------------------------------------------------------------- Undistributed (overdistributed) net investment income 11,314 23,046,774 30,079,292 -- 2,959,139 - ------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) from investments and foreign currency transactions (18,348) (4,290,927) 2,718,207 (70,261,463) 32,291,665 - ------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies -- (13,466,595) 6,338,495 350,224,905 191,183,398 ------------- ------------- - ------------- --------------- ------------- Net Assets $ 151,798,800 $ 328,562,657 $ 655,542,699 $ 1,077,960,160 $ 768,549,696 ------------- ------------- - ------------- --------------- ------------- ------------- ------------- - ------------- --------------- ------------- - ------------------------------------------------------------------------------------------------------------------------- SHARES OF BENEFICIAL INTEREST OUTSTANDING 151,805,855 29,806,919 53,210,003 24,043,802 20,956,201 - ------------------------------------------------------------------------------------------------------------------------- NET ASSETS VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 1.00 $ 11.02 $ 12.32 $ 44.83 $ 36.67 * Cost $ 151,269,014 $ 334,412,099 $ 681,813,086 $ 729,339,720 $ 576,294,542 ** Repurchase agreements $ 1,800,000 $ 5,100,000 $ 2,600,000 $ 112,500,000 $ 64,400,000 *** Premiums received $ -- $ -- $ -- $ 34,764 $ -- **** When-issued $ -- $ -- $ 47,434,432 $ -- $ --
See accompanying Notes to Financial Statements. 114 OPPENHEIMER VARIABLE ACCOUNT FUNDS STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1998 (CONTINUED)
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER MULTIPLE GLOBAL STRATEGIC GROWTH & SMALL CAP STRATEGIES SECURITIES BOND INCOME GROWTH FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost *) (including repurchase agreements **) - see accompanying statements $ 623,885,456 $ 1,146,157,977 $ 273,522,777 $ 308,317,926 $ 844,856 - ------------------------------------------------------------------------------------------------------------------------ Unrealized appreciation on forward foreign currency exchange contracts - see applicable note -- 26,055 26,339 -- -- - ------------------------------------------------------------------------------------------------------------------------ Cash 147,269 153,505 495,588 218,017 129,322 - ------------------------------------------------------------------------------------------------------------------------ Receivables: Dividends, interest and principal paydowns 5,139,170 1,288,216 5,003,192 357,509 41 Daily variation on futures contracts - see applicable note -- - -- -- -- -- Shares of beneficial interest sold 17,862 245,965 213,947 640,011 18,955 Investments sold 33,387 129,251 84,219 -- -- - ------------------------------------------------------------------------------------------------------------------------ Other 8,967 12,495 6,534 5,528 1,514 ------------- --------------- - ------------- ------------- ------------ Total assets 629,232,111 1,148,013,464 279,352,596 309,538,991 994,688 - ------------------------------------------------------------------------------------------------------------------------ LIABILITIES Options written, at value (premiums received ***) - see accompanying statements and notes 5,740,750 - -- 16,045 967,781 -- - ------------------------------------------------------------------------------------------------------------------------ Unrealized depreciation on forward foreign exchange contracts - see applicable note -- 1,403 47,561 -- -- - ------------------------------------------------------------------------------------------------------------------------ Payables and other liabilities: Dividends -- - -- -- -- -- Custodian fees 20,840 145,007 11,736 757 -- Registration and filing fees -- 39,978 19,675 43,438 255 Shareholder reports 60,011 75,114 29,632 22,221 -- Legal and auditing fees 17,461 18,232 11,708 9,836 -- Investments purchased (including those purchased on a when-issued basis****) - see applicable note 362,598 10,966,196 -- 4,100 -- Shares of beneficial interest redeemed 695,060 1,735,012 11,646 133,103 7 Transfer and shareholder servicing agent fees 2,062 1,832 2,496 3,122 -- Other 28 1,556 1,701 1,319 122 ------------- --------------- - ------------- ------------- ------------ Total liabilities 6,898,810 12,984,330 152,200 1,185,677 384 - ------------------------------------------------------------------------------------------------------------------------ NET ASSETS $ 622,333,301 $ 1,135,029,134 $ 279,200,396 $ 308,353,314 $ 994,304 ------------- --------------- - ------------- ------------- ------------ ------------- --------------- - ------------- ------------- ------------ - ------------------------------------------------------------------------------------------------------------------------ COMPOSITIONS OF NET ASSETS Paid-in capital $ 490,829,556 $ 885,257,467 $ 274,895,218 $ 284,367,574 $ 934,634 - ------------------------------------------------------------------------------------------------------------------------ Undistributed (overdistributed) net investment income 20,748,181 11,592,206 15,570,425 1,425,924 -- - ------------------------------------------------------------------------------------------------------------------------ Accumulated net realized gain (loss) from investments and foreign currency transactions 29,244,260 35,108,448 (2,352,642) (2,028,281) (45,301) - ------------------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies 81,511,304 203,071,013 (8,912,605) 24,588,097 104,971 ------------- --------------- - ------------- ------------- ------------ Net Assets $ 622,333,301 $ 1,135,029,134 $ 279,200,396 $ 308,353,314 $ 994,304 ------------- --------------- - ------------- ------------- ------------ ------------- --------------- - ------------- ------------- ------------ - ------------------------------------------------------------------------------------------------------------------------ SHARES OF BENEFICIAL INTEREST OUTSTANDING 36,497,549 51,429,193 54,569,819 15,054,704 103,531 - ------------------------------------------------------------------------------------------------------------------------ NET ASSETS VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 17.05 $ 22.07 $ 5.12 $ 20.48 $ 9.60 * Cost $ 538,342,432 $ 943,081,348 $ 282,454,523 $ 283,373,782 $ 739,885 ** Repurchase agreements $ 63,000,000 $ 27,900,000 $ 6,200,000 $ -- $ -- *** Premiums received $ 1,686,387 $ -- $ 25,235 $ 611,733 $ -- **** When-issued $ -- $ -- $ -- $ -- $ --
See accompanying Notes to Financial Statements. 115 OPPENHEIMER VARIABLE ACCOUNT FUNDS STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER AGGRESSIVE OPPENHEIMER MONEY HIGH INCOME BOND GROWTH GROWTH FUND FUND FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest (net of withholding taxes of *) $ 7,738,972 $ 28,358,859 $ 41,073,653 $ 3,823,383 $ 4,035,121 - ---------------------------------------------------------------------------------------------------------------------- Dividends (net of withholding taxes of **) -- 2,076,307 284,719 1,800,986 3,555,637 ------------ ------------- - ------------- ------------- ------------- Total income 7,738,972 30,435,166 41,358,372 5,624,369 7,590,758 - ---------------------------------------------------------------------------------------------------------------------- EXPENSES Custodian fees and expenses 11,399 212 5,407 37,397 21,434 - ---------------------------------------------------------------------------------------------------------------------- Legal and auditing fees 11,188 17,697 18,655 24,922 18,225 - ---------------------------------------------------------------------------------------------------------------------- Insurance expenses 3,435 5,148 4,274 7,901 5,339 - ---------------------------------------------------------------------------------------------------------------------- Trustees' fees and expenses 2,679 4,059 4,107 5,071 2,422 - ---------------------------------------------------------------------------------------------------------------------- Registration and filing fees 6,981 14,562 31,923 31,640 52,918 - ---------------------------------------------------------------------------------------------------------------------- Shareholder reports 29,826 64,833 67,408 108,886 77,895 - ---------------------------------------------------------------------------------------------------------------------- Management fees - see applicable note 619,030 2,383,008 4,218,231 6,564,650 4,369,487 - ---------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees - see applicable note 1,941 4,140 4,074 3,734 4,161 - ---------------------------------------------------------------------------------------------------------------------- Other 2,461 12,124 3,259 2,753 2,628 ------------ ------------- - ------------- ------------- ------------- Total expenses 688,940 2,505,783 4,357,338 6,786,954 4,554,509 - ---------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 7,050,032 27,929,383 37,001,034 (1,162,585) 3,036,249 - ---------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 9,101 (1,534,125) 6,485,338 (67,129,354) 32,505,999 Closing of futures contracts -- (1,309,724) (1,285,982) -- -- Closing and expiration of options written -- (34,656) -- 18,579 -- Foreign currency transactions -- (10,862) 340,635 (14,239) 1,951 - ---------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments -- (24,533,407) (4,833,663) 182,808,457 99,910,949 Translation of assets and liabilities denominated in foreign currencies -- 407,939 (369,485) 676,163 22,616 ------------ ------------- - ------------- ------------- ------------- Net realized and unrealized gain (loss) 9,101 (27,014,835) 336,843 116,359,606 132,441,515 - ---------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,059,133 $ 914,548 $ 37,337,877 $ 115,197,021 $ 135,477,764 ------------ ------------- - ------------- ------------- ------------- ------------ ------------- - ------------- ------------- ------------- * Withholding taxes - interest $ -- $ -- $ 11,251 $ -- $ -- ** Withholding taxes - dividends $ -- $ -- $ -- $ 926 $ 23,758
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. See accompanying Notes to Financial Statements. 116 OPPENHEIMER VARIABLE ACCOUNT FUNDS STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER MULTIPLE GLOBAL STRATEGIC GROWTH & SMALL CAP STRATEGIES SECURITIES BOND INCOME GROWTH FUND FUND FUND FUND FUND(1) - -------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest (net of withholding taxes of *) $ 25,898,105 $ 8,710,561 $ 21,709,341 $ 913,537 $ 60 - -------------------------------------------------------------------------------------------------------------------- Dividends (net of withholding taxes of **) 4,857,228 11,995,300 751,928 2,688,093 173 ------------ ------------- - ------------- ------------ ------------ Total income 30,755,333 20,705,861 22,461,269 3,601,630 233 - -------------------------------------------------------------------------------------------------------------------- EXPENSES Custodian fees and expenses 110,088 434,535 40,476 14,729 -- - -------------------------------------------------------------------------------------------------------------------- Legal and auditing fees 25,143 29,358 14,398 15,399 -- - -------------------------------------------------------------------------------------------------------------------- Insurance expenses 6,777 7,867 4,008 4,440 -- - -------------------------------------------------------------------------------------------------------------------- Trustees' fees and expenses 9,595 4,854 1,185 2,501 -- - -------------------------------------------------------------------------------------------------------------------- Registration and filing fees -- 39,654 19,916 43,581 255 - -------------------------------------------------------------------------------------------------------------------- Shareholder reports 97,293 124,964 40,101 26,194 -- - -------------------------------------------------------------------------------------------------------------------- Management fees - see applicable note 4,584,184 7,167,836 1,860,227 1,742,253 2,219 - -------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees - see applicable note 3,476 3,656 4,078 4,790 -- - -------------------------------------------------------------------------------------------------------------------- Other 7,682 6,003 25,063 3,135 98 ------------ ------------- - ------------- ------------ ------------ Total expenses 4,844,238 7,818,727 2,009,452 1,857,022 2,572 - -------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 25,911,095 12,887,134 20,451,817 1,744,608 (2,339) - -------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 28,607,655 111,119,684 (2,977,920) (2,457,929) (45,301) Closing of futures contracts -- (61,569,353) 2,898,440 -- -- Closing and expiration of options written 2,262,307 - -- (97,776) 434,542 -- Foreign currency transactions (1,329,735) (12,587,339) (2,519,662) 66,152 -- - -------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments (15,359,667) 53,953,288 (12,558,792) 6,284,351 104,971 Translation of assets and liabilities denominated in foreign currencies (536,206) 32,506,738 1,082,185 51,446 -- ------------ ------------- - ------------- ------------ ------------ Net realized and unrealized gain (loss) 13,644,354 123,423,018 (14,173,525) 4,378,562 59,670 - -------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 39,555,449 $ 136,310,152 $ 6,278,292 $ 6,123,170 $ 57,331 ------------ ------------- - ------------- ------------ ------------ ------------ ------------- - ------------- ------------ ------------ * Withholding taxes - interest $ -- $ -- $ 68,298 $ -- $ -- ** Withholding taxes - dividends $ 90,320 $ 297,465 $ -- $ 5,250 $ --
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. See accompanying Notes to Financial Statements. 117 OPPENHEIMER VARIABLE ACCOUNT FUNDS STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
OPPENHEIMER OPPENHEIMER MONEY HIGH INCOME FUND FUND 1998 1997 1998 1997 - --------------------------------------------------------------------------------------------- OPERATIONS Net investment income $ 7,050,032 $ 6,934,054 $ 27,929,383 $ 19,861,042 - --------------------------------------------------------------------------------------------- Net realized gain (loss) 9,101 2,232 (2,889,367) 6,265,470 - --------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation -- -- (24,125,468) 93,210 ------------- ------------- - ------------- ------------- Net increase in net assets resulting from operations 7,059,133 6,936,286 914,548 26,219,722 - --------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (7,050,032) (6,937,040) (6,694,100) (18,546,183) - --------------------------------------------------------------------------------------------- Distributions from net realized gain -- -- (8,113,249) (138,778) - --------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions - see applicable note 25,007,317 (2,935,384) 51,132,667 92,494,657 - --------------------------------------------------------------------------------------------- NET ASSETS Total increase (decrease) 25,016,418 (2,936,138) 37,239,866 100,029,418 - --------------------------------------------------------------------------------------------- Beginning of period 126,782,382 129,718,520 291,322,791 191,293,373 ------------- ------------- - ------------- ------------- End of period $ 151,798,800 $ 126,782,382 $ 328,562,657 $ 291,322,791 ------------- ------------- - ------------- ------------- ------------- ------------- - ------------- ------------- Undistributed (overdistributed) net investment income $ -- $ -- $ 23,046,774 $ 1,776,867
OPPENHEIMER OPPENHEIMER AGGRESSIVE BOND GROWTH FUND FUND 1998 1997 1998 1997 - ----------------------------------------------------------------------------------------------- OPERATIONS Net investment income $ 37,001,034 $ 30,219,733 $ (1,162,585) $ 2,349,366 - ----------------------------------------------------------------------------------------------- Net realized gain (loss) 5,539,991 4,038,585 (67,125,014) 21,293,313 - ----------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation (5,203,148) 6,440,140 183,484,620 61,517,825 ------------- ------------- - --------------- ------------- Net increase in net assets resulting from operations 37,337,877 40,698,458 115,197,021 85,160,504 - ----------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (9,009,958) (27,908,616) (2,267,793) (1,547,409) - ----------------------------------------------------------------------------------------------- Distributions from net realized gain (8,154,014) (1,447,022) (23,288,487) (30,466,762) - ----------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions - see applicable note 115,290,766 82,296,263 110,511,946 207,268,868 - ----------------------------------------------------------------------------------------------- NET ASSETS Total increase (decrease) 135,464,671 93,639,083 200,152,687 260,415,201 - ----------------------------------------------------------------------------------------------- Beginning of period 520,078,028 426,438,945 877,807,473 617,392,272 ------------- ------------- - --------------- ------------- End of period $ 655,542,699 $ 520,078,028 $ 1,077,960,160 $ 877,807,473 ------------- ------------- - --------------- ------------- ------------- ------------- - --------------- ------------- Undistributed (overdistributed) net investment income $ 30,079,292 $ 1,857,027 $ - -- $ 2,236,363
See accompanying Notes to Financial Statements. 118 OPPENHEIMER VARIABLE ACCOUNT FUNDS STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (CONTINUED)
OPPENHEIMER OPPENHEIMER OPPENHEIMER MULTIPLE GLOBAL GROWTH STRATEGIES SECURITIES FUND FUND FUND 1998 1997 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income $ 3,036,249 $ 3,966,775 $ 25,911,095 $ 21,778,851 $ 12,887,134 $ 12,143,675 - ------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) 32,507,950 47,435,793 29,540,227 34,197,105 36,962,992 103,718,556 - ------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 99,933,565 34,194,334 (15,895,873) 32,455,612 86,460,026 33,657,002 ------------- ------------- - ------------- ------------- --------------- ------------- Net increase in net assets resulting from operations 135,477,764 85,596,902 39,555,449 88,431,568 136,310,152 149,519,233 - ------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (3,939,379) (1,639,463) (5,964,037) (21,242,764) (21,307,082) (8,181,958) - ------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gain (47,530,889) (17,220,011) (34,591,414) (18,354,349) (80,203,951) -- - ------------------------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions - see applicable note 190,636,226 141,248,396 (14,211,527) 104,424,895 141,119,795 235,692,756 - ------------------------------------------------------------------------------------------------------------------------------- NET ASSETS Total increase (decrease) 274,643,722 207,985,824 (15,211,529) 153,259,350 175,918,914 377,030,031 - ------------------------------------------------------------------------------------------------------------------------------- Beginning of period 493,905,974 285,920,150 637,544,830 484,285,480 959,110,220 582,080,189 ------------- ------------- - ------------- ------------- --------------- ------------- End of period $ 768,549,696 $ 493,905,974 $ 622,333,301 $ 637,544,830 $ 1,135,029,134 $ 959,110,220 ------------- ------------- - ------------- ------------- --------------- ------------- ------------- ------------- - ------------- ------------- --------------- ------------- Undistributed (overdistributed) net investment income $ 2,959,139 $ 3,896,959 $ 20,748,181 $ 1,264,870 $ 11,592,206 $ 18,148,506
OPPENHEIMER OPPENHEIMER OPPENHEIMER STRATEGIC GROWTH & SMALL CAP BOND INCOME GROWTH FUND FUND FUND(1) 1998 1997 1998 1997 1998 - ------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 20,451,817 $ 13,156,048 $ 1,744,608 $ 1,094,913 $ (2,339) - ------------------------------------------------------------------------------------------------------------ Net realized gain (loss) (2,696,918) 894,858 (1,957,235) 9,837,467 (45,301) - ------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation (11,476,607) (441,401) 6,335,797 15,049,196 104,971 ------------- ------------- - ------------- ------------- ------------ Net increase in net assets resulting from operations 6,278,292 13,609,505 6,123,170 25,981,576 57,331 - ------------------------------------------------------------------------------------------------------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (3,974,494) (12,654,390) (449,201) (976,438) -- - ------------------------------------------------------------------------------------------------------------ Distributions from net realized gain (2,561,341) (207,080) (9,891,403) (2,670,354) -- - ------------------------------------------------------------------------------------------------------------ BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions - see applicable note 71,618,535 88,374,959 157,202,998 86,023,722 936,973 - ------------------------------------------------------------------------------------------------------------ NET ASSETS Total increase (decrease) 71,360,992 89,122,994 152,985,564 108,358,506 994,304 - ------------------------------------------------------------------------------------------------------------ Beginning of period 207,839,404 118,716,410 155,367,750 47,009,244 -- ------------- ------------- - ------------- ------------- ------------ End of period $ 279,200,396 $ 207,839,404 $ 308,353,314 $ 155,367,750 $ 994,304 ------------- ------------- - ------------- ------------- ------------ ------------- ------------- - ------------- ------------- ------------ Undistributed (overdistributed) net investment income $ 15,570,425 $ 885,276 $ 1,425,924 $ 130,085 $ --
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. See accompanying Notes to Financial Statements. 119 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - ---------------------------------------------------- 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------ Income from investment operations - net investment income and net realized gain .05 .05 .05 .06 .04 Dividends and distributions to shareholders (.05) (.05) (.05) (.06) (.04) - ------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 -------- -------- -------- - -------- -------- -------- -------- -------- - -------- -------- - ------------------------------------------------------------------------------------------ TOTAL RETURN(1) 5.25% 5.31% 5.13% 5.62% 4.25% - ------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $151,799 $126,782 $129,719 $65,386 $89,671 - ------------------------------------------------------------------------------------------ Average net assets (in thousands) $137,633 $133,707 $99,263 $75,136 $90,264 - ------------------------------------------------------------------------------------------ Ratios to average net assets: Net investment income 5.12% 5.19% 5.01% 5.52% 4.18% Expenses 0.50% 0.48% 0.49% 0.51% 0.43%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total returns reflect changes in net investment income only. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. See accompanying Notes to Financial Statements. 120 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - ------------------------------------------------------------ 1998 1997 1996 1995 1994 - -------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $11.52 $11.13 $10.63 $ 9.79 $11.02 - -------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .95 .94 .97 .98 .94 Net realized and unrealized gain (loss) (.90) .37 .58 .94 (1.27) - -------------------------------------------------------------------------------------------- Total income (loss) from investment operations .05 1.31 1.55 1.92 (.33) - -------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.25) (.91) (1.05) (1.08) (.66) Distributions from net realized gain (.30) (.01) -- - -- (.24) - -------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (.55) (.92) (1.05) (1.08) (.90) - -------------------------------------------------------------------------------------------- Net asset value, end of period $11.02 $11.52 $11.13 $10.63 $ 9.79 -------- -------- -------- - -------- -------- -------- -------- -------- - -------- -------- - -------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 0.31% 12.21% 15.26% 20.37% (3.18)% - -------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $328,563 $291,323 $191,293 $133,451 $ 95,698 - -------------------------------------------------------------------------------------------- Average net assets (in thousands) $322,748 $223,617 $157,203 $115,600 $101,096 - -------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 8.65% 8.88% 9.18% 9.81% 9.15% Expenses 0.78% 0.82% 0.81% 0.81% 0.67% - -------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 161.4% 167.6% 125.0% 107.1% 110.1%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $537,018,561 and $428,828,226, respectively. See accompanying Notes to Financial Statements. 121 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - ------------------------------------------ 1998 1997 1996 1995 1994 - -------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $11.91 $11.63 $11.84 $10.78 $11.65 - -------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .72 .76 .69 .72 .76 Net realized and unrealized gain (loss) .07 .28 (.15) 1.07 (.98) - -------------------------------------------------------------------------------- Total income (loss) from investment operations .79 1.04 .54 1.79 (.22) - -------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.20) (.72) (.74) (.73) (.62) Distributions from net realized gain (.18) (.04) (.01) -- (.03) - -------------------------------------------------------------------------------- Total dividends and distributions to shareholders (.38) (.76) (.75) (.73) (.65) - -------------------------------------------------------------------------------- Net asset value, end of period $12.32 $11.91 $11.63 $11.84 $10.78 ------ ------ ------ ------ - ------ ------ ------ ------ ------ - ------ - -------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 6.80% 9.25% 4.80% 17.00% (1.94)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $655,543 $520,078 $426,439 $211,232 $135,067 - -------------------------------------------------------------------------------- Average net assets (in thousands) $586,242 $449,760 $296,253 $170,929 $121,884 - -------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 6.31% 6.72% 6.72% 6.91% 7.30% Expenses 0.74% 0.78% 0.78% 0.80% 0.57% - -------------------------------------------------------------------------------- Portfolio turnover rate(2) 75.8% 116.9% 82.3% 79.4% 35.1%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $523,613,491 and $403,166,088, respectively. See accompanying Notes to Financial Statements. 122 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - -------------------------------------------------------------- 1998 1997 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $40.96 $38.71 $34.21 $25.95 $31.64 - ---------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (.05) .10 .09 .11 .10 Net realized and unrealized gain (loss) 5.09 4.01 6.59 8.29 (2.22) - ---------------------------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations 5.04 4.11 6.68 8.40 (2.12) - ---------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.10) (.09) (.11) (.09) (.04) Distributions from net realized gain (1.07) (1.77) (2.07) (.05) (3.53) - ---------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (1.17) (1.86) (2.18) (.14) (3.57) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $44.83 $40.96 $38.71 $34.21 $25.95 ---------- - ---------- ---------- ---------- ---------- ---------- - ---------- ---------- ---------- ---------- - ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 12.36% 11.67% 20.22% 32.52% (7.59)% - ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,077,960 $ 877,807 $ 617,392 $ 325,404 $ 185,774 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 954,848 $ 753,852 $ 467,080 $ 240,730 $ 153,832 - ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income (loss) (0.12)% 0.31% 0.32% 0.47% 0.50% Expenses 0.71% 0.73% 0.75% 0.78% 0.57% - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 79.8% 87.6% 100.1% 125.5% 96.5%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $781,979,929 and $705,990,510, respectively. See accompanying Notes to Financial Statements. 123 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - ----------------------------------------------------------------------- 1998 1997 1996 1995 1994 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $32.44 $27.24 $23.55 $17.68 $17.70 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .13 .25 .15 .25 .22 Net realized and unrealized gain (loss) 7.28 6.62 5.46 6.10 (.05) - --------------------------------------------------------------------------------------------------------------------------- Total income from investment operations 7.41 6.87 5.61 6.35 .17 - --------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.24) (.15) (.25) (.22) (.15) Distributions from net realized gain (2.94) (1.52) (1.67) (.26) (.04) - --------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (3.18) (1.67) (1.92) (.48) (.19) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $36.67 $32.44 $27.24 $23.55 $17.68 ----------- - ----------- ------ ----------- ----------- ----------- - ----------- ------ ----------- ----------- - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 24.00% 26.68% 25.20% 36.65% 0.97% - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $768,550 $493,906 $285,920 $117,710 $63,283 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $609,246 $390,447 $152,466 $ 88,803 $59,953 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 0.50% 1.02% 1.08% 1.46% 1.38% Expenses 0.75% 0.75% 0.81%(2) 0.79% 0.58% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(3) 55.7% 66.0% 65.4% 58.2% 53.8%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The expense ratio was 0.79% net of the voluntary reimbursement by the Manager. 3. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $478,348,867 and $297,133,286, respectively. See accompanying Notes to Financial Statements. 124 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - -------------------------------------------------------------- 1998 1997 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $17.01 $15.63 $14.55 $12.91 $13.88 - ---------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .71 .62 .72 .66 .63 Net realized and unrealized gain (loss) .42 1.95 1.45 2.00 (.90) - ---------------------------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations 1.13 2.57 2.17 2.66 (.27) - ---------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income (.16) (.61) (.74) (.65) (.60) Distributions from net realized gain (.93) (.58) (.35) (.37) (.10) - ---------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (1.09) (1.19) (1.09) (1.02) (.70) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $17.05 $17.01 $15.63 $14.55 $12.91 ---------- - ---------- ---------- ---------- ---------- ---------- - ---------- ---------- ---------- ---------- - ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 6.66% 17.22% 15.50% 21.36% (1.95)% - ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $622,333 $637,545 $484,285 $381,263 $292,067 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $640,131 $564,369 $428,277 $344,745 $279,949 - ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 4.05% 3.86% 4.89% 4.81% 4.90% Expenses 0.76% 0.75% 0.77% 0.77% 0.56% - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 42.5% 41.9% 40.3% 39.0% 31.4%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $235,924,766 and $252,937,156, respectively. See accompanying Notes to Financial Statements. 125 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - ---------------------------------------------------- 1998 1997 1996 1995 1994 - ----------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $21.37 $17.67 $15.00 $15.09 $16.30 - ----------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .24 .25 .15 .12 .04 Net realized and unrealized gain (loss) 2.64 3.68 2.52 .19 (.96) - ----------------------------------------------------------------------------------------- Total income (loss) from investment operations 2.88 3.93 2.67 .31 (.92) - ----------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.46) (.23) -- - -- (.04) Distributions from net realized gain (1.72) -- -- (.40) (.25) - ----------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (2.18) (.23) -- (.40) (.29) - ----------------------------------------------------------------------------------------- Net asset value, end of period $ 22.07 $ 21.37 $ 17.67 $ 15.00 $ 15.09 -------- -------- -------- - -------- -------- -------- -------- -------- - -------- -------- - ----------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 14.11% 22.42% 17.80% 2.24% (5.72)% - ----------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,135,029 $959,110 $582,080 $360,979 $297,842 - ----------------------------------------------------------------------------------------- Average net assets (in thousands) $1,055,123 $802,389 $466,750 $332,336 $214,545 - ----------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 1.22% 1.51% 1.09% 0.86% 0.54% Expenses 0.74% 0.76% 0.81% 0.89% 0.91% - ----------------------------------------------------------------------------------------- Portfolio turnover rate(2) 80.9% 67.1% 89.9% 131.3% 70.4%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $786,354,899 and $769,035,230, respectively. See accompanying Notes to Financial Statements. 126 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - ------------------------------------------------------------------------ 1998 1997 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $5.12 $5.09 $4.91 $4.60 $5.12 - ---------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .39 .39 .38 .38 .35 Net realized and unrealized gain (loss) (.24) .04 .19 .30 (.54) - ---------------------------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations .15 .43 .57 .68 (.19) - ---------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.09) (.39) (.39) (.37) (.32) Distributions from net realized gain (.06) (.01) -- -- (.01) - ---------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (.15) (.40) (.39) (.37) (.33) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.12 $5.12 $5.09 $4.91 $4.60 ----- - ----- ----- ----- ----- ----- - ----- ----- ----- ----- - ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 2.90% 8.71% 12.07% 15.33% (3.78)% - ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $279,200 $207,839 $118,716 $60,098 $20,320 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $250,227 $159,934 $82,604 $37,698 $15,389 - ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 8.17% 8.23% 8.48% 9.32% 8.36% Expenses 0.80% 0.83% 0.85% 0.85% 0.87% - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 133.7% 149.7% 144.3% 87.0% 136.6%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $358,275,325 and $301,159,735, respectively. See accompanying Notes to Financial Statements. 127 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31, - ----------------------------------------------- 1998 1997 1996 1995(1) - ------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $20.58 $16.37 $12.51 $10.00 - ------------------------------------------------------------------------------- Income from investment operations: Net investment income .13 .19 .14 .01 Net realized and unrealized gain .92 4.91 3.91 2.52 - ------------------------------------------------------------------------------- Total income from investment operations 1.05 5.10 4.05 2.53 - ------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.05) (.17) (.14) (.02) Distributions from net realized gain (1.10) (.72) (.05) - -- - ------------------------------------------------------------------------------- Total dividends and distributions to shareholders (1.15) (.89) (.19) (.02) - ------------------------------------------------------------------------------- Net asset value, end of period $20.48 $20.58 $16.37 $12.51 -------- -------- -------- - -------- -------- -------- -------- - -------- - ------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(2) 4.70% 32.48% 32.51% 25.25% - ------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $308,353 $155,368 $47,009 $4,288 - ------------------------------------------------------------------------------- Average net assets (in thousands) $234,306 $94,906 $21,562 $1,809 - ------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 0.74% 1.15% 1.41% 0.50%(3) Expenses 0.79% 0.83% 1.00% 2.07%(3) - ------------------------------------------------------------------------------- Portfolio turnover rate(4) 85.7% 78.5% 112.6% 23.7%
1. For the period from July 5, 1995 (commencement of operations) to December 31, 1995. 2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 3. Annualized. 4. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $287,405,235 and $199,780,365, respectively. See accompanying Notes to Financial Statements. 128 OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FINANCIAL HIGHLIGHTS
PERIOD ENDED DECEMBER 31, 1998(1) - ------------------------------------------------------------------------------ PER SHARE OPERATING DATA Net asset value, beginning of period $ 10.00 - ------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment loss (.02) Net realized and unrealized gain (loss) (.38) - ------------------------------------------------------------------------------ Total loss from investment operations (.40) - ------------------------------------------------------------------------------ Net asset value, end of period $ 9.60 ------ ------ - ------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE(2) (4.00)% - ------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $994 - ------------------------------------------------------------------------------ Average net assets (in thousands) $441 - ------------------------------------------------------------------------------ Ratios to average net assets: Net investment loss (0.79)%(3) Expenses 0.87%(3) - ------------------------------------------------------------------------------ Portfolio turnover rate(4) 61.4%
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. 2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods of less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 3. Annualized. 4. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998 were $1,023,289 and $242,621, respectively. See accompanying Notes to Financial Statements. 129 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Money Fund (OMF), Oppenheimer High Income Fund (OHIF), Oppenheimer Bond Fund (OBF), Oppenheimer Aggressive Growth Fund (OAGF) operated under the name Oppenheimer Capital Appreciation Fund through April 30, 1998, Oppenheimer Growth Fund (OGF), Oppenheimer Multiple Strategies Fund (OMSF), Oppenheimer Global Securities Fund (OGSF), Oppenheimer Strategic Bond Fund (OSBF), Oppenheimer Growth & Income Fund (OGIF) and Oppenheimer Small Cap Growth Fund (OSCGF), (collectively, the Funds) are separate series of Oppenheimer Variable Account Funds (the Trust), a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of significant accounting policies consistently followed by the Funds. The Funds' objectives are as follows: OPPENHEIMER MONEY FUND seeks the maximum current income from investments in "money market" securities consistent with low capital risk and the maintenance of liquidity. OPPENHEIMER HIGH INCOME FUND seeks a high level of current income from investment in high yield fixed-income securities. The Fund's investments include unrated securities or high risk securities in the lower rating categories, commonly known as "junk bonds", which are subject to a greater risk of loss of principal and nonpayment of interest than higher-rated securities. OPPENHEIMER BOND FUND primarily seeks a high level of current income. Secondarily, this Fund seeks capital growth when consistent with its primary objective. The Fund will, under normal market conditions, invest at least 65% of its total assets in investment grade debt securities. OPPENHEIMER AGGRESSIVE GROWTH FUND seeks to achieve capital appreciation by investing in "growth-type" companies. OPPENHEIMER GROWTH FUND seeks to achieve capital appreciation by investing in securities of well-known established companies. OPPENHEIMER MULTIPLE STRATEGIES FUND seeks a total investment return (which includes current income and capital appreciation in the value of its shares) from investments in common stocks and other equity securities, bonds and other debt securities, and "money market" securities. OPPENHEIMER GLOBAL SECURITIES FUND seeks long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special institutions which are considered to have appreciation possibilities, but which may be considered to be speculative. OPPENHEIMER STRATEGIC BOND FUND seeks a high level of current income principally derived from interest on debt securities and to enhance such income by writing covered call options on debt securities. OPPENHEIMER GROWTH & INCOME FUND seeks a high total return (which includes growth in the value of its shares as well as current income) from equity and debt securities. From time to time this Fund may focus on small to medium capitalization common stocks, bonds and convertible securities. OPPENHEIMER SMALL CAP GROWTH FUND seeks investments in securities of "growth-type" companies with market capitalization less than $1 billion, including common stocks, preferred stocks, convertible securities, rights, warrants and options. 130 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVESTMENT VALUATION. Portfolio securities of OMF are valued on the basis of amortized cost, which approximates market value. Portfolio securities of OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by an approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward foreign currency exchange contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. Options are valued based upon the last sale price on the principal exchange on which the option is traded or, in the absence of any transactions that day, the value is based upon the last sale on the prior trading date if it is within the spread between the closing bid and asked prices. If the last sale price is outside the spread, the closing bid is used. - -------------------------------------------------------------------------------- STRUCTURED NOTES. The Funds may invest in commodity and foreign currency-linked structured notes whereby the market value and redemption price are linked to commodity indices and foreign currency exchange rates. The structured notes may be leveraged, which increase the notes' volatility relative to the face value of the security. Fluctuations in values of the securities are recorded as unrealized gains and losses in the accompanying financial statements. During the year ended December 31, 1998, the market value of these securities comprised an average of 8% and 5%, respectively, of the net assets of OHIF and OSBF, and resulted in realized and unrealized gains of $4,745,329 and $3,012,491, respectively. - -------------------------------------------------------------------------------- SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities that have been purchased by OHIF, OBF, OMSF, OSBF and OGIF on a forward commitment or when-issued basis can take place a month or more after the transaction date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Funds maintain, in segregated accounts with the custodian, assets with a market value equal to the amount of their purchase commitments. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of the Funds' net asset values to the extent the Funds make such purchases while remaining substantially fully invested. As of December 31, 1998, OBF had entered into outstanding when-issued or forward commitments of $47,434,432. In connection with their ability to purchase securities on a when-issued or forward commitment basis, OHIF, OBF and OSBF may enter into mortgage dollar-rolls in which the Funds sell securities for delivery in the current month and simultaneously contract with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Funds record each dollar-roll as a sale and a new purchase transaction. - -------------------------------------------------------------------------------- SECURITY CREDIT RISK. OHIF, OMSF and OSBF invest in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Funds may acquire securities in default, and are not obligated to dispose of securities whose issuers subsequently default. The aggregate market value of securities in default as of December 31, 1998 for OHIF and OSBF are shown below:
PERCENTAGE OF AMOUNT NET ASSETS - ------------------------------------------------------------------------------------------------------ Oppenheimer High Income Fund $ 493,580 0.15% Oppenheimer Strategic Bond Fund 666,711 0.24
131 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are maintained in U.S. dollars. Prices of securities purchased by OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF and OGIF that are denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. For OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF and OGIF, the effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Funds' Statements of Operations. - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS. The Funds require the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Funds may be delayed or limited. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Trust intends for each Fund to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. As of December 31, 1998, OHIF, OAGF, OSBF, OSCGF had available for federal income tax purposes an approximate unused capital loss carryover, which expires in 2006, as follows:
CAPITAL LOSS CARRYOVER - ------------------------------------------------- Oppenheimer High Income Fund $ 3,402,000 Oppenheimer Aggressive Growth Fund 66,771,000 Oppenheimer Strategic Bond Fund 1,014,000 Oppenheimer Small Capital Growth Fund 33,000
- -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders of OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF are recorded on the ex-dividend date. OMF intends to declare dividends from net investment income each day the New York Stock Exchange is open for business and pay such dividends monthly. To effect its policy of maintaining a net asset value of $1.00 per share, OMF may withhold dividends or make distributions of net realized gains. CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Funds. 132 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. The Funds adjusted the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Changes in classification during the year ended December 31, 1998 are shown below:
ADJUSTMENTS FOR THE YEAR ENDED DECEMBER 31, 1998 ------------------------------------------ INCREASE INCREASE (DECREASE) (DECREASE) IN IN ACCUMULATED UNDISTRIBUTED NET REALIZED INCREASE NET GAIN (DECREASE) INVESTMENT ON IN PAID-IN INCOME INVESTMENTS CAPITAL - --------------------------------------------------------------------- Oppenheimer Money Fund $ 11,314 $ (11,314) $ -- Oppenheimer High Income Fund 34,624 18,470 (16,154) Oppenheimer Bond Fund 231,189 (231,189) -- Oppenheimer Aggressive Growth Fund 1,194,015 32,432 (1,226,447) Oppenheimer Growth Fund (34,690) 34,690 -- Oppenheimer Multiple Strategies Fund (463,747) 463,747 -- Oppenheimer Global Securities Fund 1,863,648 (1,863,648) -- Oppenheimer Strategic Bond Fund (1,792,174) 1,817,242 (25,068) Oppenheimer Growth & Income Fund 432 (432) -- Oppenheimer Small Cap Growth Fund 2,339 -- (2,339)
- -------------------------------------------------------------------------------- OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Discount on securities purchased by OHIF, OBF, OMSF, OGSF, OSBF and OGIF is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate, and a market adjustment is made on the ex-date. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Funds have authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 1998 DECEMBER 31, 1997 ------------------------------- - ------------------------------- OPPENHEIMER MONEY FUND SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ Sold 318,160,993 $ 318,160,993 390,437,217 $ 390,437,217 Dividends and distributions reinvested 7,008,382 7,008,382 6,901,000 6,901,000 Redeemed (300,162,058) (300,162,058) (400,273,601) (400,273,601) -------------- -------------- - -------------- -------------- Net increase (decrease) 25,007,317 $ 25,007,317 (2,935,384) $ (2,935,384) -------------- -------------- - -------------- -------------- -------------- -------------- - -------------- --------------
133 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
YEAR ENDED YEAR ENDED DECEMBER 31, 1998 DECEMBER 31, 1997 ------------------------------- - ------------------------------- OPPENHEIMER HIGH INCOME FUND SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------- Sold 15,303,847 $171,699,925 14,372,458 $163,481,515 Dividends and distributions reinvested 1,300,031 14,807,349 1,658,451 18,684,961 Redeemed (12,094,532) (135,374,607) (7,919,351) (89,671,819) ----------- ------------ - ----------- ------------ Net increase 4,509,346 $ 51,132,667 8,111,558 $ 92,494,657 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
OPPENHEIMER BOND FUND - ---------------------------------------------------------------------------------------------------- Sold 24,245,723 $293,126,941 12,079,029 $142,326,116 Dividends and distributions reinvested 1,463,254 17,163,972 2,509,897 29,264,275 Redeemed (16,150,244) (195,000,147) (7,613,095) (89,294,128) ----------- ------------ - ----------- ------------ Net increase 9,558,733 $115,290,766 6,975,831 $ 82,296,263 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
OPPENHEIMER AGGRESSIVE GROWTH FUND - ---------------------------------------------------------------------------------------------------- Sold 13,376,589 $556,408,810 9,511,150 $368,762,665 Dividends and distributions reinvested 580,166 25,556,280 952,236 32,014,171 Redeemed (11,344,620) (471,453,144) (4,981,695) (193,507,968) ----------- ------------ - ----------- ------------ Net increase 2,612,135 $110,511,946 5,481,691 $207,268,868 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
OPPENHEIMER GROWTH FUND - ---------------------------------------------------------------------------------------------------- Sold 8,866,513 $293,095,063 10,437,357 $318,824,006 Dividends and distributions reinvested 1,565,397 51,470,268 720,274 18,842,365 Redeemed (4,699,071) (153,929,105) (6,429,313) (191,417,975) ----------- ------------ - ----------- ------------ Net increase 5,732,839 $190,636,226 4,728,318 $141,248,396 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
OPPENHEIMER MULTIPLE STRATEGIES FUND - ---------------------------------------------------------------------------------------------------- Sold 3,352,415 $ 56,547,384 6,728,904 $110,124,465 Dividends and distributions reinvested 2,387,019 40,555,451 2,517,354 39,597,113 Redeemed (6,714,957) (111,314,362) (2,765,980) (45,296,683) ----------- ------------ - ----------- ------------ Net increase (decrease) (975,523) $(14,211,527) 6,480,278 $104,424,895 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
OPPENHEIMER GLOBAL SECURITIES FUND - ---------------------------------------------------------------------------------------------------- Sold 11,735,029 $248,354,528 17,881,768 $354,780,849 Dividends and distributions reinvested 4,877,993 101,511,033 446,370 8,181,958 Redeemed (10,067,775) (208,745,766) (6,390,329) (127,270,051) ----------- ------------ - ----------- ------------ Net increase 6,545,247 $141,119,795 11,937,809 $235,692,756 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
OPPENHEIMER STRATEGIC BOND FUND - ---------------------------------------------------------------------------------------------------- Sold 21,445,910 $109,659,739 18,907,314 $ 96,727,423 Dividends and distributions reinvested 1,279,028 6,535,835 2,528,920 12,861,470 Redeemed (8,759,684) (44,577,039) (4,147,991) (21,213,934) ----------- ------------ - ----------- ------------ Net increase 13,965,254 $ 71,618,535 17,288,243 $ 88,374,959 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
OPPENHEIMER GROWTH & INCOME FUND - ---------------------------------------------------------------------------------------------------- Sold 9,181,075 $189,060,690 5,209,743 $ 95,997,604 Dividends and distributions reinvested 468,325 10,340,604 216,162 3,646,792 Redeemed (2,145,877) (42,198,296) (745,544) (13,620,674) ----------- ------------ - ----------- ------------ Net increase 7,503,523 $157,202,998 4,680,361 $ 86,023,722 ----------- ------------ - ----------- ------------ ----------- ------------ - ----------- ------------
134 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
PERIOD ENDED DECEMBER 31, 1998(1) - ------------------------- OPPENHEIMER SMALL CAP GROWTH FUND SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ Sold 114,434 $ 1,030,883 Redeemed (10,903) (93,910) - ----------- ------------ Net increase 103,531 $ 936,973 - ----------- ------------ - ----------- ------------
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. - -------------------------------------------------------------------------------- 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS As of December 31, 1998, net unrealized appreciation or depreciation on investments and options written consisted of the following:
OPPENHEIMER OPPENHEIMER OPPENHEIMER MULTIPLE HIGH INCOME OPPENHEIMER AGGRESSIVE OPPENHEIMER STRATEGIES FUND BOND FUND GROWTH FUND GROWTH FUND FUND - ------------------------------------------------------------------------------------------------------ Gross appreciation $ 8,629,297 $ 13,200,055 $355,515,405 $235,480,248 $121,405,881 Gross depreciation 22,128,011 6,999,293 5,290,500 44,296,850 39,917,220 ------------- ------------- ------------- - ------------- ------------- Net unrealized appreciation (depreciation) $(13,498,714) $ 6,200,762 $350,224,905 $191,183,398 $ 81,488,661 ------------- ------------- ------------- - ------------- ------------- ------------- ------------- ------------- - ------------- -------------
OPPENHEIMER GLOBAL OPPENHEIMER OPPENHEIMER OPPENHEIMER SECURITIES STRATEGIC GROWTH & SMALL CAP FUND BOND FUND INCOME FUND GROWTH FUND - ---------------------------------------------------------------------------------------- Gross appreciation $255,177,315 $ 8,361,107 $ 55,571,813 $ 134,186 Gross depreciation 52,100,686 17,283,663 30,983,707 29,215 ------------- ------------- ------------- - ------------- Net unrealized appreciation (depreciation) $203,076,629 $ (8,922,556) $ 24,588,106 $ 104,971 ------------- ------------- ------------- - ------------- ------------- ------------- ------------- - -------------
- -------------------------------------------------------------------------------- 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreements with the Trust. For OAGF, OGF, OMSF, OGSF, OGIF and OSCGF, the annual fees are 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million and 0.60% of average annual net assets over $800 million. For OHIF, OBF and OSBF, the annual fees are 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million and 0.60% of average annual net assets over $200 million. In addition, management fees for OHIF, OBF and OSBF are 0.50% of average annual net assets in excess of $1 billion. Management fees for OMF are 0.45% of the first $500 million of average annual net assets, 0.425% of the next $500 million, 0.40% of the next $500 million and 0.375% of average annual net assets over $1.5 billion. 135 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) The management fee for the year ended December 31, 1998 (computed on an annualized basis as a percentage of the average annual net assets of each of the Funds) were as follows:
FUND MANAGEMENT FEES - ------------------------------------------------------------------------------------------------------ Oppenheimer Money Fund 0.45% Oppenheimer High Income Fund 0.74 Oppenheimer Bond Fund 0.72 Oppenheimer Aggressive Growth Fund 0.69 Oppenheimer Growth Fund 0.72 Oppenheimer Multiple Strategies Fund 0.72 Oppenheimer Global Securities Fund 0.68 Oppenheimer Strategic Bond Fund 0.74 Oppenheimer Growth & Income Fund 0.74 Oppenheimer Small Cap Growth Fund 0.75
- -------------------------------------------------------------------------------- 5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Funds (except OMF) use forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Funds generally enter into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Funds may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Funds will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on outstanding forward contracts are noted in the Statements of Investments where applicable. Unrealized appreciation or depreciation on forward contracts is reported in the Statements of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Funds' Statements of Operations. Risks include the potential inability of the counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. 136 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. FORWARD CONTRACTS (CONTINUED) As of December 31, 1998, outstanding forward contracts were as follows:
VALUATION AS OF EXPIRATION CONTRACT DECEMBER 31, UNREALIZED UNREALIZED OPPENHEIMER HIGH INCOME FUND DATES AMOUNT (000'S) 1998 APPRECIATION DEPRECIATION - ------------------------------------------------------------------------------------------------------ CONTRACTS TO SELL British Pound Sterling (GBP) 3/15/99 1,680 GBP $2,779,282 $ 50,410 $ -- Canadian Dollar (CAD) 3/15/99 540 CAD 352,663 -- 2,014 - ------- ------------ Total Unrealized Appreciation and Depreciation $ 50,410 $ 2,014 - ------- ------------ - ------- ------------ OPPENHEIMER BOND FUND - ------------------------------------------------------------------------------------------------------ CONTRACTS TO SELL Canadian Dollar (CAD) 3/15/99 4,000 CAD $2,612,319 $ 14,916 $ -- OPPENHEIMER GLOBAL SECURITIES FUND - ------------------------------------------------------------------------------------------------------ CONTRACTS TO PURCHASE German Mark (DEM) 1/4/99-1/5/99 8,837 DEM $5,306,742 $ 12,154 $ -- Italian Lira (ITL) 1/7/99-1/8/99 5,005,679 ITL 3,034,123 13,901 -- - ------- ------------ 26,055 -- - ------- ------------ CONTRACTS TO SELL Finnish Markka (FIM) 1/4/99-1/5/99 1,161 FIM 229,251 -- 1,403 - ------- ------------ Total Unrealized Appreciation and Depreciation $ 26,055 $ 1,403 - ------- ------------ - ------- ------------ OPPENHEIMER STRATEGIC BOND FUND - ------------------------------------------------------------------------------------------------------ CONTRACTS TO PURCHASE Canadian Dollar (CAD) 1/27/99 650 CAD $ 424,445 $ 1,764 $ -- - ------- ------------ CONTRACTS TO SELL Australian Dollar (AUD) 2/22/99 1,620 AUD 993,532 14,756 -- British Pound Sterling (GBP) 2/22/99-3/9/99 1,290 GBP 2,134,521 7,058 13,431 Canadian Dollar (CAD) 1/11/99-1/27/99 1,950 CAD 1,273,327 397 6,753 German Mark (DEM) 2/8/99 2,550 DEM 1,534,924 -- 11,672 Japanese Yen (JPY) 2/8/99 40,000 JPY 355,206 -- 15,705 New Zealand Dollar (NZD) 1/26/99 210 NZD 110,553 2,364 -- - ------- ------------ 24,575 47,561 - ------- ------------ Total Unrealized Appreciation and Depreciation $ 26,339 $ 47,561 - ------- ------------ - ------- ------------
- -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS The Funds (except OMF) may buy and sell interest rate futures contracts in order to gain exposure to or protect against changes in interest rates. The Funds may also buy or write put or call options on these futures contracts. The Funds generally sell futures contracts to hedge against increases in interest rates and the resulting negative effect on the value of fixed rate portfolio securities. The Funds may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Funds are required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Funds each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Funds recognize a realized gain or loss when the contract is closed or expires. 137 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS (CONTINUED) Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statements of Investments. The Statements of Assets and Liabilities reflect a receivable or payable for the daily mark to market for variation margin. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. As of December 31, 1998, outstanding futures contracts were as follows:
VALUATION AS OF UNREALIZED EXPIRATION NUMBER OF DECEMBER 31, APPRECIATION OPPENHEIMER HIGH INCOME FUND DATE CONTRACTS 1998 (DEPRECIATION) - ------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Standard & Poors 500 Index 3/99 9 $2,802,375 $ 15,700 OPPENHEIMER BOND FUND - ------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE U.S. Treasury Nts., 5 yr. 3/99 335 $37,970,156 $ 147,016 U.S. Treasury Bonds, 20 yr. 3/99 127 16,228,219 10,031 - -------------- 157,047 - -------------- CONTRACTS TO SELL U.S. Treasury Nts., 10 yr. 3/99 37 4,408,781 (4,781) - -------------- $ 152,266 - -------------- - -------------- OPPENHEIMER STRATEGIC BOND FUND - ------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE United Kingdom Long Gilt 3/99 5 $ 987,174 $ 4,410 - -------------- CONTRACTS TO SELL Canadian Government Bonds 3/99 5 420,633 1,828 U.S. Treasury Nts., 10 yr. 3/99 11 1,310,719 1,852 - -------------- 3,680 - -------------- $ 8,090 - -------------- - --------------
- -------------------------------------------------------------------------------- 7. OPTION ACTIVITY The Funds (except OMF) may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Funds generally purchase put options or write covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Funds receive a premium and become obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Funds will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. 138 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 7. OPTION ACTIVITY (CONTINUED) Securities designated to cover outstanding call options are noted in the Statements of Investments where applicable. Options written are reported as a liability in the Statements of Assets and Liabilities. Gains and losses are reported in the Statements of Operations. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. The Funds also have the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. The Funds may also write over-the-counter options where the completion of the obligation is dependent upon the credit standing of the counterparty. Written option activity for the year ended December 31, 1998 was as follows:
CALL OPTIONS PUT OPTIONS --------------------------- - -------------------------- NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF OPPENHEIMER HIGH INCOME FUND OPTIONS PREMIUMS OPTIONS PREMIUMS - --------------------------------------------------------------------------------------------- Options outstanding as of December 31, 1997 -- $ -- - -- $ -- Options written 200 45,875 6 50,220 Options closed or expired (200) (45,875) (6) (50,220) ------------ ------------ - ------------- ---------- Options outstanding as of December 31, 1998 -- $ -- - -- $ -- ------------ ------------ - ------------- ---------- ------------ ------------ - ------------- ----------
OPPENHEIMER MULTIPLE STRATEGIES FUND - ------------------------------------------------------------------------------------------------------ Options outstanding as of December 31, 1997 6,056 $1,797,849 -- $ -- Options written 14,157 4,642,269 -- -- Options closed or expired (9,606) (3,358,067) -- -- Options exercised (4,736) (1,395,664) -- -- ---------- ---------- - ----------- ----------- Options outstanding as of December 31, 1998 5,871 $1,686,387 -- $ -- ---------- ---------- - ----------- ----------- ---------- ---------- - ----------- -----------
OPPENHEIMER STRATEGIC BOND FUND - -------------------------------------------------------------------------------------------- Options outstanding as of December 31, 1997 400 $ 3,679 224,820,000 $ 31,046 Options written 150,816,100 50,369 565,183,580 237,481 Options closed or expired (3,210,400) (28,813) (420,932,320) (145,971) Options exercised -- -- (369,071,260) (122,556) ------------ ------------ - ------------- --------- Options outstanding as of December 31, 1998 147,606,100 $ 25,235 - -- $ -- ------------ ------------ - ------------- --------- ------------ ------------ - ------------- ---------
OPPENHEIMER GROWTH & INCOME FUND - ------------------------------------------------------------------------------------------------------ Options outstanding as of December 31, 1997 880 $ 61,758 -- $ -- Options written 11,965 2,578,629 200 74,397 Options closed or expired (9,495) (1,306,303) -- -- Options exercised (2,025) (763,924) (100) (32,824) ---------- ---------- - ----------- ----------- Options outstanding as of December 31, 1998 1,325 $ 570,160 100 $ 41,573 ---------- ---------- - ----------- ----------- ---------- ---------- - ----------- -----------
OPPENHEIMER AGGRESSIVE GROWTH FUND - ------------------------------------------------------------------------------------------------------ Options outstanding as of December 31, 1997 -- $ - -- -- $ -- Options written 638 53,343 -- -- Options closed or expired (500) (18,579) -- -- ---------- ---------- - ----------- ----------- Options outstanding as of December 31, 1998 138 $ 34,764 -- $ -- ---------- ---------- - ----------- ----------- ---------- ---------- - ----------- -----------
139 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 8. ILLIQUID AND RESTRICTED SECURITIES As of December 31, 1998, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Funds intend to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid and restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limit. The aggregate value of illiquid and restricted securities subject to this 10% limitation as of December 31, 1998 are shown below: Information concerning restricted securities is as follows:
PERCENTAGE OF NET AMOUNT ASSETS - --------------------------------------------- Oppenheimer Money Fund $13,000,000 8.56% - --------------------------------------------- Oppenheimer High Income Fund 19,677,807 5.99 - --------------------------------------------- Oppenheimer Bond Fund 47,819,400 7.29 - --------------------------------------------- Oppenheimer Multiple Strategies Fund 2,293,795 0.37 - --------------------------------------------- Oppenheimer Global Securities Fund 3,769,145 0.33 - --------------------------------------------- Oppenheimer Strategic Bond Fund 11,110,683 3.98 - --------------------------------------------- Oppenheimer Growth & Income Fund 4,030 0.01 OPPENHEIMER MONEY FUND The aggregate value of restricted securities is $2,000,000.
VALUATION PER UNIT AS OF SECURITY ACQUISITION DATE COST PER UNIT DECEMBER 31, 1998 - ---------------------------------------------------------------------------------------------- SHORT-TERM NOTES Travelers Insurance Co., 5.034%, 1/4/99 9/16/98 100.00% 100.00% OPPENHEIMER HIGH INCOME FUND The aggregate value of restricted securities is $3,362,687. BONDS ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 100.00% 100.25% - ---------------------------------------------------------------------------------------------- TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95-8/13/96 100.00-105.75 116.10 - ---------------------------------------------------------------------------------------------- Trans World Airlines Lease, 14% Equipment Trust, 7/2/08 3/19/98 101.00 99.00 STOCKS AND WARRANTS ECM Fund, L.P.I. 4/14/92 $ 1,000.00 $ 885.00 - ---------------------------------------------------------------------------------------------- CGA Group Ltd., Preferred 6/17/97-9/28/98 25.00 25.00 - ---------------------------------------------------------------------------------------------- CGA Group Ltd. Wts., Exp. 12/49 6/17/97 - -- .30 - ---------------------------------------------------------------------------------------------- Omnipoint Corp. Wts., Exp. 11/00 11/29/95 - -- 9.31 OPPENHEIMER BOND FUND The aggregate value of restricted securities is $1,130,000. Merrill Lynch & Co., Inc., Units, 9.75%, 6/15/99 5/15/95 110.05% $ 113.00 OPPENHEIMER MULTIPLE STRATEGIES FUND The aggregate value of restricted securities is $2,293,795. STOCKS Intermedia Communications, Inc. 9/29/98 $ 21.69 $ 13.80
140 OPPENHEIMER VARIABLE ACCOUNT FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 8. ILLIQUID AND RESTRICTED SECURITIES (CONTINUED)
VALUATION PER UNIT AS OF SECURITY ACQUISITION DATE COST PER UNIT DECEMBER 31, 1998 - ---------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND The aggregate value of restricted securities is $598,651. BONDS TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95 100.00% 116.10% STOCKS AND WARRANTS CGA Group Ltd., Preferred 6/17/97 $ 25.00 $ 25.00 - ---------------------------------------------------------------------------------------------- CGA Group Ltd. Wts., Exp. 12/49 6/17/97 - -- .30 OPPENHEIMER GROWTH & INCOME FUND The aggregate value of restricted securities is $4,030. STOCKS Intermedia Communications, Inc. 9/29/98 $ 21.54 $ 13.80
Appendix A RATINGS DEFINITIONS Below are summaries of the rating definitions used by the nationally-recognized rating agencies listed below. Those ratings represent the opinion of the agency as to the credit quality of issues that they rate. The summaries below are based upon publicly-available information provided by the rating organizations. Moody's Investors Service, Inc. Long-Term (Taxable) Bond Ratings Aaa: Bonds rated Aaa are judged to be the best quality. They carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, the changes that can be expected are most unlikely to impair the fundamentally strong position of such issues. Aa: Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as with Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than those of Aaa securities. A: Bonds rated A possess many favorable investment attributes and are to be considered as upper-medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa: Bonds rated Baa are considered medium grade obligations; that is, they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and have speculative characteristics as well. Ba: Bonds rated Ba are judged to have speculative elements. Their future cannot be considered well-assured. Often the protection of interest and principal payments may be very moderate and not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B: Bonds rated B generally lack characteristics of desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa: Bonds rated Caa are of poor standing and may be in default or there may be present elements of danger with respect to principal or interest. Ca: Bonds rated Ca represent obligations which are speculative in a high degree and are often in default or have other marked shortcomings. C: Bonds rated C are the lowest class of rated bonds and can be regarded as having extremely poor prospects of ever attaining any real investment standing. Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier "1" indicates that the obligation ranks in the higher end of its category; the modifier "2: indicates a mid-range ranking and the modifier "3" indicates a "ranking in the lower end of the category. Short-Term Ratings - Taxable Debt These ratings apply to the ability of issuers to repay punctually senior debt obligations having an original maturity not exceeding one year: Prime-1: Issuer has a superior ability for repayment of senior short-term debt obligations. Prime-2: Issuer has a strong ability for repayment of senior short-term debt obligations. Earnings trends and coverage, while sound, may be subject to variation. Capitalization characteristics, while appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Prime-3: Issuer has an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. Not Prime: Issuer does not fall within any Prime rating category. Standard & Poor's Rating Services Long-Term Credit Ratings AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. AA: Bonds rated "AA" differ from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. A: Bonds rated "A" are somewhat more susceptible to adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. BBB: Bonds rated BBB exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Bonds rated BB, B, CCC, CC and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. BB: Bonds rated BB are less vulnerable to nonpayment than other speculative issues. However, these face major uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. B: A bond rated B is more vulnerable to nonpayment than an obligation rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. CCC: A bond rated CCC is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. CC: An obligation rated CC is currently highly vulnerable to nonpayment. C: The C rating may used where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued. D: Bonds rated D are in default. Payments on the obligation are not being made on the date due. The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. The "r" symbol is attached to the ratings of instruments with significant noncredit risks. Short-Term Issue Credit Ratings A-1: Rated in the highest category. The obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, a plus (+) sign designation indicates the issuer's capacity to meet its financial obligation is very strong. A-2: Obligation is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory. A-3: Exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. B: Regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation. However, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. C: Currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. D: In payment default. Payments on the obligation have not been made on the due date. The rating may also be used if a bankruptcy petition has been filed or similar actions jeopardize payments on the obligation. Fitch IBCA, Inc. International Long-Term Credit Ratings Investment Grade: AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of credit risk. They are assigned only in the case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. AA: Very High Credit Quality. "AA" ratings denote a very low expectation of credit risk. They indicate a very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is the lowest investment-grade category. Speculative Grade: BB: Speculative. "BB" ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time. However, business or financial alternatives may be available to allow financial commitments to be met. B: Highly Speculative. "B" ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met. However, capacity for continued payment is contingent upon a sustained, favorable business and economic environment. CCC, CC C: High Default Risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. A "CC" rating indicates that default of some kind appears probable. "C" ratings signal imminent default. DDD, DD, and D: Default. Securities are not meeting current obligations and are extremely speculative. "DDD" designates the highest potential for recovery of amounts outstanding on any securities involved. Plus (+) and minus (-) signs may be appended to a rating symbol to denote relative status within the rating category. Plus and minus signs are not added to the "AAA" category or to categories below "CCC." International Short-Term Credit Ratings F1: Highest credit quality. Strongest capacity for timely payment. May have an added "+" to denote exceptionally strong credit feature. F2: Good credit quality. A satisfactory capacity for timely payment, but the margin of safety is not as great as in higher ratings. F3: Fair credit quality. Capacity for timely payment is adequate. However, near-term adverse changes could result in a reduction to non-investment grade. B: Speculative. Minimal capacity for timely payment, plus vulnerability to near-term adverse changes in financial and economic conditions. C: High default risk. Default is a real possibility, Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment. D: Default. Denotes actual or imminent payment default. Duff & Phelps Credit Rating Co. Ratings Long-Term Debt and Preferred Stock AAA: Highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt. AA+, AA, AA-: High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. A+, A & A-: Protection factors are average but adequate. However, risk factors are more variable in periods of greater economic stress. BBB+, BBB & BBB-: Below average protection factors but still considered sufficient for prudent investment. Considerable variability in risk during economic cycles. BB+, BB & BB-: Below investment grade but deemed likely to meet obligations when due. Present or prospective financial protection factors fluctuate according to industry conditions. Overall quality may move up or down frequently within the category. B+, B & B-: Below investment grade and possessing risk that obligations will not be met when due. Financial protection factors will fluctuate widely according to economic cycles, industry conditions and/or company fortunes. Potential exists for frequent changes in the rating within this category or into a higher of lower rating grade. CCC: Well below investment-grade securities. Considerable uncertainty exists as to timely payment of principal, interest or preferred dividends. Protection factors are narrow and risk can be substantial with unfavorable economic/industry conditions, and/or with unfavorable company developments. DD: Defaulted debt obligations. Issuer failed to meet scheduled principal and/or interest payments. DP: Preferred stock with dividend arrearages. Short-Term Debt: High Grade: D-1+: Highest certainty of timely payment. Safety is just below risk-free U.S. Treasury short-term debt. D-1: Very high certainty of timely payment. Risk factors are minor. D-1-: High certainty of timely payment. Risk factors are very small. Good Grade: D-2: Good certainty of timely payment. Risk factors are small. Satisfactory Grade: D-3: Satisfactory liquidity and other protection factors qualify issues as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Non-Investment Grade: D-4: Speculative investment characteristics. Liquidity is not sufficient to insure against disruption in debt service. Default: D-5: Issuer failed to meet scheduled principal and/or interest payments. Appendix B Industry Classifications Aerospace/Defense Food and DrugRetailers Air Transportation Gas Utilities Asset-Backed Health Care/Drugs Auto Parts and Equipment Health Care/Supplies & Services Automotive Homebuilders/Real Estate Bank Holding Companies Hotel/Gaming Banks IndustrialServices Beverages Information Technology Broadcasting Insurance Broker-Dealers Leasing & Factoring Building Materials Leisure Cable Television Manufacturing Chemicals Metals/Mining Commercial Finance Nondurable Household Goods Communication Equipment Office Equipment Computer Hardware Oil - Domestic Computer Software Oil -International Conglomerates Paper Consumer Finance Photography Consumer Services Publishing Containers Railroads Convenience Stores Restaurants Department Stores Savings & Loans Diversified Financial Shipping Diversified Media Special Purpose Financial Drug Wholesalers Specialty Printing Durable Household Goods Specialty Retailing Education Steel Electric Utilities Telecommunications - Technology Electrical Equipment Telephone - Utility Electronics Textile/Apparel Energy Services & Producers Tobacco Entertainment/Film Trucks and Parts Environmental Wireless Services Food APPENDIX C - MAJOR SHAREHOLDERS As of April 1, 1999, the number of shares and approximate percentage of shares held of record by separate accounts of the following insurance companies (and their respective subsidiaries) that held 5% or more of the outstanding shares of one of the Funds as shown in the tables below. The full name and address of each insurance company is shown on page 37:
Monarch ReliaStar GE Nationwide Aetna Money Fund/VA 25,145,916.770 9,153,762.542 * * 10,150,889.250 16.48% 6.00% 6.65% High Income Fund/VA * 1,885,144.642 17,269,050.642 ** 1,778,832.069 5.70% 52.18% 5.37% Bond Fund/VA * * 6,066,946.035 30,957,444.228 * 10.75% 55.39% Aggressive Growth * * 4,702,545.948 * 1,248,988.180 Fund/VA 20.00% 5.31% Capital Appreciation Fund/VA * * 5,577,643.166 4,845,945.654 1,288,654.479 23.52% 20.44% 5.44% Multiple Strategies 3,057,791.713 2,460,350.504 5,231,829.734 21,096,649.563 2,206,895.128 Fund/VA 8.12% 6.53% 13.89% 56.00% 5.86% Global Securities * * * 25,806,270.802 * Fund/VA 49.83% Strategic Bond Fund/VA * * * * 4,966,074.026 10.72% Main Street Growth & Income * * * 2,999,652.343 2,398,958.391 Fund/VA 19.04% 15.34 Small Cap Growth/VA * * * * *
_______________ *Less than 5% of the outstanding shares of that Fund. (continued)
MassMutual Jefferson-Pilot CUNA American General Protective Money Fund/VA 108,169,643.695 * * * * 70.87% High Income Fund/VA 5,681,835.175 * 4,641,289.720 * * 17.17% 14.02% Bond Fund/VA 12,829,726.419 3,959,387.875 * * * 22.95% 7.08% Aggressive Growth 14,964,195,124 * * * * Fund/VA 63.64% Capital Appreciation Fund/VA 6,326,279.04 1 3,430,222.806 * * * 26.68% 14.47% Multiple Strategies 3,555,224.212 * * * * Fund/VA 9.44% Global Securities 22,911,099.051 * * * * Fund/VA 44.24% Strategic Bond Fund/VA 44,005,016.230 * * * 4,074,940 76.45% 7.08% Main Street Growth & Income 8,512,628.396 * * * 1,272,918 Fund/VA 54.44% 8.14% Small Cap Growth/VA 115,682.817 * * 36,971.693 * 75.74% 24.20%
___________ *Less than 5% of the outstanding shares of that Fund. Oppenheimer Variable Account Funds Investment Adviser OppenheimerFunds, Inc. Two World Trade Center New York, New York 10048-0203 Transfer Agent OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217 1-888-470-0861 Custodian Bank The Bank of New York One Wall Street New York, New York 10015 Independent Auditors Deloitte & Touche LLP 555 Seventeenth Street Denver, Colorado 80202 Legal Counsel Myer, Swanson, Adams & Wolf, P.C. 1600 Broadway Denver, Colorado 80202 OPPENHEIMER VARIABLE ACCOUNT FUNDS FORM N-1A PART C OTHER INFORMATION Item 23. Exhibits (a) Ninth Restated Declaration of Trust dated 5/1/99: Filed herewith. (b) Amended By-Laws dated 6/26/90: Previously filed with Registrant's Post-Effective Amendment No. 26 (2/13/95), and incorporated herein by reference. (i) Oppenheimer Money Fund/VA specimen share certificate: Filed herewith. (ii) Oppenheimer Bond Fund/VA specimen share certificate: Filed herewith. C-4 (iii) Oppenheimer Capital Appreciation Fund/VA specimen share certificate: Filed herewith. (iv) Oppenheimer High Income Fund/VA specimen share certificate: Filed herewith. (v) Oppenheimer Aggressive Growth Fund/VA specimen share certificate: Filed herewith. (vi) Oppenheimer Multiple Strategies Fund/VA specimen share certificate: Filed herewith. (vii) Oppenheimer Global Securities Fund/VA specimen share certificate: Filed herewith. (viii) Oppenheimer Strategic Bond Fund/VA specimen share certificate: Filed herewith. (ix) Oppenheimer Main Street Growth & Income Fund/VA specimen share certificate: Filed herewith. (x) Oppenheimer Small Cap Growth Fund/VA specimen share certificate: Filed herewith. (xi) Oppenheimer Money Fund/VA Class 2 specimen share certificate: Filed herewith. (xii) Oppenheimer Bond Fund/VA Class 2 specimen share certificate: Filed herewith. (xiii) Oppenheimer Capital Appreciation Fund/VA Class 2 specimen share certificate: Filed herewith. (xiv) Oppenheimer High Income Fund/VA Class 2 specimen share certificate: Filed herewith. (xv) Oppenheimer Aggressive Growth Fund/VA Class 2 specimen share certificate: Filed herewith. (xvi) Oppenheimer Multiple Strategies Fund/VA Class 2 specimen share certificate: Filed herewith. (xvii) Oppenheimer Global Securities Fund/VA Class 2 specimen share certificate: Filed herewith. (viii) Oppenheimer Strategic Bond Fund/VA Class 2 specimen share certificate: Filed herewith. (xix) Oppenheimer Main Street Growth & Income Fund/VA Class 2 specimen share certificate: Filed herewith. (xx) Oppenheimer Small Cap Growth Fund/VA Class 2 specimen share certificate: Filed herewith. (d) (i) Investment Advisory Agreement for Oppenheimer Money Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (ii) Investment Advisory Agreement for Oppenheimer High Income Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (iii) Investment Advisory Agreement for Oppenheimer Bond Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (iv) Investment Advisory Agreement for Oppenheimer Aggressive Growth Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (v) Amended and Restated Investment Advisory Agreement for Oppenheimer Aggressive Growth Fund/VA dated 5/1/99: Filed herewith. (vi) Investment Advisory Agreement for Oppenheimer Capital Appreciation Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (vii) Investment Advisory Agreement for Oppenheimer Multiple Strategies Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (viii) Investment Advisory Agreement for Oppenheimer Global Securities Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (ix) Investment Advisory Agreement for Oppenheimer Strategic Bond Fund/VA dated 9/1/94: Filed with Post-Effective Amendment No. 26, 2/13/95, and incorporated herein by reference. (x) Investment Advisory Agreement for Oppenheimer Main Street Growth & Income Fund/VA dated 5/1/95: Filed with Post-Effective Amendment No. 29, 4/22/96, and incorporated herein by reference. (xi) Investment Advisory Agreement for Oppenheimer Small Cap Growth Fund/VA dated 5/1/98 - Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98, and incorporated herein by reference. (e) (i) General Distributor=s Agreement for Class 2 shares of Oppenheimer Money Fund /VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (ii) General Distributor=s Agreement for Class 2 shares of Oppenheimer Bond Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (iii) General Distributor=s Agreement for Class 2 shares of Oppenheimer Capital Appreciation Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (iv) General Distributor=s Agreement for Class 2 shares of Oppenheimer High Income Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (v) General Distributor=s Agreement for Class 2 shares of Oppenheimer Aggressive Growth Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (vi) General Distributor=s Agreement for Class 2 shares of Oppenheimer Multiple Strategies Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (vii) General Distributor=s Agreement for Class 2 shares of Oppenheimer Global Securities Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (viii) General Distributor=s Agreement for Class 2 shares of Oppenheimer Strategic Bond Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (ix) General Distributor=s Agreement for Class 2 shares of Oppenheimer Main Street Growth & Income Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (x) General Distributor=s Agreement for Class 2 shares of Oppenheimer Small Cap Growth Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (f) Form of Deferred Compensation Plan for Disinterested Trustees\Directors: Filed with Post-Effective Amendment No. 40 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/27/98, and incorporated herein by reference. (g) Custody Agreement between Oppenheimer Variable Account Funds and The Bank of New York, dated 11/12/92: Previously filed with Registrant's Post-Effective Amendment No. 21, 3/12/93, refiled with Registrant's Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T, and incorporated herein by reference. (h) Not applicable. (i) (i) Opinion and Consent of Counsel, 3/14/85: Previously filed with Registrant's Pre-Effective Amendment No. 1, 3/20/85, refiled with Registrant's Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T, and incorporated herein by reference. (ii) Opinion and Consent of Counsel, 4/28/86: Previously filed with Registrant's Post-Effective Amendment No. 5, 8/12/86, refiled with Registrant's Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T, and incorporated herein by reference. (iii) Opinion and Consent of Counsel, 7/31/86: Previously filed with Registrant's Post-Effective Amendment No. 5, 8/12/86, refiled with Registrant's Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T, and incorporated herein by reference. (iv) Opinion and Consent of Counsel, 1/21/87: Previously filed with Registrant's Post-Effective Amendment No. 7, 2/6/87, refiled with Registrant's Post-Effective Amendment No. 27, 4/27/95, pursuant to Item 102 of Regulation S-T, and incorporated herein by reference. (v) Opinion and Consent of Counsel, dated July 31, 1990: Previously filed with Registrant's Post-Effective Amendment No. 15, 9/19/90, refiled with Registrant's Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T, and incorporated herein by reference. (vi) Opinion and Consent of Counsel dated April 23, 1993: Previously filed with Registrant's Post-Effective Amendment No. 22, 4/30/93, refiled with Registrant's Post-Effective Amendment No. 27, 4/27/95 pursuant to Item 102 of Regulation S-T, and incorporated herein by reference. (vii) Opinion and Consent of Counsel dated April 18, 1995: Filed with Post-Effective Amendment No. 29, 4/22/96, and incorporated herein by reference. (viii) Opinion and Consent of Counsel: Filed with Post-Effective Amendment No. 32, 4/29/98, and incorporated herein by reference. (j) Independent Auditors' Consent: Filed herewith. (k) Not applicable. (l) Not applicable. (m) (i) Service Plan and Agreement for Class 2 shares of Oppenheimer Money Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (ii) Service Plan and Agreement for Class 2 shares of Oppenheimer Bond Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (iii) Service Plan and Agreement for Class 2 shares of Oppenheimer Capital Appreciation Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (iv) Service Plan and Agreement for Class 2 shares of Oppenheimer High Income Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (v) Service Plan and Agreement for Class 2 shares of Oppenheimer Aggressive Growth Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (vi) Service Plan and Agreement for Class 2 shares of Oppenheimer Multiple Strategies Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (vii) Service Plan and Agreement for Class 2 shares of Oppenheimer Global Securities Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (viii) Service Plan and Agreement for Class 2 shares of Oppenheimer Strategic Bond Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (ix) Service Plan and Agreement for Class 2 shares of Oppenheimer Main Street Growth & Income Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (x) Service Plan and Agreement for Class 2 shares of Oppenheimer Small Cap Growth Fund/VA: Filed with Registrant's Post-Effective Amendment No. 31, 1/30/98 and incorporated herein by reference. (n) Financial Data Schedules: Filed herewith. (o) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through 8/25/98: Previously filed with Post-Effective Amendment No. 70 to the Registration Statement of Oppenheimer Global Fund (Reg. No. 2-31661), 9/14/98, and incorporated herein by reference. - -- Powers of Attorney: Filed with Post-Effective Amendment No. 29, 4/22/96, and with Registrant's Post-Effective Amendment No. 24, 2/25/94, and incorporated herein by reference. - -- Powers of Attorney of Brian W. Wixted: Filed herewith. Item 24. Persons Controlled by or Under Common Control with the Fund None. Item 25. Indemnification Reference is made to the provisions of Article Seventh of Registrant's Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this Registration Statement, and incorporated herein by reference. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of Registrant pursuant to the foregoing provisions or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. Item 26. Business and Other Connections of the Investment Adviser (a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and certain subsidiaries and affiliates act in the same capacity to other investment companies, including with limitation those described in Parts A and B hereof and listed in Item 26(b) below. (b) There is set forth below information as to any other business, profession, vocation or employment of a substantial nature in which each officer and director of OppenheimerFunds, Inc. is, or at any time during the past two fiscal years has been, engaged for his/her own account or in the capacity of director, officer, employee, partner or trustee. Name and Current Position Other Business and Connections with OppenheimerFunds, Inc. During the Past Two Years Charles E. Albers, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds (since April 1998); a Chartered Financial Analyst; formerly, a Vice President and portfolio manager for Guardian Investor Services, the investment management subsidiary of The Guardian Life Insurance Company (since 1972). Edward Amberger, Assistant Vice President Formerly Assistant Vice President, Securities Analyst for Morgan Stanley Dean Witter (May 1997 - April 1998); and Research Analyst (July 1996 - May 1997), Portfolio Manager (February 1992 - July 1996) and Department Manager (June 1988 to February 1992) for The Bank of New York. Mark J.P. Anson, Vice President Vice President of Oppenheimer Real Asset Management, Inc. ("ORAMI"); formerly, Vice President of Equity Derivatives at Salomon Brothers, Inc. Peter M. Antos, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds; a Chartered Financial Analyst; Senior Vice President of HarbourView Asset Management Corporation ("HarbourView"); prior to March, 1996 he was the senior equity portfolio manager for the Panorama Series Fund, Inc. (the "Company") and other mutual funds and pension funds managed by G.R. Phelps & Co. Inc. ("G.R. Phelps"), the Company's former investment adviser, which was a subsidiary of Connecticut Mutual Life Insurance Company; he was also responsible for managing the common stock department and common stock investments of Connecticut Mutual Life Insurance Co. Lawrence Apolito, Vice President None. Victor Babin, Senior Vice President None. Bruce Bartlett, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Formerly, a Vice President and Senior Portfolio Manager at First of America Investment Corp. George Batejan, Executive Vice President, Chief Information Officer Formerly Senior Vice President, Group Executive, and Senior Systems Officer for American International Group (October 1994 - May, 1998). John R. Blomfield, Vice President Formerly Senior Product Manager (November, 1995 - August, 1997) of International Home Foods and American Home Products (March, 1994 - October, 1996). Connie Bechtolt, Assistant Vice President None. Kathleen Beichert, Vice President None. Rajeev Bhaman, Vice President Formerly, Vice President (January 1992 - February, 1996) of Asian Equities for Barclays de Zoete Wedd, Inc. Robert J. Bishop, Vice President Vice President of Mutual Fund Accounting (since May 1996); an officer of other Oppenheimer funds; formerly, an Assistant Vice President of OFI/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for OFI. Chad Boll, Assistant Vice President None George C. Bowen, Senior Vice President, Treasurer and Director Vice President (since June 1983) and Treasurer (since March 1985) of OppenheimerFunds Distributor, Inc. (the "Distributor"); Vice President (since October 1989) and Treasurer (since April 1986) of HarbourView; Senior Vice President (since February 1992), Treasurer (since July 1991)and a director (since December 1991) of Centennial; President, Treasurer and a director of Centennial Capital Corporation (since June 1989); Vice President and Treasurer (since August 1978) and Secretary (since April 1981) of Shareholder Services, Inc. ("SSI"); Vice President, Treasurer and Secretary of Shareholder Financial Services, Inc. ("SFSI") (since November 1989); Assistant Treasurer of Oppenheimer Acquisition Corp. ("OAC") (since March, 1998); Treasurer of Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and Treasurer of ORAMI (since July 1996); an officer of other Oppenheimer funds. Scott Brooks, Vice President None. Kevin Brosmith, Vice President None. Nancy Bush, Assistant Vice President Adele Campbell, Assistant Vice President & Assistant Treasurer: Rochester Division Formerly, Assistant Vice President of Rochester Fund Services, Inc. Michael Carbuto, Vice President An officer and/or portfolio manager of certain Oppenheimer funds; Vice President of Centennial. John Cardillo, Assistant Vice President None. Mark Curry, Assistant Vice President H.C. Digby Clements, Vice President: Rochester Division None. O. Leonard Darling, Executive Vice President Chief Executive Officer and Senior Manager of HarbourView Asset Management Corporation; Trustee (1993 - present) of Awhtolia College - Greece. William DeJianne, None. Assistant Vice President Robert A. Densen, Senior Vice President None. Sheri Devereux, Assistant Vice President None. Craig P. Dinsell Executive Vice President Formerly, Senior Vice President of Human Resources for Fidelity Investments-Retail Division (January, 1995 - January, 1996), Fidelity Investments FMR Co. (January, 1996 - June, 1997) and Fidelity Investments FTPG (June, 1997 - January, 1998). Robert Doll, Jr., Executive Vice President and Chief Investment Officer and Director An officer and/or portfolio manager of certain Oppenheimer funds. John Doney, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Andrew J. Donohue, Executive Vice President, General Counsel and Director Executive Vice President (since September 1993), and a director (since January 1992) of the Distributor; Executive Vice President, General Counsel and a director of HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since (September 1995); President and a director of Centennial (since September 1995); President and a director of ORAMI (since July 1996); General Counsel (since May 1996) and Secretary (since April 1997) of OAC; Vice President and Director of OppenheimerFunds International, Ltd. ("OFIL") and Oppenheimer Millennium Funds plc (since October 1997); an officer of other Oppenheimer funds. Patrick Dougherty, None. Assistant Vice President Bruce Dunbar, None. Vice President Daniel Engstrom, Assistant Vice President George Evans, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Edward Everett, Assistant Vice President None. George Fahey, Vice President None. Scott Farrar, Vice President Assistant Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer of other Oppenheimer funds; formerly, an Assistant Vice President of OFI/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for OFI. Leslie A. Falconio, Assistant Vice President None. Katherine P. Feld, Vice President and Secretary Vice President and Secretary of the Distributor; Secretary of HarbourView, and Centennial; Secretary, Vice President and Director of Centennial Capital Corporation; Vice President and Secretary of ORAMI. Ronald H. Fielding, Senior Vice President; Chairman: Rochester Division An officer, Director and/or portfolio manager of certain Oppenheimer funds; Presently he holds the following other positions: Director (since 1995) of ICI Mutual Insurance Company; Governor (since 1994) of St. John's College; Director (since 1994 - present) of International Museum of Photography at George Eastman House. Formerly, he held the following positions: formerly, Chairman of the Board and Director of Rochester Fund Distributors, Inc. ("RFD"); President and Director of Fielding Management Company, Inc. ("FMC"); President and Director of Rochester Capital Advisors, Inc. ("RCAI"); Managing Partner of Rochester Capital Advisors, L.P., President and Director of Rochester Fund Services, Inc. ("RFS"); President and Director of Rochester Tax Managed Fund, Inc.; Director (1993 - 1997) of VehiCare Corp.; Director (1993 - 1996) of VoiceMode. Patricia Foster, Vice President Formerly, she held the following positions: An officer of certain former Rochester funds (May, 1993 - January, 1996); Secretary of Rochester Capital Advisors, Inc. and General Counsel (June, 1993 - January 1996) of Rochester Capital Advisors, L.P. David Foxhoven, Assistant Vice President Jennifer Foxson, Vice President None. Erin Gardiner, Assistant Vice President None. Linda Gardner, Vice President None. Alan Gilston, Vice President Formerly, Vice President (1987-1997) for Schroder Capital Management International. Jill Glazerman, Vice President None. Robyn Goldstein-Liebler Assistant Vice President None. Mikhail Goldverg Assistant Vice President None. Jeremy Griffiths, Executive Vice President and Chief Financial Officer Chief Financial Officer and Treasurer (since March, 1998) of Oppenheimer Acquisition Corp.; a Member and Fellow of the Institute of Chartered Accountants; formerly, an accountant for Arthur Young (London, U.K.). Robert Grill, Senior Vice President Formerly, Marketing Vice President for Bankers Trust Company (1993-1996); Steering Committee Member, Subcommittee Chairman for American Savings Education Council (1995-1996). Caryn Halbrecht, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Elaine T. Hamann, Vice President Formerly, Vice President (September, 1989 - January, 1997) of Bankers Trust Company. Robert Haley Assistant Vice President Formerly, Vice President of Information Services for Bankers Trust Company (January, 1991 - November, 1997). Thomas B. Hayes, Vice President None. Barbara Hennigar, Executive Vice President and Chief Executive Officer of OppenheimerFunds Services, a division of the Manager President and Director of SFSI; President and Chief executive Officer of SSI. Dorothy Hirshman, None. Assistant Vice President Merryl Hoffman, Vice President None. Nicholas Horsley, Vice President Formerly, a Senior Vice President and Portfolio Manager for Warburg, Pincus Counsellors, Inc. (1993-1997), Co-manager of Warburg, Pincus Emerging Markets Fund (12/94 - 10/97), Co-manager Warburg, Pincus Institutional Emerging Markets Fund - Emerging Markets Portfolio (8/96 - 10/97), Warburg Pincus Japan OTC Fund, Associate Portfolio Manager of Warburg Pincus International Equity Fund, Warburg Pincus Institutional Fund - Intermediate Equity Portfolio, and Warburg Pincus EAFE Fund. Scott T. Huebl, Assistant Vice President None. Richard Hymes, Vice President None. Jane Ingalls, Vice President None. Kathleen T. Ives, Vice President None. Christopher Jacobs, Assistant Vice President None. William Jaume, Vice President Frank Jennings, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Susan Katz, Vice President Thomas W. Keffer, Senior Vice President None. Erica Klein, Assistant Vice President Avram Kornberg, Vice President None. John Kowalik, Senior Vice President An officer and/or portfolio manager for certain OppenheimerFunds; formerly, Managing Director and Senior Portfolio Manager at Prudential Global Advisors (1989 - 1998). Joseph Krist, Assistant Vice President None. Michael Levine, Vice President None. Shanquan Li, Vice President None. Stephen F. Libera, Vice President An officer and/or portfolio manager for certain Oppenheimer funds; a Chartered Financial Analyst; a Vice President of HarbourView; prior to March 1996, the senior bond portfolio manager for Panorama Series Fund Inc., other mutual funds and pension accounts managed by G.R. Phelps; also responsible for managing the public fixed-income securities department at Connecticut Mutual Life Insurance Co. Mitchell J. Lindauer, Vice President None. Dan Loughran, Assistant Vice President: Rochester Division None. David Mabry, Assistant Vice President None. Steve Macchia, Vice President None. Bridget Macaskill, President, Chief Executive Officer and Director Chief Executive Officer (since September 1995); President and director (since June 1991) of HarbourView; Chairman and a director of SSI (since August 1994), and SFSI (September 1995); President (since September 1995) and a director (since October 1990) of OAC; President (since September 1995) and a director (since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of OFI; a director of ORAMI (since July 1996) ; President and a director (since October 1997) of OFIL, an offshore fund manager subsidiary of OFI and Oppenheimer Millennium Funds plc (since October 1997); President and a director of other Oppenheimer funds; a director of Hillsdown Holdings plc (a U.K. food company); formerly, an Executive Vice President of OFI. Philip T. Masterson, Vice President Loretta McCarthy, Executive Vice President None. Kelley A. McCarthy-Kane Assistant Vice President Formerly, Product Manager, Assistant Vice President (June 1995- October, 1997) of Merrill Lynch Pierce Fenner & Smith. Beth Michnowski, Assistant Vice President Formerly Senior Marketing Manager May, 1996 - June, 1997) and Director of Product Marketing (August, 1992 - May, 1996) with Fidelity Investments. Lisa Migan, Assistant Vice President None. Denis R. Molleur, Vice President None. Nikolaos Monoyios, Vice President A Vice President and/or portfolio manager of certain Oppenheimer funds (since April 1998); a Certified Financial Analyst; formerly, a Vice President and portfolio manager for Guardian Investor Services, the management subsidiary of The Guardian Life Insurance Company (since 1979). Linda Moore, Vice President Formerly, Marketing Manager (July 1995-November 1996) for Chase Investment Services Corp. Kenneth Nadler, Vice President None. David Negri, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Barbara Niederbrach, Assistant Vice President None. Robert A. Nowaczyk, Vice President None. Ray Olson, Assistant Vice President None. Richard M. O'Shaugnessy, Assistant Vice President: Rochester Division None. Gina M. Palmieri, Assistant Vice President None. Robert E. Patterson, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds. James Phillips Assistant Vice President None. Stephen Puckett, Vice President None. Jane Putnam, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Michael Quinn, Assistant Vice President Formerly, Assistant Vice President (April, 1995 - January, 1998) of Van Kampen American Capital. Julie Radtke, Vice President Russell Read, Senior Vice President Vice President of Oppenheimer Real Asset Management, Inc. (since March, 1995). Thomas Reedy, Vice President An officer and/or portfolio manager of certain Oppenheimer funds; formerly, a Securities Analyst for the Manager. John Reinhardt, Vice President: Rochester Division None Ruxandra Risko, Vice President None. Michael S. Rosen, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Richard H. Rubinstein, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Lawrence Rudnick, Assistant Vice President None. James Ruff, Executive Vice President & Director None. Valerie Sanders, Vice President None. Ellen Schoenfeld, Assistant Vice President None. Martha Shapiro, Assistant Vice President None Stephanie Seminara, Vice President None. Michelle Simone, Assistant Vice President None. Richard Soper, Vice President None. Cathleen Stahl, Vice President Donald W. Spiro, Chairman Emeritus and Director Vice Chairman and Trustee of the New York-based Oppenheimer Funds; formerly, Chairman of the Manager and the Distributor. Richard A. Stein, Vice President: Rochester Division Assistant Vice President (since 1995) of Rochester Capitol Advisors, L.P. Arthur Steinmetz, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Ralph Stellmacher, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds. John Stoma, Senior Vice President None. Michael C. Strathearn, Vice President An officer and/or portfolio manager of certain Oppenheimer funds; a Chartered Financial Analyst; a Vice President of HarbourView. Wayne Strauss, Assistant Vice President: Rochester Division James C. Swain, Vice Chairman of the Board Chairman, CEO and Trustee, Director or Managing Partner of the Denver-based Oppenheimer Funds; formerly, President and Director of OAMC, CAMC and Chairman of the Board of SSI. Anthony A. Tanner, Vice President: Rochester Division None. Jay Tracey, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. James Turner, Assistant Vice President None. Maureen VanNorstrand, Assistant Vice President None. Ashwin Vasan, Vice President An officer and/or portfolio manager of certain Oppenheimer funds. Annette Von Brandis, Assistant Vice President None. Teresa Ward, Assistant Vice President None. Jerry Webman, Senior Vice President Director of New York-based tax-exempt fixed income Oppenheimer funds. Christine Wells, Vice President None. Joseph Welsh, Assistant Vice President None. Kenneth B. White, Vice President An officer and/or portfolio manager of certain Oppenheimer funds; a Chartered Financial Analyst; Vice President of HarbourView. William L. Wilby, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds; Vice President of HarbourView. Brian Wixted Formerly Principal and Chief Operating Officer, Senior Vice President Bankers Trust Company. Carol Wolf, Vice President An officer and/or portfolio manager of certain Oppenheimer funds; Vice President of Centennial; Vice President, Finance and Accounting; Point of Contact: Finance Supporters of Children; Member of the Oncology Advisory Board of the Childrens Hospital. Caleb Wong, Assistant Vice President None. Robert G. Zack, Senior Vice President and Assistant Secretary, Associate General Counsel Assistant Secretary of SSI (since May 1985), SFSI (since November 1989), OFIL (since 1998), Oppenheimer Millennium Funds plc (since October 1997); an officer of other Oppenheimer funds. Jill Zachman, Assistant Vice President: Rochester Division None. Arthur J. Zimmer, Senior Vice President An officer and/or portfolio manager of certain Oppenheimer funds; Vice President of Centennial. The Oppenheimer Funds include the New York-based Oppenheimer Funds, the Denver-based Oppenheimer Funds and the Oppenheimer Quest /Rochester Funds, as set forth below: New York-based Oppenheimer Funds Oppenheimer California Municipal Fund Oppenheimer Capital Appreciation Fund Oppenheimer Developing Markets Fund Oppenheimer Discovery Fund Oppenheimer Enterprise Fund Oppenheimer Europe Fund Oppenheimer Global Fund Oppenheimer Global Growth & Income Fund Oppenheimer Gold & Special Minerals Fund Oppenheimer Growth Fund Oppenheimer International Growth Fund Oppenheimer International Small Company Fund Oppenheimer Large Cap Growth Fund Oppenheimer Money Market Fund, Inc. Oppenheimer Multi-Sector Income Trust Oppenheimer Multi-State Municipal Trust Oppenheimer Multiple Strategies Fund Oppenheimer Municipal Bond Fund Oppenheimer New York Municipal Fund Oppenheimer Series Fund, Inc. Oppenheimer U.S. Government Trust Oppenheimer World Bond Fund Quest/Rochester Funds Limited Term New York Municipal Fund Oppenheimer Convertible Securities Fund Oppenheimer MidCap Fund Oppenheimer Quest Capital Value Fund, Inc. Oppenheimer Quest For Value Funds Oppenheimer Quest Global Value Fund, Inc. Oppenheimer Quest Value Fund, Inc. Rochester Fund Municipals Denver-based Oppenheimer Funds Centennial America Fund, L.P. Centennial California Tax Exempt Trust Centennial Government Trust Centennial Money Market Trust Centennial New York Tax Exempt Trust Centennial Tax Exempt Trust Oppenheimer Cash Reserves Oppenheimer Champion Income Fund Oppenheimer Capital Income Fund Oppenheimer High Yield Fund Oppenheimer Integrity Funds Oppenheimer International Bond Fund Oppenheimer Limited-Term Government Fund Oppenheimer Main Street Funds, Inc. Oppenheimer Municipal Fund Oppenheimer Real Asset Fund Oppenheimer Strategic Income Fund Oppenheimer Total Return Fund, Inc. Oppenheimer Variable Account Funds Panorama Series Fund, Inc. The New York Tax-Exempt Income Fund, Inc. The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds, the Quest Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203. The address of the Denver-based Oppenheimer Funds, Shareholder Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services, Centennial Asset Management Corporation, Centennial Capital Corp., and Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood, Colorado 80112. The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New York 14625-2807. Item 27. Principal Underwriter (a) OppenheimerFunds Distributor, Inc. is the Distributor of the Registrant's Class 2 shares. It is also the Distributor of each of the other registered open-end investment companies for which OppenheimerFunds, Inc. is the investment adviser, as listed in Item 26(b) above (except Oppenheimer Multi-Sector Income Trust and Panorama Series Fund, Inc.) and for MassMutual Institutional Funds. (b) The directors and officers of the Registrant's principal underwriter are: Name & Principal Positions & Offices Positions & Offices Business Address with Underwriter with Registrant Jason Bach VicePresident None 31 Racquel Drive Marietta, GA 30364 Peter Beebe Vice President None 876 Foxdale Avenue Winnetka, IL 60093 Douglas S. Blankenship Vice President None 17011 Woodbank Spring, TX 77379 George C. Bowen(1) Vice President and Vice President and Treasurer Treasurer of the Oppenheimer funds. Peter W. Brennan Vice President None 1940 Cotswold Drive Orlando, FL 32825 Susan Burton(2) Vice President None Erin Cawley(2) Assistant Vice President None Robert Coli Vice President None 12 White Tail Lane Bedminster, NJ 07921 William Coughlin Vice President None 542 West Surf - #2N Chicago, IL 60657 Mary Crooks(1) Daniel Deckman Vice President None 12252 Rockledge Circle Boca Raton, FL 33428 Christopher DeSimone Vice President None 5105 Aldrich Avenue South Minneapolis, MN 55403 Joseph DiMauro Vice President None 244 McKinley Avenue Grosse Pointe Farms, MI 48236 Rhonda Dixon-Gunner(1) Assistant Vice President None Andrew John Donohue(2) Executive Vice Secretary of the President & Director Oppenheimer funds. And General Counsel John Donovan Vice President None 868 Washington Road Woodbury, CT 06798 Kenneth Dorris Vice President None 4104 Harlanwood Drive Fort Worth, TX 76109 Eric Edstrom(2) Vice President None Wendy H. Ehrlich Vice President None 4 Craig Street Jericho, NY 11753 Kent Elwell Vice President None 35 Crown Terrace Yardley, PA 19067 Todd Ermenio Vice President None 11011 South Darlington Tulsa, OK 74137 John Ewalt Vice President None 2301 Overview Dr. NE Tacoma, WA 98422 George Fahey Vice President None 412 Commons Way Doylestown, PA 18901 Eric Fallon Vice President None 10 Worth Circle Newton, MA 02158 Katherine P. Feld(2) Vice President None & Secretary Mark Ferro Vice President None 43 Market Street Breezy Point, NY 11697 Ronald H. Fielding(3) Vice President None John ("J") Fortuna(2) Vice President None Ronald R. Foster Senior Vice President None 11339 Avant Lane Cincinnati, OH 45249 Patricia Gadecki-Wells Vice President None 950 First St., S. Suite 204 Winter Haven, FL 33880 Luiggino Galleto Vice President None 10239 Rougemont Lane Charlotte, NC 28277 Michelle Gans Vice President None 8327 Kimball Drive Eden Prairie, MN 55347 L. Daniel Garrity Vice President None 2120 Brookhaven View, N.E. Atlanta, GA 30319 Mark Giles Vice President None 5506 Bryn Mawr Dallas, TX 75209 Ralph Grant(2) Vice President/National None Sales Manager Michael Guman Vice President None 3913 Pleasent Avenue Allentown, PA 18103 Allen Hamilton Vice President None 5 Giovanni Aliso Viejo, CA 92656 C. Webb Heidinger Vice President None 138 Gales Street Portsmouth, NH 03801 Byron Ingram(1) Assistant Vice President None Kathleen T. Ives(1) Vice President None Eric K. Johnson Vice President None 3665 Clay Street San Francisco, CA 94118 Mark D. Johnson Vice President None 409 Sundowner Ridge Court Wildwood, MO 63011 Elyse Jurman Vice President None 1194 Hillsboro Mile, #51 Hillsboro Beach, FL 33062 Michael Keogh(2) Vice President None Brian Kelly Vice President None 60 Larkspur Road Fairfield, CT 06430 John Kennedy Vice President None 799 Paine Drive Westchester, PA 19382 Richard Klein Vice President None 4820 Fremont Avenue So. Minneapolis, MN 55409 Daniel Krause Vice President None 560 Beacon Hill Drive Orange Village, OH 44022 Oren Lane Vice President None 5286 Timber Bend Drive Brighton, MI 48116 Todd Lawson Vice President None 3333 E. Bayaud Avenue Unit 714 Denver, CO 80209 Dawn Lind Vice President None 7 Maize Court Melville, NY 11747 James Loehle Vice President None 2714 Orchard Terrace Linden, NJ 07036 Steve Manns Vice President None 1941 W. Wolfram Street Chicago, IL 60657 Todd Marion Vice President None 39 Coleman Avenue Chatham, N.J. 07928 Marie Masters Vice President None 8384 Glen Eagle Drive Manlius, NY 13104 LuAnn Mascia(2) Assistant Vice President None Wesley Mayer(2) Vice President None Theresa-Marie Maynier Vice President None 2421 Charlotte Drive Charlotte, NC 28203 Anthony Mazzariello Vice President None 100 Anderson Street, #427 Pittsburgh, PA 15212 John McDonough Vice President None 3812 Leland Street Chevey Chase, MD 20815 Wayne Meyer Vice President None 2617 Sun Meadow Drive Chesterfield, MO 63005 Tanya Mrva(2) Assistant Vice President None Laura Mulhall(2) Senior Vice President None Charles Murray Vice President None 18 Spring Lake Drive Far Hills, NJ 07931 Wendy Murray Vice President None 32 Carolin Road Upper Montclair, NJ 07043 Denise-Marke Nakamura Vice President None 2870 White Ridge Place, #24 Thousand Oaks, CA 91362 Chad V. Noel Vice President None 2408 Eagleridge Dr. Henderson, NV 89014 Joseph Norton Vice President None 2518 Fillmore Street San Francisco, CA 94115 Kevin Parchinski Vice President None 8409 West 116th Terrace Overland Park, KS 66210 Gayle Pereira Vice President None 2707 Via Arboleda San Clemente, CA 92672 Charles K. Pettit Vice President None 22 Fall Meadow Dr. Pittsford, NY 14534 Bill Presutti Vice President None 130 E. 63rd Street, #10E New York, NY 10021 Steve Puckett Vice President None 5297 Soledad Mountain Road San Diego, CA 92109 Elaine Puleo(2) Senior Vice President None Minnie Ra Vice President None 100 Delores Street, #203 Carmel, CA 93923 Dustin Raring Vice President None 378 Elm Street Denver, CO 80220 Michael Raso Vice President None 16 N. Chatsworth Ave. Apt. 301 Larchmont, NY 10538 John C. Reinhardt(3) Vice President None Douglas Rentschler Vice President None 677 Middlesex Road Grosse Pointe Park, MI 48230 Ruxandra Risko(2) Vice President None Ian Robertson Vice President None 4204 Summit Wa Marietta, GA 30066 Michael S. Rosen(2) Vice President None Kenneth Rosenson Vice President None 3505 Malibu Country Drive Malibu, CA 90265 James Ruff(2) President None Alfredo Scalzo Vice President None 19401 Via Del Mar, #303 Tampa, FL 33647 Timothy Schoeffler Vice President None 1717 Fox Hall Road Washington, DC 77479 Michael Sciortino Vice President None 785 Beau Chene Drive Mandeville, LA 70471 Eric Sharp Vice President None 862 McNeill Circle Woodland, CA 95695 Michelle Simone(2) Assistant Vice President None Stuart Speckman(2) Vice President None Timothy Stegner Vice President None 794 Jackson Street Denver, CO 80206 Peter Sullivan Vice President None 21445 S. E 35th Street Issaquah, WA 98029 David Sturgis Vice President None 44 Abington Road Danvers, MA 0923 Scott Such(1) Senior Vice President None Brian Summe Vice President None 239 N. Colony Drive Edgewood, KY 41017 George Sweeney Vice President None 5 Smokehouse Lane Hummelstown, PA 17036 Andrew Sweeny Vice President None 5967 Bayberry Drive Cincinnati, OH 45242 Scott McGregor Tatum Vice President None 704 Inwood Southlake, TX 76092 David G. Thomas Vice President None 7009 Metropolitan Place, #300 Falls Church, VA 22043 Susan Torrisi(2) Assistant Vice President None Sarah Turpin Vice President None 2201 Wolf Street, #5202 Dallas, TX 75201 Mark Vandehey(1) Vice President None Andrea Walsh(1) Vice President None Suzanne Walters(1) Assistant Vice President None James Wiaduck Vice President None 29900 Meridian Place #22303 Farmington Hills, MI 48331 Marjorie Williams Vice President None 6930 East Ranch Road Cave Creek, AZ 85331 Donn Weise Vice President None 3249 Earlmar Drive Los Angeles, CA 90064 (1) 6803 South Tucson Way, Englewood, CO 80112 (2) Two World Trade Center, New York, NY 10048 (3) 350 Linden Oaks, Rochester, NY 14623 (c) Not applicable. Item 28. Location of Accounts and Records The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and rules promulgated thereunder are in the possession of OppenheimerFunds, Inc. at its offices at 6803 South Tucson Way, Englewood, Colorado 80112. Item 29. Management Services Not applicable Item 30. Undertakings Not applicable. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and/or the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) of the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of Arapahoe and State of Colorado on the 27th day of April, 1999. Oppenheimer Variable Account Funds By: /s/ James C. Swain* James C. Swain, Chairman Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the dates indicated: Signatures Title Date /s/ James C. Swain* Chairman of the April 27, 1999 - -------------------- Board of Trustees James C. Swain and Principal Executive Officer /s/ Brian W. Wixted* Treasurer April 27, 1999 - ------------------------------------- Brian W. Wixted /s/ Bridget A. Macaskill* President April 27, 1999 - ------------------------------------- Bridget A. Macaskill /s/ Robert G. Avis* Trustee April 27, 1999 - ------------------------------------- Robert G. Avis /s/ William A. Baker* Trustee April 27, 1999 - ------------------------------------- William A. Baker /s/ Charles Conrad, Jr.* Trustee April 27, 1999 - ------------------------------------- Charles Conrad, Jr. /s/ Jon S. Fossel* Trustee April 27, 1999 - ------------------------------------- Jon S. Fossel /s/ Sam Freedman* Trustee April 27, 1999 - ------------------------------------- Sam Freedman /s/ Raymond J. Kalinowski* Trustee April 27, 1999 - ------------------------------------- Raymond J. Kalinowski /s/ C. Howard Kast* Trustee April 27, 1999 - ------------------------------------- C. Howard Kast /s/ Robert M. Kirchner* Trustee April 27, 1999 - ------------------------------------- Robert M. Kirchner /s/ Ned M. Steel* Trustee April 27, 1999 - ------------------------------------- Ned M. Steel *By: /s/ Robert G. Zack - --------------------------------------------- Robert G. Zack, Attorney-in-Fact OPPENHEIMER VARIABLE ACCOUNT FUNDS EXHIBIT INDEX Exhibit No. Description - ------------ -------------- 23 (a) Ninth Restated Declaration of Trust dated 5/1/99 23 (b)(i) Oppenheimer Money Fund/VA specimen share certificate 23(b)(ii) Oppenheimer Bond Fund/VA specimen share certificate 23(b)(iii) Oppenheimer Capital Appreciation Fund/VA specimen share certificate 23(b)(iv) Oppenheimer High Income Fund/VA specimen share certificate 23(b)(v) Oppenheimer Aggressive Growth Fund/VA specimen share certificate 23(b)(vi) Oppenheimer Multiple Strategies Fund/VA specimen share certificate 23(b)(vii) Oppenheimer Global Securities Fund/VA specimen share certificate 23(b)(viii) Oppenheimer Strategic Bond Fund/VA specimen share certificate 23(b)(ix) Oppenheimer Main Street Growth & Income Fund/VA specimen share certificate 23(b)(x) Oppenheimer Small Cap Growth Fund/VA specimen share certificate 23(b)(xi) Oppenheimer Money Fund/VA Class 2 specimen share certificate 23(b)(xii) Oppenheimer Bond Fund/VA Class 2 specimen share certificate 23(b)(xiii) Oppenheimer Capital Appreciation Fund/VA Class 2 specimen share certificate 23(b)(xiv) Oppenheimer High Income Fund/VA Class 2 specimen share certificate 23(b)(xv) Oppenheimer Aggressive Growth Fund/VA Class 2 specimen share certificate 23(b)(xvi) Oppenheimer Multiple Strategies Fund/VA Class 2 specimen share certificate 23(b)(xvii) Oppenheimer Global Securities Fund/VA Class 2 specimen share certificate 23(b)(viii) Oppenheimer Strategic Bond Fund/VA Class 2 specimen share certificate 23(b)(xix) Oppenheimer Main Street Growth & Income Fund/VA Class 2 specimen share certificate 23(b)(xx) Oppenheimer Small Cap Growth Fund/VA Class 2 specimen share certificate 23(d)(v) Amended and Restated Investment Advisory Agreement for Oppenheimer Aggressive Growth Fund/VA dated 5/1/99 23(j) Independent Auditors' Consent 23(n) Financial Data Schedules - -- Power of Attorney of Brian W. Wixted EX-3 2 DECLARATION OF TRUST -1- NINTH RESTATED DECLARATION OF TRUST OF OPPENHEIMER VARIABLE ACCOUNT FUNDS NINTH RESTATED DECLARATION OF TRUST, made as of May 1, 1999 by and among the individuals executing this Ninth Restated Declaration of Trust as the initial Trustees. WHEREAS, (i) by Declaration of Trust dated August 28, 1984, the Trustees establish a Trust initially named Oppenheimer Variable Life Funds, a trust fund under the laws of the Commonwealth of Massachusetts, for the investment and reinvestment of funds contributed thereto, (ii) by the First Restated Declaration of Trust dated March 11, 1986, the Trustees amended and restated said Declaration of Trust to create two new Series of Shares, (iii) by the Second Restated Declaration of Trust dated August 15, 1986, the Trustees further amended and restated said Declaration of Trust to change the Trust's name to Oppenheimer Variable Account Funds and to make certain other changes, (iv) by the Third Restated Declaration of Trust dated October 21, 1986, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (v) by the Fourth Restated Declaration of Trust dated June 4, 1990, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (vi) by the Fifth Restated Declaration of Trust dated February 25, 1993, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (vii) by the Sixth Restated Declaration of Trust dated February 28, 1995, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (viii) by the Seventh Restated Declaration of Trust dated December 16, 1997, the Trustees amended and restated said Declaration of Trust to create two new Series of Shares and (ix) by the Eighth Restated Declaration of Trust dated May 1, 1998, the Trustees amended and restated said Declaration of Trust to create a class of Shares for each Series and to change the names of two Series; WHEREAS, the Trustees desire to amend such Declaration of Trust, as amended, without Shareholder approval pursuant to Section (B) of Article Fourth, (i) to add "/VA" as a suffix to the names of each Series, and (ii) to change the name of the Series previously designated as Oppenheimer Growth Fund and Oppenheimer Growth & Income Fund to "Oppenheimer Capital Appreciation Fund/VA" and "Oppenheimer Main Street Growth & Income Fund/VA", respectively. NOW, THEREFORE, the Trustees declare that all money and property held or delivered to the Trust Fund hereunder shall be held and managed under this Ninth Restated Declaration of Trust IN TRUST as herein set forth below. FIRST: This Trust shall be known as OPPENHEIMER VARIABLE ACCOUNT FUNDS. The address of Oppenheimer Variable Account Funds is 6803 South Tucson Way, Englewood, Colorado 80112. The Registered Agent for service is Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111, Attention: Legal Department. SECOND: Whenever used herein, unless otherwise required by the context or specifically provided: 1. All terms used in this Declaration of Trust which are defined in the 1940 Act (defined below) shall have the meanings given to them in the 1940 Act. 2. "Board" or "Board of Trustees" or the "Trustees" means the Board of Trustees of the Trust. 3. "By-Laws" means the By-Laws of the Trust as amended from time to time. 4. "Class" means a class of Shares of a Series the Trust established and designated under or in accordance with the provisions of ARTICLE FOURTH. 5. "Commission" means the Securities and Exchange Commission. 6. "Declaration of Trust" shall mean this Declaration of Trust as amended or restated from time to time. 7. The "1940 Act" refers to the Investment Company Act of 1940 and the Rules and Regulations of the Commission thereunder, all as amended from time to time. 8. "Series" refers to Series of Shares established and designated under or in accordance with the provisions of Article FOURTH. 9. "Shareholder" means a record owner of Shares of the Trust. 10. "Shares" refers to the transferable units of interest into which the beneficial interest in the Trust or any Series or Class of the Trust (as the context may require) shall be divided from time to time and includes fractions of Shares as well as whole Shares. 11. The "Trust" refers to the Massachusetts business trust created by this Declaration of Trust, as amended or restated from time to time. 12. "Trustees" refers to the individual trustees in their capacity as trustees hereunder of the Trust and their successor or successors in office as such trustees. THIRD: The purpose or purposes for which the Trust is formed and the business or objects to be transacted, carried on and promoted by it are as follows: 1. To hold, invest or reinvest its funds, and in connection therewith to hold part or all of its funds in cash, and to purchase or otherwise acquire, hold for investment or otherwise, sell, sell short, assign, negotiate, transfer, exchange or otherwise dispose of or turn to account or realize upon, securities (which term "securities" shall for the purposes of this Declaration of Trust, without limitation of the generality thereof, be deemed to include any stocks, shares, bonds, financial futures contracts, indexes, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase or subscribe for the same, or evidencing or representing any other rights or interests therein, or in any property or assets) created or issued by any issuer (which term "issuer" shall for the purposes of this Declaration of Trust, without limitation of the generality thereof be deemed to include any persons, firms, associations, corporations, syndicates, combinations, organizations, governments, or subdivisions thereof) and financial instruments (whether they are considered as securities or commodities); and to exercise, as owner or holder of any securities or financial instruments, all rights, powers and privileges in respect thereof; and to do any and all acts and things for the preservation, protection, improvement and enhancement in value of any or all such securities or financial instruments. 2. To borrow money and pledge assets in connection with any of the objects or purposes of the Trust, and to issue notes or other obligations evidencing such borrowings, to the extent permitted by the 1940 Act and by the Trust's fundamental investment policies under the 1940 Act. 3. To issue and sell its Shares in such Series and Classes and in such amounts and on such terms and conditions, for such purposes and for such amount or kind of consideration (including without limitation thereto, securities) now or hereafter permitted by the laws of the Commonwealth of Massachusetts and by this Declaration of Trust, as the Trustees may determine. 4. To purchase or otherwise acquire, hold, dispose of, resell, transfer, reissue or cancel its Shares, or to classify or reclassify any unissued Shares or any Shares previously issued and reacquired of any Series or Class into one or more Series or Classes that may have been established and designated from time to time, all without the vote or consent of the Shareholders of the Trust, in any manner and to the extent now or hereafter permitted by this Declaration of Trust. 5. To conduct its business in all its branches at one or more offices in Colorado and elsewhere in any part of the world, without restriction or limit as to extent. 6. To carry out all or any of the foregoing objects and purposes as principal or agent, and alone or with associates or to the extent now or hereafter permitted by the laws of Massachusetts, as a member of, or as the owner or holder of any stock of, or share of interest in, any issuer, and in connection therewith or make or enter into such deeds or contracts with any issuers and to do such acts and things and to exercise such powers, as a natural person could lawfully make, enter into, do or exercise. 7. To do any and all such further acts and things and to exercise any and all such further powers as may be necessary, incidental, relative, conducive, appropriate or desirable for the accomplishment, carrying out or attainment of all or any of the foregoing purposes or objects. The foregoing objects and purposes shall, except as otherwise expressly provided, be in no way limited or restricted by reference to, or inference from, the terms of any other clause of this or any other Article of this Declaration of Trust, and shall each be regarded as independent and construed as powers as well as objects and purposes, and the enumeration of specific purposes, objects and powers shall not be construed to limit or restrict in any manner the meaning of general terms or the general powers of the Trust now or hereafter conferred by the laws of the Commonwealth of Massachusetts nor shall the expression of one thing be deemed to exclude another, though it be of a similar or dissimilar nature, not expressed; provided, however, that the Trust shall not carry on any business, or exercise any powers, in any state, territory, district or country except to the extent that the same may lawfully be carried on or exercised under the laws thereof. FOURTH: (A) The beneficial interest in the Trust shall be divided into Shares, all without par value, but the Trustees shall have the authority from time to time, without obtaining Shareholder approval, to create one or more Series of Shares in addition to the Series specifically established and designated in part (B) of this Article FOURTH, and to divide the Shares of any Series into two or more Classes pursuant to part (B) of this Article FOURTH, all as they deem necessary or desirable, to establish and designate such Series and Classes, and to fix and determine the relative rights and preferences as between the shares of the different Series or Classes as to right of redemption and the price, terms and manner of redemption, liabilities and expenses to be borne by any Series or Class, special and relative rights as to dividends and other distributions and on liquidation, sinking or purchase fund provisions, conversion on liquidation, conversion rights, and conditions under which the several Series and Classes shall have individual voting rights or no voting rights. Except as aforesaid, all Shares of the different Series and Classes shall be identical. The number of authorized Shares and the number of Shares of each Series and each Class that may be issued is unlimited, and the Trustees may issue Shares of any Series or Class for such consideration and on such terms as they may determine (or for no consideration if pursuant to a Share dividend or split-up), all without action or approval of the Shareholders. All Shares when so issued on the terms determined by the Trustees shall be fully paid and non-assessable. The Trustees may classify or reclassify any unissued Shares or any Shares previously issued and reacquired of any Series or Class into one or more Series or Class that may be established and designated from time to time. The Trustees may hold as treasury Shares (of the same or some other Series or Class), reissue for such consideration and on such terms as they may determine, or cancel, at their discretion from time to time, any Shares of any Series or Class reacquired by the Trust. The establishment and designation of any Series or any Class of Shares in addition to that established and designated in part (B) of this Article FOURTH shall be effective upon the execution by a majority of the Trustees of an instrument setting forth such establishment and designation and the relative rights and preferences of such Series or such Class of such Series, or as otherwise provided in such instrument. At any time that there are no Shares outstanding of any particular Series or Class previously established and designated, the Trustees may by an instrument executed by a majority of their number abolish that Series or Class and the establishment and designation thereof. Each instrument referred to in this paragraph shall be an amendment to this Declaration of Trust, and may be made by the Trustees without Shareholder approval. Any Trustee, officer or other agent of the Trust, and any organization in which any such person is interested may acquire, own, hold and dispose of Shares of any Series or Class of any Series of the Trust to the same extent as if such person were not a Trustee, officer or other agent of the Trust; and the Trust may issue and sell or cause to be issued and sold and may purchase Shares of any Series or Class of any Series from any such person or any such organization subject only to the general limitations, restrictions or other provisions applicable to the sale or purchase of Shares of such Series or Class generally. Expenses related directly or indirectly to the Shares of a Class of a Series may be borne solely by such Class (as shall be determined by the Trustees) and, as provided in Article FIFTH, a Class of a Series may have exclusive voting rights with respect to matters relating solely to such Class. The bearing of expenses solely by a Class of Shares of a Series shall be appropriately reflected (in the manner determined by the Trustees) in the net asset value, dividend and liquidation rights of the Shares of such Class of a Series. The division of the Shares of a Series into Classes and the terms and conditions pursuant to which such Shares will be issued must be made in compliance with the 1940 Act. No division of Shares of a Series into Classes shall result in the creation of a Class of Shares having a preference as to dividends or distributions or a preference in the event of any liquidation, termination or winding up of the Trust, to the extent such a preference is prohibited by Section 18 of the 1940 Act as to the Trust. The relative rights and preferences of Shares of different Classes of Shares of the same Series shall be the same in all respects except that, and unless and until the Board of Trustees shall determine otherwise: (i) when a vote of Shareholders is required under this Declaration of Trust or when a meeting of Shareholders is called by the Board of Trustees, the Shares of a Class shall vote exclusively on matters that affect that Class only; (ii) the liability and expenses related to a Class shall be borne solely by such Class (as determined and allocated to such Class by the Trustees from time to time in a manner consistent with parts (A) and (B) of Article FOURTH); and (iii) pursuant to paragraph 10 of Article NINTH, the Shares of each Class shall have such other rights and preferences as are set forth from time to time in the then effective prospectus and/or statement of additional information relating to such Shares. Dividends and distributions on Shares of different Classes of the same Series may differ and the net asset values of Shares of different Classes of the same Series may differ. The Trustees shall have the authority from time to time, without obtaining Shareholder approval, to divide the unissued Shares of any Series into two or more Classes as they deem necessary or desirable, and to establish and designate such classes. In such event, each Class of a Series shall represent interests in the designated Series of the Trust and have such voting, dividend, liquidation and other rights as may be established and designated by the Trustees. (B) Without limiting the authority of the Trustees set forth in part (A) of this Article FOURTH to establish and designate any further such Classes or Series, the Trustees hereby establish and designate ten Series of Shares: "Oppenheimer Money Fund/VA," "Oppenheimer Bond Fund/VA" and "Oppenheimer Capital Appreciation Fund/VA (formerly "Oppenheimer Growth Fund") established by the Declaration of Trust dated August 28, 1984 and renamed by this Ninth Restated Declaration of Trust dated May 1, 1999; "Oppenheimer High Income Fund/VA" and "Oppenheimer Aggressive Growth Fund/VA" (formerly "Oppenheimer Capital Appreciation Fund") established by the First Restated Declaration of Trust dated March 11, 1986 and renamed by this Eighth Restated Declaration of Trust dated May 1, 1998; "Oppenheimer Multiple Strategies Fund/VA," established by the Third Restated Declaration of Trust dated October 21, 1986; "Oppenheimer Global Securities Fund/VA" established by the Fourth Restated Declaration of Trust dated June 4, 1990; "Oppenheimer Strategic Bond Fund/VA" established by the Fifth Restated Declaration of Trust dated February 25, 1993; "Oppenheimer Main Street Growth & Income Fund/VA" (formerly "Oppenheimer Growth & Income Fund") established by the Sixth Restated Declaration of Trust dated February 28, 1995 and renamed by this Ninth Restated Declaration of Trust dated May 1, 1999; and "Oppenheimer Small Cap Growth Fund/VA" (formerly "Oppenheimer Discovery Fund") established by the Seventh Restated Declaration of Trust dated December 16, 1997 and renamed by this Eighth Restated Declaration of Trust dated May 1, 1998. The Shares of Oppenheimer Money Fund/VA, Oppenheimer High Income Fund/VA, Oppenheimer Bond Fund/VA, Oppenheimer Global Securities Fund/VA, Oppenheimer Aggressive Growth Fund/VA, Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Multiple Strategies Fund/VA, Oppenheimer Strategic Bond Fund/VA, Oppenheimer Main Street Growth & Income Fund/VA and Oppenheimer Small Cap Growth Fund/VA are hereby divided into two Classes, as follows: (i) the Shares of the Class of each Series outstanding since the inception of that Series have no numerical class designation; and (ii) the Shares of the Class initially issued upon the division of the Shares of each Series into two Classes pursuant to this Eighth Restated Declaration of Trust are hereby numerically designated Class 2 Shares. The Shares of these Series and any Shares of any further Series or Classes that may from time to time be established and designated by the Trustees shall (unless the Trustees otherwise determine with respect to some further Series or Classes at the time of establishing and designating the same) have the following relative rights and preferences: (i) Assets Belonging to Series. All consideration received by the Trust for the issue or sale of Shares of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to that Series for all purposes, subject only to the rights of creditors, and shall be so recorded upon the books of account of the Trust. Such consideration, assets, income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds, in whatever form the same may be, together with any General Items allocated to that Series as provided in the following sentence, are herein referred to as "assets belonging to" that Series. In the event that there are any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular Series (collectively "General Items"), the Trustees shall allocate such General Items to and among any one or more of the Series established and designated from time to time in such manner and on such basis as they, in their sole discretion, deem fair and equitable; and any General Items so allocated to a particular Series shall belong to that Series. Each such allocation by the Trustees shall be conclusive and binding upon the shareholders of all Series for all purposes. (ii) Liabilities Belonging to Series. The assets belonging to each particular Series shall be charged with the liabilities of the Trust in respect of that Series and all expenses, costs, charges and reserves attributable to that Series, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular Series shall be allocated and charged by the Trustees to and among any one or more of the Series established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The liabilities, expenses, costs, charges and reserves allocated and so charged to a Series are herein referred to as "liabilities belonging to" that Series. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the holders of all Series for all purposes. (iii) Liabilities Belonging to a Class. If a Series is divided into more than one Class, the liabilities, expenses, costs, charges and reserves attributable to a Class shall be charged and allocated to the Class to which such liabilities, expenses, costs, charges or reserves are attributable. Any general liabilities, expenses, costs, charges or reserves belonging to the Series which are not identifiable as belonging to any particular Class shall be allocated and charged by the Trustees to and among any one or more of the Classes established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The allocations in the two preceding sentences shall be subject to the 1940 Act or any release, rule, regulation, interpretation or order thereunder, relating to such allocations. The liabilities, expenses, costs, charges and reserves allocated and so charged to each Class are herein referred to as "liabilities belonging to" that Class. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the holders of all Classes for all purposes. (iv) Dividends. Dividends and distributions on Shares of a particular Series or Class may be paid to the holders of Shares of that Series or Class, with such frequency as the Trustees may determine, which may be daily or otherwise pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine, from such of the income, and capital gains accrued or realized, from the assets belonging to that Series, as the Trustees may determine, after providing for actual and accrued liabilities belonging to that Series or Class. All dividends and distributions on Shares of a particular Series or Class shall be distributed pro rata to the holders of that Series or Class in proportion to the number of Shares of that Series or Class held by such holders at the date and time of record established for the payment of such dividends or distributions, except that in connection with any dividend or distribution program or procedure the Trustees may determine that no dividend or distribution shall be payable on Shares as to which the Shareholder's purchase order and/or payment have not been received by the time or times established by the Trustees under such program or procedure. Such dividends and distributions may be made in cash or Shares or a combination thereof as determined by the Trustees or pursuant to any program that the Trustees may have in effect at the time for the election by each Shareholder of the mode of the making of such dividend or distribution to that Shareholder. Any such dividend or distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with paragraph 13 of Article SEVENTH. (v) Liquidation. In the event of the liquidation or dissolution of the Trust, the Shareholders of each Series and Classes that have been established and designated shall be entitled to receive, as a Series or Class, when and as declared by the Trustees, the excess of the assets belonging to that Series over the liabilities belonging to that Series. The assets so distributable to the Shareholders of any particular Class and Series shall be distributed among such Shareholders in proportion to the number of Shares of such Class of that Series held by them and recorded on the books of the Trust. (vi) Transfer. All Shares of each particular Series or Class shall be transferable, but transfers of Shares of a particular Class and Series will be recorded on the Share transfer records of the Trust applicable to that Series or Class only at such times as Shareholders shall have the right to require the Trust to redeem Shares of that Series or Class and at such other times as may be permitted by the Trustees. (vii) Equality. All Shares of each particular Series shall represent an equal proportionate interest in the assets belonging to that Series (subject to the liabilities belonging to that Series or any Class of that Series), and each Share of any particular Series shall be equal to each other Share of that Series (Shares of each Class of a Series shall be equal to each other Share of such Class); but the provisions of this sentence shall not restrict any distinctions permissible under this Article FOURTH that may exist with respect to Shares of a Series or the different Classes of a Series. The Trustees may from time to time divide or combine the Shares of any particular Series or Class of a Series into a greater or lesser number of Shares of that Series or Class of a Series without thereby changing the proportionate beneficial interest in the assets belonging to that Class or Series or in any way affecting the rights of Shares of any other Class or Series. (viii)Fractions. Any fractional Share of any Series or Class, if any such fractional Share is outstanding, shall carry proportionately all the rights and obligations of a whole Share of that Series or Class, including those rights and obligations with respect to voting, receipt of dividends and distributions, redemption of Shares, and liquidation of the Trust. (ix) Conversion Rights. Subject to compliance with the requirements of the 1940 Act, the Trustees shall have the authority to provide (i) whether holders of Shares of any Series shall have the right to exchange said Shares into Shares of one or more other Series of Shares (ii) whether holders of Shares of any Class of a Series shall have the right to exchange said Shares into Shares of one or more other Classes of the same or a different Series, and/or (iii) that the Trust shall have the right to carry out the aforesaid exchanges, in each case in accordance with such requirements and procedures as may be established by the Trustees. (x) Ownership of Shares. The ownership of Shares shall be recorded on the books of the Trust or of a transfer or similar agent for the Trust, which books shall be maintained separately for the Shares of each Class and Series that has been established and designated. No certification certifying the ownership of Shares need be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the use of facsimile signatures, the transfer of Shares and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to who are the Shareholders and as to the number of Shares of each Class and Series held from time to time by each such Shareholder. (xi) Investments in the Trust. The Trustees may accept investments in the Trust from such persons and on such terms and for such consideration, not inconsistent with the provisions of the 1940 Act, as they from time to time authorize. The Trustees may authorize any distributor, principal underwriter, custodian, transfer agent or other person to accept orders for the purchase or sale of Shares that conform to such authorized terms and to reject any purchase or sale orders for Shares whether or not conforming to such authorized terms. (C) The Trustees hereby terminate the Series of Shares, "Oppenheimer Real Asset Fund," that was established by the Seventh Restated Declaration of Trust dated December 16, 1997, for which no shares were ever issued. FIFTH: The following provisions are hereby adopted with respect to voting Shares of the Trust and certain other rights: 1. The Shareholders shall have the power to vote (i) for the election of Trustees, when that issue is submitted to them, (ii) with respect to the amendment of this Declaration of Trust, except when the Trustees are granted authority to amend the Declaration of Trust without Shareholder approval, (iii) to the same extent as the shareholders of a Massachusetts business corporation, as to whether or not a court action, proceeding or claim should be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (iv) with respect to such additional matters relating to the Trust as may be required by the 1940 Act or required by law, by this Declaration of Trust, or the By-Laws of the Trust or any registration statement of the Trust with the Commission or any State, or as the Trustees may consider desirable. 2. The Trust will not hold Shareholder meetings of Shareholders unless required to do so by the 1940 Act, the provisions of this Declaration of Trust or other applicable law, or unless such meeting is expressly authorized by the Trustees. 3. At all meetings of Shareholders, each Shareholder shall be entitled to one vote on each matter submitted to a vote of the Shareholders of the affected Series (as defined in Rule 18f-2 or its successor under the 1940 Act) for each Share standing in his name on the books of the Trust on the date, fixed in accordance with the By-Laws, for determination of Shareholders of the affected Series entitled to vote at such meeting (except, if the Board so determines, for Shares redeemed prior to the meeting), and each such Series shall vote as an individual class ("Individual Class Voting"); provided, however, that as to any matter with respect to which a vote of all Shareholders is required by the 1940 Act or other applicable law, such requirements as to a vote by all Shareholders shall apply in lieu of Individual Class Voting as described above. If the Shares of a Series are divided into Classes as provided in Article Fourth, the Shares of each Class shall have identical voting rights except that the Trustees, in their discretion, may provide a Class of a Series with exclusive voting rights with respect to matters which relate solely to such Classes. If the Shares of any Series shall be divided into Classes with a Class having exclusive voting rights with respect to certain matters, the quorum and voting requirements described below with respect to action to be taken by the Shareholders of the Class of such Series on such matters shall be applicable only to the Shares of such Class. Any fractional Share shall carry proportionately all the rights of a whole Share, including the right to vote and the right to receive dividends. The presence of a quorum at any meeting of the Shareholders shall be determined in the manner provided for in the By-Laws. If at any meeting of the Shareholders there shall be less than a quorum present, the Shareholders present at such meeting may, without further notice, adjourn the same from time to time until a quorum shall attend, but no business shall be transacted at any such adjourned meeting except such as might have been lawfully transacted had the meeting not been adjourned. 4. Each Shareholder, upon request to the Trust in proper form determined by the Trust, shall be entitled to require the Trust to redeem from the net assets of that Series all or part of the Shares of such Series or Class standing in the name of such Shareholder. The method of computing such net asset value, the time at which such net asset value shall be computed and the time within which the Trust shall make payment therefor, shall be determined as hereinafter provided in Article SEVENTH of this Declaration of Trust. Notwithstanding the foregoing, the Trustees, when permitted or required to do so by the 1940 Act, may suspend the right of the Shareholders to require the Trust to redeem Shares. 5. No Shareholder shall, as such holder, have any right to purchase or subscribe for any security of the Trust which it may issue or sell, other than such right, if any, as the Trustees, in their discretion, may determine. 6. All persons who shall acquire Shares shall acquire the same subject to the provisions of the Declaration of Trust. 7. Cumulative voting for the election of Trustees shall not be allowed. SIXTH: (A) The persons who shall act as initial Trustees until the first meeting or until their successors are duly chosen and qualify are the initial trustees who executed the Declaration of Trust as of August 28, 1984. However, the By-Laws of the Trust may fix the number of Trustees at a number greater than that of the number of initial Trustees and may authorize the Trustees to increase or decrease the number of Trustees, to fill the vacancies on the Board which may occur for any reason, including any vacancies created by any such increase in the number of Trustees, to set and alter the terms of office of the Trustees and to lengthen or lessen their own terms of office or make their terms of office of indefinite duration, all subject to the 1940 Act. Unless otherwise provided by the By-Laws of the Trust, the Trustees need not be Shareholders. (B) A Trustee at any time may be removed either with or without cause by resolution duly adopted by the affirmative vote of the holders of two-thirds of the outstanding Shares, present in person or by proxy at any meeting of Shareholders called for such purpose; such a meeting shall be called by the Trustees when requested in writing to do so by the record holders of not less than ten per cent of the outstanding Shares. A Trustee may also be removed by the Board of Trustees as provided in the By-Laws of the Trust. (C) The Trustees shall make available a list of names and addresses of all Shareholders as recorded on the books of the Trust, upon receipt of the request, in writing signed by not less than ten Shareholders who have been such for at least six months holding in the aggregate shares of the Trust valued at not less than $25,000 at current offering price (as defined in the Trust's Prospectus and/or Statement of Additional Information) or holding not less than 1% in amount of the entire amount of Shares issued and outstanding; such request must state that such Shareholders wish to communicate with other shareholders with a view to obtaining signatures to a request for a meeting to take action pursuant to part (B) of this Article SIXTH and be accompanied by a form of communication to the Shareholders. The Trustees may, in their discretion, satisfy their obligation under this part (C) by either making available the Shareholder list to such Shareholders at the principal offices of the Trust, or at the offices of the Trust's transfer agent, during regular business hours, or by mailing a copy of such communication and form of request, at the expense of such requesting Shareholders, to all other Shareholders and the Trustees may also take such action as may be permitted under Section 16(c) of the 1940 Act. (D) The Trust may at any time or from time to time apply to the Commission for one or more exemptions from all or part of said Section 16(c) and, if an exemptive order or orders are issued by the Commission, such order or orders shall be deemed part of Section 16(c) for the purposes of parts (B) and (C) of this Article SIXTH. SEVENTH: The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the Trust, the Trustees and the Shareholders. 1. As soon as any Trustee is duly elected by the Shareholders or the Trustees and shall have accepted this Trust, the Trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance, and he shall be deemed a Trustee hereunder. 2. The death, declination, resignation, retirement, removal, or incapacity of the Trustees, or any one of them shall not operate to annul or terminate the Trust; in such event the Trust shall continue in full force and effect pursuant to the terms of this Declaration of Trust. 3. The assets of the Trust shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. All of the assets of the Trust shall at all times be considered as vested in the Trustees. No Shareholder shall have, as such holder of beneficial interest in the Trust, any authority, power or right whatsoever to transact business for or on behalf of the Trust, or on behalf of the Trustees, in connection with the property or assets of the Trust, or in any part thereof, except the rights to receive the income and distributable amounts arising therefrom and of a particular Series or Class as set forth herein. 4. The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute, and to authorize the officers of the Trust to make and execute, any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust. The Trustees shall not in any way be bound or limited by present or future laws or customs in regard to Trust investments, but shall have full authority and power to make any and all investments which they, in their uncontrolled discretion, shall deem proper to accomplish the purpose of this Trust. Subject to any applicable limitation in this Declaration of Trust or by the By-Laws of the Trust, the Trustees shall have power and authority: (a) to adopt By-Laws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust and to amend and repeal them to the extent that they do not reserve that right to the Shareholders; (b) to elect and remove such officers and appoint and terminate such officers as they consider appropriate with or without cause, and (c) to employ a bank or trust company as custodian of any assets of the Trust subject to any conditions set forth in this Declaration of Trust or in the By-Laws; (d) to retain a transfer agent and shareholder servicing agent, or both; (e) to provide for the distribution of Shares either through a principal underwriter or the Trust itself or both; (f) to set record dates in the manner provided for in the By-Laws; (g) to delegate such authority as they consider desirable to any officers of the Trust and to any agent, custodian or underwriter; (h) to vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property held in Trust hereunder; and to execute and deliver powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper; (i) to exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities held in trust hereunder; (j) to hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or either in its own name or in the name of a custodian or a nominee or nominees, subject in either case to proper safeguards according to the usual practice of Massachusetts business trusts or investment companies; (k) to consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is held in the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security held in the Trust; (l) to compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes; (m) to make, in the manner provided in the By-Laws, distributions of income and of capital gains to Shareholders; (n) to borrow money to the extent and in the manner permitted by the 1940 Act and the Trust's fundamental policy thereunder as to borrowing; (o) to enter into investment advisory or management contracts, subject to the 1940 Act, with any one or more corporations, partnerships, trusts, associations or other persons; if the other party or parties to any such contract are authorized to enter into securities transactions on behalf of the Trust, such transactions shall be deemed to have been authorized by all of the Trustees; (p) to change the name of the Trust or any Class or Series, without Shareholder approval, as they consider appropriate; and (q) to establish fees and/or compensation, for the Trustees and for committees of the Board of Trustees, to be paid by the Trust or any Series thereof in such manner and amount as the Trustees may determine. 5. No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order. 6. (a) The Trustees shall have no power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever, and the liability of a Shareholder for the acts, omissions to act or obligations of the Trust is hereby expressly disclaimed, other than such as the Shareholder may at any time personally agree to pay by way of subscription to any Shares or otherwise. Every note, bond, contract or other undertaking issued by or on behalf of the Trust or the Trustees relating to the Trust shall include a notice and provision limiting the obligation represented thereby to the Trust and its assets (but the omission of such notice and provision shall not operate to impose any liability or obligation on any Shareholder). (b) Whenever this Declaration of Trust calls for or permits any action to be taken by the Trustees hereunder, such action shall mean that taken by the Board of Trustees by vote of the majority of a quorum of Trustees as set forth from time to time in the By-Laws of the Trust or as required by the 1940 Act. (c) The Trustees shall possess and exercise any and all such additional powers as are reasonably implied from the powers herein contained such as may be necessary or convenient in the conduct of any business or enterprise of the Trust, to do and perform anything necessary, suitable, or proper for the accomplishment of any of the purposes, or the attainment of any one or more of the objects, herein enumerated, or which shall at any time appear conducive to or expedient for the protection or benefit of the Trust, and to do and perform all other acts and things necessary or incidental to the purposes herein before set forth, or that may be deemed necessary by the Trustees. (d) The Trustees shall have the power, to the extent not inconsistent with the 1940 Act, to determine conclusively whether any moneys, securities, or other properties of the Trust are, for the purposes of this Trust, to be considered as capital or income and in what manner any expenses or disbursements are to be borne as between capital and income whether or not in the absence of this provision such moneys, securities, or other properties would be regarded as capital or income and whether or not in the absence of this provision such expenses or disbursements would ordinarily be charged to capital or to income. 7. The By-Laws of the Trust may divide the Trustees into classes and prescribe the tenure of office of the several classes, but no class shall be elected for a period shorter than that from the time of the election following the division into classes until the next meeting at which Trustees are elected and thereafter for a period shorter than the interval between meetings or for a period longer than five years, and the term of office of at least one class shall expire each year. 8. The Shareholders shall have the right to inspect the records, documents, accounts and books of the Trust, subject to reasonable regulations of the Trustees, not contrary to Massachusetts law, as to whether and to what extent, and at what times and places, and under what conditions and regulations, such right shall be exercised. 9. Any officer elected or appointed by the Shareholders may be removed at any time, with or without cause, in such lawful manner as may be provided in the By-Laws of the Trust. 10. If the By-Laws so provide, the Trustees, and any committee thereof shall have power to hold their meetings, to have an office or offices and, subject to the provisions of the laws of Massachusetts, to keep the books of the Trust outside of said Commonwealth at such places as may from time to time be designated by them, and to take action without a meeting by unanimous written consent or by telephone or similar method of communication. 11. Securities held by the Trust shall be voted in person or by proxy by the President or a Vice President, or such officer or officers of the Trust as the Trustees shall designate for the purpose, or by a proxy or proxies thereunto duly authorized by the Trustees, except as otherwise ordered by vote of the holders of a majority of the Shares outstanding and entitled to vote in respect thereto. 12. (a) Subject to the provisions of the 1940 Act, any Trustee, officer or employee, individually, or any partnership of which any Trustee, officer or employee may be a member, or any corporation or association of which any Trustee, officer or employee may be an officer, director, trustee, employee or stockholder, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Trust, and in the absence of fraud no contract or other transaction shall be thereby affected or invalidated; provided that when a Trustee, or a partnership, corporation or association of which a Trustee is a member, officer, director, trustee, employee or stockholder is so interested, such fact shall be disclosed or shall have been known to the Trustees, including those Trustees who are neither "interested" nor "affiliated" persons as those terms are defined in the 1940 Act, or a majority thereof; and any Trustee who is so interested, or who is also a director, officer, trustee, employee or stockholder of such other corporation or a member of such partnership which is so interested, may be counted in determining the existence of a quorum at any meeting of the Trustees which shall authorize any such contract or transaction, and may vote thereat to authorize any such contract or transaction, with like force and effect as if he were not such director, officer, trustee, employee or stockholder of such other trust or corporation or association or a member of a partnership so interested. (b) Specifically, but without limitation of the foregoing, the Trust may enter into a management or investment advisory contract or underwriting contract and other contracts with, and may otherwise do business with any manager or investment adviser for the Trust and/or principal underwriter of the Shares of the Trust or any subsidiary or affiliate of any such manager or investment adviser and/or principal underwriter and may permit any such firm or corporation to enter into any contracts or other arrangements with any other firm or corporation relating to the Trust notwithstanding that the Trustee of the Trust may be composed in part of partners, directors, officers or employees of any such firm or corporation, and officers of the Trust may have been or may be or become partners, directors, officers or employees of any such firm or corporation, and in the absence of fraud the Trust and any such firm or corporation may deal freely with each other, and no such contract or transaction between the Trust and any such firm or corporation shall be invalidated or in any way affected thereby, nor shall any Trustee or officer of the Trust be liable to the Trust or to any Shareholder or creditor thereof or to any other person for any loss incurred by it or him solely because of the existence of any such contract or transaction; provided that nothing herein shall protect any director or officer of the Trust against any liability to the trust or to its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. (c) (1) As used in this paragraph the following terms shall have the meanings set forth below: (i) the term "indemnitee" shall mean any present or former Trustee, officer or employee of the Trust, any present or former Trustee, or officer of another trust or corporation whose securities are or were owned by the Trust or of which the Trust is or was a creditor and who served or serves in such capacity at the request of the Trust, any present or former investment adviser or principal underwriter of the Trust and the heirs, executors, administrators, successors and assigns of any of the foregoing; however, whenever conduct by an indemnitee is referred to, the conduct shall be that of the original indemnitee rather than that of the heir, executor, administrator, successor or assignee; (ii) the term "covered proceeding" shall mean any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to which an indemnitee is or was a party or is threatened to be made a party by reason of the fact or facts under which he or it is an indemnitee as defined above; (iii)the term "disabling conduct" shall mean willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office in question; (iv) the term "covered expenses" shall mean expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by an indemnitee in connection with a covered proceeding; and (v) the term "adjudication of liability" shall mean, as to any covered proceeding and as to any indemnitee, an adverse determination as to the indemnitee whether by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent. (d) The Trust shall not indemnify any indemnitee for any covered expenses in any covered proceeding if there has been an adjudication of liability against such indemnitee expressly based on a finding of disabling conduct. (e) Except as set forth in paragraph (d) above, the Trust shall indemnify any indemnitee for covered expenses in any covered proceeding, whether or not there is an adjudication of liability as to such indemnitee, if a determination has been made that the indemnitee was not liable by reason of disabling conduct by (i) a final decision on the merits of the court or other body before which the covered proceeding was brought; or (ii) in the absence of such decision, a reasonable determination, based on a review of the facts, by either (a) the vote of a majority of a quorum of Trustees who are neither "interested persons," as defined in the 1940 Act nor parties to the covered proceedings, or (b) an independent legal counsel in a written opinion; provided that such Trustees or counsel, in reaching such determination, may but need not presume the absence of disabling conduct on the part of the indemnitee by reason of the manner in which the covered proceeding was terminated. (f) Covered expenses incurred by an indemnitee in connection with a covered proceeding shall be advanced by the Trust to an indemnitee prior to the final disposition of a covered proceeding upon the request of the indemnitee for such advance and the undertaking by or on behalf of the indemnitee to repay the advance unless it is ultimately determined that the indemnitee is entitled to indemnification thereunder, but only if one or more of the following is the case: (i) the indemnitee shall provide a security for such undertaking; (ii) the Trust shall be insured against losses arising out of any lawful advances; or (iii) there shall have been a determination, based on a review of the readily available facts (as opposed to a full trial-type inquiry) that there is a reason to believe that the indemnitee ultimately will be found entitled to indemnification, by either independent legal counsel in a written opinion or by the vote of a majority of a quorum of trustees who are neither "interested persons" as defined in the 1940 Act nor parties to the covered proceeding. (g) Nothing herein shall be deemed to affect the right of the Trust and/or any indemnitee to acquire and pay for any insurance covering any or all indemnitees to the extent permitted by the 1940 Act or to affect any other indemnification rights to which any indemnitee may be entitled to the extent permitted by the 1940 Act. 13. For purposes of the computation of net asset value, as in this Declaration of Trust referred to, the following rules shall apply: (a) The net asset value per Share of any Series or Class, as of the time of valuation on any day, shall be the quotient obtained by dividing the value, as at such time, of the net assets belonging to that Series or with respect to a Class (i.e., the value of the assets of that Series or Class less its liabilities exclusive of its surplus) by the total number of Shares of that Series or Class outstanding at such time. The assets and liabilities of any Series shall be determined in accordance with generally accepted accounting principles; provided, however, that in determining the liabilities belonging to any Series or Class there shall be included such reserves as may be authorized or approved by the Trustees, and provided further that in connection with the accrual of any fee or refund payable to or by an investment adviser of the Trust for such Series, the amount of which accrual is not definitely determinable as of any time at which the net asset value of each Share of that Series is being determined due to the contingent nature of such fee or refund, the Trustees are authorized to establish from time to time formulae for such accrual, on the basis of the contingencies in question to the date of such determination, or on such other basis as the Trustees may establish. (1) Shares of a Series to be issued shall be deemed to be outstanding as of the time of the determination of the net asset value per Share applicable to such issuance and the net price thereof shall be deemed to be an asset of that Series; (2) Shares of a Series to be redeemed by the Trust shall be deemed to be outstanding until the time of the determination of the net asset value applicable to such redemption and thereupon and until paid the redemption price thereof shall be deemed to be a liability of that Series; and (3) Shares of a Series voluntarily purchased or contracted to be purchased by the Trust pursuant to the provisions of paragraph 4 of Article FIFTH shall be deemed to be outstanding until whichever is the later of (i) the time of the making of such purchase or contract of purchase, and (ii) the time of which the purchase price is determined, and thereupon and until paid, the purchase price thereof shall be deemed to be a liability of that Series. (b) The Trustees are empowered, in their absolute discretion, to establish bases or times, or both, for determining the net asset value per Share of any Class and Series in accordance with the 1940 Act and to authorize the voluntary purchase by any Class and Series, either directly or through an agent, of Shares of any Class and Series upon such terms and conditions and for such consideration as the Trustees shall deem advisable in accordance with the 1940 Act. 14. Payment of the net asset value per Share of any Class and Series properly surrendered to it for redemption shall be made by the Trust within seven days after tender of such Shares to the Trust for such purpose plus any period of time during which the right of the holders of the Shares of such Class of that Series to require the Trust to redeem such Shares has been suspended, or as specified in any applicable law or regulation. Any such payment may be made in portfolio securities of that Series and/or in cash, as the Trustees shall deem advisable, and no Shareholder shall have a right, other than as determined by the Trustees, to have his Shares redeemed in kind. 15. The Trust shall have the right, at any time and without prior notice to the Shareholder, to redeem Shares of the Class and Series held by such Shareholder held in any account registered in the name of such Shareholder for its current net asset value, if and to the extent that such redemption is necessary to reimburse either that Series or Class of the Trust or the distributor of the Shares for any loss either has sustained by reason of the failure of such Shareholder to make timely and good payment for Shares purchased or subscribed for by such Shareholder, regardless of whether such Shareholder was a Shareholder at the time of such purchase or subscription; subject to and upon such terms and conditions as the Trustees may from time to time prescribe. EIGHTH: The name "Oppenheimer" included in the name of the Trust and of any Series shall be used pursuant to a royalty-free, non-exclusive license from OppenheimerFunds, Inc. ("OFI"), incidental to and as part of an advisory, management or supervisory contract which may be entered into by the Trust with OFI. The license may be terminated by OFI upon termination of such advisory, management or supervisory contract or without cause upon 60 days' notice, in which case neither the Trust nor any Series (or Class) shall have any further right to use the name "Oppenheimer" in its name or otherwise and the Trust, the Shareholders and its officers and Trustees shall promptly take whatever action may be necessary to change its name and the names of any Series (or Classes) accordingly. NINTH: 1. In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his being or having been a Shareholder and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the Trust estate to be held harmless from and indemnified against all loss and expense arising from such liability. The Trust shall, upon request by the Shareholder, assume the defense of any such claim made against any Shareholder for any act or obligation of the Trust and satisfy any judgment thereon. 2. It is hereby expressly declared that a trust and not a partnership is created hereby. No individual Trustee hereunder shall have any power to bind the Trust, the Trust's officers or any Shareholder. All persons extending credit to, doing business with, contracting with or having or asserting any claim against the Trust or the Trustees shall look only to the assets of the Trust for payment under such credit, transaction, contract or claim; and neither the Shareholders nor the Trustees, nor any of their agents, whether past, present or future, shall be personally liable therefor; notice of such disclaimer shall be given in each agreement, obligation or instrument entered into or executed by the Trust or the Trustees. Nothing in this Declaration of Trust shall protect a Trustee against any liability to which such Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee hereunder. 3. The exercise by the Trustees of their powers and discretion hereunder in good faith and with reasonable care under the circumstances then prevailing, shall be binding upon everyone interested. Subject to the provisions of paragraph 2 of this Article NINTH, the Trustees shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operations of this Declaration of Trust, applicable laws, contracts, obligations, transactions, or any business or dealings the Trust may enter into, and subject to the provisions of paragraph 2 of this Article NINTH, shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. 4. This Trust shall continue without limitation of time but subject to the provisions of sub-sections (a), (b), (c) and (d) of this paragraph 4. (a) The Trustees, with the favorable vote of the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, of any one or more Series entitled to vote, may sell and convey the assets of that Series (which sale may be subject to the retention of assets for the payment of liabilities and expenses) to another issuer for a consideration which may be or include securities of such issuer. Upon making provision for the payment of liabilities, by assumption by such issuer or otherwise, the Trustees shall distribute the remaining proceeds ratably among the holders of the outstanding Shares of the Series the assets of which have been so transferred. (b) The Trustees, with the favorable vote of the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, of any one or more Series entitled to vote, may at any time sell and convert into money all the assets of that Series. Upon making provisions for the payment of all outstanding obligations, taxes and other liabilities, accrued or contingent, of that Series, the Trustees shall distribute the remaining assets of that Series ratably among the holders of the outstanding Shares of that Series. (c) The Trustees, with the favorable vote of the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, of any one or more Series entitled to vote, may at any time otherwise alter, transfer or convert the assets of such Series. (d) Upon completion of the distribution of the remaining proceeds or the remaining assets as provided in sub-sections (a), (b), and (c), whenever applicable, the Series the assets of which have been so transferred shall terminate, and if all the assets of the Trust have been so transferred, the Trust shall terminate and the Trustees shall be discharged of any and all further liabilities and duties hereunder and the right, title and interest of all parties shall be canceled and discharged. 5. The original or a copy of this instrument and of each declaration of trust supplemental hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each supplemental or restated declaration of trust shall be filed with the Massachusetts Secretary of State, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to whether or not any such supplemental or restated declarations of trust have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this instrument or of any such restated or supplemental declaration of trust. In this instrument or in any such supplemental or restated declaration of trust, references to this instrument, and all expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to this instrument as amended or affected by any such restated or supplemental declaration of trust. This instrument may be executed in any number of counterparts, each of which shall be deemed as original. 6. The Trust set forth in this instrument is created under and is to be governed by and construed and administered according to the laws of the Commonwealth of Massachusetts. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust. 7. The Board of Trustees is empowered to cause the redemption of the Shares held in any account if the aggregate net asset value of such Shares (taken at cost or value, as determined by the Board) has been reduced to $200 or less upon such notice to the shareholder in question, with such permission to increase the investment in question and upon such other terms and conditions as may be fixed by the Board of Trustees in accordance with the 1940 Act. 8. In the event that any person advances the organizational expenses of the Trust, such advances shall become an obligation of the Trust subject to such terms and conditions as may be fixed by, and on a date fixed by, or determined with criteria fixed by the Board of Trustees, to be amortized over a period or periods to be fixed by the Board. 9. Whenever any action is taken under this Declaration of Trust under any authorization to take action which is permitted by the 1940 Act or other applicable law, such action shall be deemed to have been properly taken if such action is in accordance with the construction of the 1940 Act then in effect as expressed in "no action" letters of the staff of the Commission or any release, rule, regulation or order under the 1940 Act or any decision of a court of competent jurisdiction, notwithstanding that any of the foregoing shall later be found to be invalid or otherwise reversed or modified by any of the foregoing. 10. Any action which may be taken by the Board of Trustees under this Declaration of Trust or its By-Laws may be taken by the description thereof in the then effective prospectus or statement of additional information relating to the Shares under the Securities Act of 1933 or in any proxy statement of the Trust rather than by formal resolution of the Board. 11. Whenever under this Declaration of Trust, the Board of Trustees is permitted or required to place a value on assets of the Trust, such action may be delegated by the Board, and/or determined in accordance with a formula determined by the Board, to the extent permitted by the 1940 Act. 12. If authorized by vote of the Trustees and the favorable vote of the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, entitled to vote, or by any larger vote which may be required by applicable law in any particular case, the Trustees shall amend or otherwise supplement this instrument, by making a Restated Declaration of Trust or a Declaration of Trust supplemental hereto, which thereafter shall form a part hereof; any such Supplemental or Restated Declaration of Trust may be executed by and on behalf of the Trust and the Trustees by an officer or officers of the Trust. IN WITNESS WHEREOF, the undersigned have executed this instrument as of the 1st day of May, 1999. /s/ William A. Baker /s/ Charles Conrad, Jr. William A. Baker Charles Conrad, Jr. 197 Desert Lakes Drive 6301Princeville Circle Palm Springs, CA 92264 Huntington Beach, CA 92648 /s/ Ned M. Steel /s/ Robert M. Kirchner Ned M. Steel Robert M. Kirchner 3416 S. Race Street 2800 S. University Blvd. #131 Englewood, CO 80110 Denver, Colorado 80210 /s/ Raymond J. Kalinowski /s/ C. Howard Kast Raymond J. Kalinowski C. Howard Kast 44 Portland Drive 2252 East Alameda, #30 St. Louis, Missouri 63131 Denver, CO 80209 /s/ James C. Swain /s/ Jon S. Fossel James C. Swain Jon S. Fossel 355 Adams Street Box 44-Mead Street Denver, CO 80206 Waccabuc, NY 10597 /s/ Robert G. Avis /s/ Sam Freedman Robert G. Avis Sam Freedman 1706 Warson Estates Drive 4975 Lake Shore Drive St. Louis, MO 63124 Littleton, CO 80123 EX-99 3 MONEY FUND/VA SHARE CERTIFICATE OPPENHEIMER MONEY FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER MONEY FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER MONEY FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 4 BOND FUND/VA SHARE CERTIFICATE OPPENHEIMER BOND FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER BOND FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER BOND FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVISON OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - ____________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) _____________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ _________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ___________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 5 CAPITAL APPRECIATION/VA SHARE CERTIFICATE OPPENHEIMER CAPITAL APPRECIATION FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER CAPITAL APPRECIATION FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER CAPITAL APPRECIATION FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ _______________________________(Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 6 HIGH INCOME/VA SHARE CERTIFICATE OPPENHEIMER HIGH INCOME FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER HIGH INCOME FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER HIGH INCOME FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 7 AGGRESSIVE GROWTH/VA SHARE CERTIFICATE OPPENHEIMER AGGRESSIVE GROWTH FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER AGGRESSIVE GROWTH FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 8 MULTIPLE STRATEGIES FUND/VA SHARE CERTIFICATE OPPENHEIMER MULTIPLE STRATEGIES FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER MULTIPLE STRATEGIES FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER MULTIPLE STRATEGIES FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 9 GLOBAL SEC. FUND/VA SHARE CERT. OPPENHEIMER GLOBAL SECURITIES FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER GLOBAL SECURITIES FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER GLOBAL SECURITIES FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVISON OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) _________________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ___________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 10 STRATEGIC BOND FUND/VA SHARE CERTIFICATE OPPENHEIMER STRATEGIC BOND FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER STRATEGIC BOND FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER STRATEGIC BOND FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 11 MAIN ST. GROWTH & INCOME SHARE CERTIFICATE OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 12 SMALL CAP/VA SHARE CERTIFICATE OPPENHEIMER SMALL CAP GROWTH FUND/VA Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER SMALL CAP GROWTH FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) (at left) is the owner of (centered) FULLY PAID SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER SMALL CAP GROWTH FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 13 MONEY FUND/VA CLASS 2 SHARE CERTIFICATE OPPENHEIMER MONEY FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER MONEY FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER MONEY FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 14 BOND FUND/VA CLASS 2 SHARE CERTIFICATE OPPENHEIMER BOND FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER BOND FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER BOND FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVISON OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - ____________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) _____________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ _________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ___________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 15 CAPITAL APPRECIATION CLASS 2 SHARE CERTIFICATE OPPENHEIMER CAPITAL APPRECIATION FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER CAPITAL APPRECIATION FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER CAPITAL APPRECIATION FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 16 HIGH INCOME FUND/VA CLASS 2 SHARE CERTIFICATE OPPENHEIMER HIGH INCOME FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER HIGH INCOME FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER HIGH INCOME FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 17 AGGRESSIVE GROWTH/VA CLASS 2 SHARE CERTIFICATE OPPENHEIMER AGGRESSIVE GROWTH FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER AGGRESSIVE GROWTH FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 18 MULTIPLE STRATEGIES/VA CLASS 2 SHARE CERTIFICATE OPPENHEIMER MULTIPLE STRATEGIES FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER MULTIPLE STRATEGIES FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER MULTIPLE STRATEGIES FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 19 GLOBAL SECURITIES/VA CLASS 2 SHARE CERTIFICATE OPPENHEIMER GLOBAL SECURITIES FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER GLOBAL SECURITIES FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER GLOBAL SECURITIES FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVISON OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) _________________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ___________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 20 STRATEGIC BOND/VA CLASS 2 SHARE CERTIFICATE OPPENHEIMER STRATEGIC BOND FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER STRATEGIC BOND FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER STRATEGIC BOND FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 21 MAIN ST. GROWTH & INCOME/VA CLASS 2 SHARE CERT. OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) CUSIP (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-99 22 SMALL CAP GROWTH FUND/VA CLASS 2 SHARE CERT. OPPENHEIMER SMALL CAP GROWTH FUND/VA Class 2 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (upper left corner): NUMBER [of shares] (upper right) CLASS 2 SHARES (centered below boxes) Oppenheimer Variable Account Funds A MASSACHUSETTS BUSINESS TRUST SERIES: OPPENHEIMER SMALL CAP GROWTH FUND/VA (at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN DEFINITIONS (box with number) (at left) is the owner of (centered) FULLY PAID CLASS 2 SHARES OF BENEFICIAL INTEREST OF OPPENHEIMER SMALL CAP GROWTH FUND/VA a series of OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter called the "Fund"), transferable only on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust of the Fund to all of which the holder by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Fund and the signatures of its duly authorized officers. (signature Dated: (signature at left of seal) at right of seal) /s/ Brian W. Wixted /s/ Bridget A. Macaskill _______________________ ___________________ TREASURER PRESIDENT (centered at bottom) 1-1/2" diameter facsimile seal with legend OPPENHEIMER VARIABLE ACCOUNT FUNDS SEAL 1984 COMMONWEALTH OF MASSACHUSETTS (at lower right, printed vertically) Countersigned OPPENHEIMERFUNDS SERVICES (A DIVSION OF OPPENHEIMERFUNDS, INC.) Denver (Colo.) Transfer Agent By ____________________________ Authorized Signature II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS NOT TC - as joint tenants with rights of survivorship and not as tenants in common UNIF GIFT/TRANSFER MIN ACT - __________ Custodian _______________ (Cust) (Minor) UNDER UGMA/UTMA ___________________ (State) Additional abbreviations may also be used though not on above list. For Value Received ................ hereby sell(s), assign(s), and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE (box for identifying number) ______________________________________________________________ (Please print or type name and address of assignee) ______________________________________________________ __________________________________________________________ Class 2 Shares of the beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the said shares on the books of the within named Fund with full power of substitution in the premises. Dated: ______________________ Signed: __________________________ ________________________________ (Both must sign if joint tenancy) Signature(s) __________________________ guaranteed Name of Firm or Bank by: _____________________________ Signature of Officer (text printed NOTICE: The signature(s) to this assignment vertically to right must correspond with the name(s) as of above paragraph) written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. (text printed in Signatures must be guaranteed by a U.S. box to left of commercial bank or trust company, signature(s) a Federally-chartered savings and loan association, a foreign bank having a U.S. firm of a national securities exchange. EX-10 23 ADVISORY AGREEMENT AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT THIS AMENDED AND RESTATED AGREEMENT made the 1st day of May, 1999, by and between OPPENHEIMER VARIABLE ACCOUNT FUNDS (hereinafter referred to as the "Trust"), and OPPENHEIMERFUNDS, INC. (hereinafter referred to as "OFI"). WHEREAS, the Trust is an open-end, diversified series management investment company registered as such with the Securities and Exchange Commission (the "Commission") pursuant to the Investment Company Act of 1940 (the "Investment Company Act"), and OFI is a registered investment adviser; WHEREAS, OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (the "Fund") is a series of the Trust having a separate portfolio, investment policies and investment restrictions; and WHEREAS, the Trust and Oppenheimer Management Corporation have entered into an Investment Advisory Agreement for the Fund dated September 1, 1994 (the "Prior Agreement"). WHEREAS, the Trust and OFI have agreed, at a meeting of the Board of Trustees held on December 15, 1998, to pay OFI an annual management fee rate of 0.58% on average annual net assets of the Fund in excess of $1.5 billion, and to replace the Prior Agreement with this Agreement. WHEREAS, since the Prior Agreement, OFI changed its name from "Oppenheimer Management Corporation" to "OppenheimerFunds, Inc." and the Fund changed its name from "Oppenheimer Capital Appreciation Fund" to "Oppenheimer Aggressive Growth Fund/VA". NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, it is agreed by and between the parties, as follows: 1. General Provision. a. The Trust hereby employs OFI and OFI hereby undertakes to act as the investment adviser of the Fund and to perform for the Fund such other duties and functions as are hereinafter set forth. OFI shall, in all matters, give to the Fund and the Trust's Board of Trustees the benefit of its best judgment, effort, advice and recommendations and shall, at all times conform to, and use its best efforts to enable the Fund to conform to: (i) the provisions of the Investment Company Act and any rules or regulations thereunder; (ii) any other applicable provisions of state or Federal law; (iii) the provisions of the Declaration of Trust and By-Laws of the Trust as amended from time to time; (iv) policies and determinations of the Board of Trustees of the Trust; (v) the fundamental policies and investment restrictions of the Fund as reflected in the Trust's registration statement under the Investment Company Act or as such policies may, from time to time, be amended by the Fund's shareholders; and (vi) the Prospectus and Statement of Additional Information of the Trust in effect from time to time. The appropriate officers and employees of OFI shall be available upon reasonable notice for consultation with any of the trustees and officers of the Trust with respect to any matters dealing with the business and affairs of the Trust including the valuation of portfolio securities of the Fund which securities are either not registered for public sale or not traded on any securities market. 2. Investment Management. -5- a. OFI shall, subject to the direction and control by the Trust's Board of Trustees: (i) regularly provide investment advice and recommendations to the Fund with respect to its investments, investment policies and the purchase and sale of securities; (ii) supervise continuously the investment program of the Fund and the composition of its portfolio and determine what securities shall be purchased or sold by the Fund; and (iii) arrange, subject to the provisions of paragraph 7 hereof, for the purchase of securities and other investments for the Fund and the sale of securities and other investments held in the portfolio of the Fund. b. Provided that the Trust shall not be required to pay any compensation for services under this Agreement other than as provided by the terms of this Agreement and subject to the provisions of paragraph 7 hereof, OFI may obtain investment information, research or assistance from any other person, firm or corporation to supplement, update or otherwise improve its investment management services. c. OFI shall not be liable for any loss sustained by the Trust and/or the Fund in connection with matters to which this Agreement relates, except a loss resulting by reason of OFI's willful misfeasance, bad faith or gross negligence in the performance of its duties; or by reason of its reckless disregard of its obligations and duties under this Agreement. d. Nothing in this Agreement shall prevent OFI or any officer thereof from acting as investment adviser for any other person, firm or corporation and shall not in any way limit or restrict OFI or any of its directors, officers, stockholders or employees from buying, selling or trading any securities for its or their own account or for the account of others for whom it or they may be acting, provided that such activities will not adversely affect or otherwise impair the performance by OFI of its duties and obligations under this Agreement. 3. Other Duties of OFI. OFI shall, at its own expense, provide and supervise the activities of all administrative and clerical personnel as shall be required to provide effective administration for the Fund, including the compilation and maintenance of such records with respect to its operations as may reasonably be required; the preparation and filing of such reports with respect thereto as shall be required by the Commission; composition of periodic reports with respect to operations of the Fund for its shareholders; composition of proxy materials for meetings of the Fund's shareholders, and the composition of such registration statements as may be required by Federal securities laws for continuous public sale of shares of the Fund. OFI shall, at its own cost and expense, also provide the Trust with adequate office space, facilities and equipment. OFI shall, at its own expense, provide such officers for the Fund as the Fund's Board may request. 4. Allocation of Expenses. All other costs and expenses of the Fund not expressly assumed by OFI under this Agreement, shall be paid by the Trust, including, but not limited to: (i) interest and taxes; (ii) brokerage commissions; (iii) insurance premiums for fidelity and other coverage requisite to its operations; (iv) compensation and expenses of its trustees other than those associated or affiliated with OFI; (v) legal and audit expenses; (vi) custodian and transfer agent fees and expenses; (vii) expenses incident to the redemption of its shares; (viii) expenses incident to the issuance of its shares against payment therefor by or on behalf of the subscribers thereto; (ix) fees and expenses, other than as hereinabove provided, incident to the registration under Federal securities laws of shares of the Fund for public sale; (x) expenses of printing and mailing reports, notices and proxy materials to shareholders of the Fund; (xi) except as noted above, all other expenses incidental to holding meetings of the Fund's shareholders; and (xii) such extraordinary non-recurring expenses as may arise, including litigation, affecting the Fund and any legal obligation which the Trust may have on behalf of the Fund to indemnify its officers and trustees with respect thereto. Any officers or employees of OFI or any entity controlling, controlled by or under common control with OFI, who may also serve as officers, trustees or employees of the Trust shall not receive any compensation from the Trust for their services. The expenses with respect to any two or more series of the Trust shall be allocated in proportion to the net assets of the respective series except where allocations of direct expenses can be made. 5. Compensation of OFI. The Trust agrees to pay OFI on behalf of the Fund and OFI agrees to accept as full compensation for the performance of all functions and duties on its part to be performed pursuant to the provisions hereof, a fee computed on the aggregate net asset value of the Fund as of the close of each business day and payable monthly at the annual rate of: .75% of the first $200 million of average annual net assets; .72% of the next $200 million; .69% of the next $200 million; .66% of the next $200 million; .60% of the next $700 million; and .58% of average annual net assets in excess of $1.5 billion. 6. Use of Name "Oppenheimer." OFI hereby grants to the Trust a royalty-free, non-exclusive license to use the name "Oppenheimer" in the name of the Trust and the Fund for the duration of this Agreement and any extensions or renewals thereof. To the extent necessary to protect OFI's rights to the name "Oppenheimer" under applicable law, such license shall allow OFI to inspect, and subject to control by the Trust's Board, control the name and quality of services offered by the Fund under such name. Such license may, upon termination of this Agreement, be terminated by OFI, in which event the Trust shall promptly take whatever action may be necessary to change its name and the name of the Fund and discontinue any further use of the name "Oppenheimer" in the name of the Trust or the Fund or otherwise. The name "Oppenheimer" may be used or licensed by OFI in connection with any of its activities, or licensed by OFI to any other party. 7. Portfolio Transactions and Brokerage. a. OFI is authorized, in arranging the purchase and sale of the Fund's portfolio securities, to employ or deal with such members of securities or commodities exchanges, brokers or dealers (hereinafter "broker-dealers"), including "affiliated" broker-dealers (as that term is defined in the Investment Company Act), as may, in its best judgment, implement the policy of the Fund to obtain, at reasonable expense, the "best execution" (prompt and reliable execution at the most favorable security price obtainable) of the Fund's portfolio transactions as well as to obtain, consistent with the provisions of subparagraph (c) of this paragraph 7, the benefit of such investment information or research as will be of significant assistance to the performance by OFI of its investment management functions. b. OFI shall select broker-dealers to effect the Fund's portfolio transactions on the basis of its estimate of their ability to obtain best execution of particular and related portfolio transactions. The abilities of a broker-dealer to obtain best execution of particular portfolio transaction(s) will be judged by OFI on the basis of all relevant factors and considerations including, insofar as feasible, the execution capabilities required by the transaction or transactions; the ability and willingness of the broker-dealer to facilitate the Fund's portfolio transactions by participating therein for its own account; the importance to the Fund of speed, efficiency or confidentiality; the broker-dealer's apparent familiarity with sources from or to whom particular securities might be purchased or sold; as well as any other matters relevant to the selection of a broker-dealer for particular and related transactions of the Fund. c. OFI shall have discretion, in the interests of the Fund, to allocate brokerage on the Fund's portfolio transactions to broker-dealers, other than an affiliated broker-dealer, qualified to obtain best execution of such transactions who provide brokerage and/or research services (as such services are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for the Fund and/or other accounts for which OFI or its affiliates exercise "investment discretion" (as that term is defined in Section 3(a)(35) of the Securities Exchange Act of 1934) and to cause the Trust to pay such broker-dealers a commission for effecting a portfolio transaction for the Fund that is in excess of the amount of commission another broker-dealer adequately qualified to effect such transaction would have charged for effecting that transaction, if OFI determines, in good faith, that such commission is reasonable in relation to the value of the brokerage and/or research services provided by such broker-dealer, viewed in terms of either that particular transaction or the overall responsibilities of OFI or its affiliates with respect to the accounts as to which they exercise investment discretion. In reaching such determination, OFI will not be required to place or attempt to place a specific dollar value on the brokerage and/or research services provided or being provided by such broker-dealer. In demonstrating that such determinations were made in good faith, OFI shall be prepared to show that all commissions were allocated for purposes contemplated by this Agreement and that the total commissions paid by the Trust over a representative period selected by the Trust's trustees were reasonable in relation to the benefits to the Fund. d. OFI shall have no duty or obligation to seek advance competitive bidding for the most favorable commission rate applicable to any particular portfolio transactions or to select any broker-dealer on the basis of its purported or "posted" commission rate but will, to the best of its ability, endeavor to be aware of the current level of the charges of eligible broker-dealers and to minimize the expense incurred by the Fund for effecting its portfolio transactions to the extent consistent with the interests and policies of the Fund as established by the determinations of the Board of Trustees of the Trust and the provisions of this paragraph 7. e. The Trust recognizes that an affiliated broker-dealer: (i) may act as one of the Fund's regular brokers so long as it is lawful for it so to act; (ii) may be a major recipient of brokerage commissions paid by the Trust; and (iii) may effect portfolio transactions for the Fund only if the commissions, fees or other remuneration received or to be received by it are determined in accordance with procedures contemplated by any rule, regulation or order adopted under the Investment Company Act for determining the permissible level of such commissions. f. Subject to the foregoing provisions of this paragraph 7, OFI may also consider sales of shares of the Fund and the other funds advised by OFI and its affiliates as a factor in the selection of broker-dealers for its portfolio transactions. 8. Duration. This Agreement will take effect on the date first set forth above, whereupon it replaces the Prior Agreement. Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement shall continue in effect until December 31, 1999, and thereafter will continue in effect from year to year, so long as such continuance shall be approved at least annually by the Trust's Board of Trustees, including the vote of the majority of the trustees of the Trust who are not parties to this Agreement or "interested persons" (as defined in the Investment Company Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval, or by the holders of a "majority" (as defined in the Investment Company Act) of the outstanding voting securities of the Fund and by such a vote of the Trust's Board of Trustees. 9. Disclaimer of Trustee or Shareholder Liability. OFI understands and agrees that the obligations of the Trust under this Agreement are not binding upon any Trustee or shareholder of the Trust or Fund personally, but bind only the Trust and the Trust's property. OFI represents that it has notice of the provisions of the Declaration of Trust of the Trust disclaiming Trustee or shareholder liability for acts or obligations of the Trust. 10. Termination. This Agreement may be terminated: (i) by OFI at any time without penalty upon sixty days' written notice to the Trust (which notice may be waived by the Trust); or (ii) by the Trust at any time without penalty upon sixty days' written notice to OFI (which notice may be waived by OFI) provided that such termination by the Trust shall be directed or approved by the vote of a majority of all of the trustees of the Trust then in office or by the vote of the holders of a "majority" of the outstanding voting securities of the Fund (as defined in the Investment Company Act). 11. Assignment or Amendment. This Agreement may not be amended or the rights of OFI hereunder sold, transferred, pledged or otherwise in any manner encumbered without the affirmative vote or written consent of the holders of the "majority" of the outstanding voting securities of the Trust. This Agreement shall automatically and immediately terminate in the event of its "assignment," as defined in the Investment Company Act. 12. Definitions. The terms and provisions of this Agreement shall be interpreted and defined in a manner consistent with the provisions and definitions of the Investment Company Act. OPPENHEIMER VARIABLE ACCOUNT FUNDS on behalf of OPPENHEIMER AGGRESSIVE GROWTH FUND/VA By: /s/ Andrew J. Donohue ------------------------------- Andrew J. Donohue Title: Vice President and Secretary OPPENHEIMERFUNDS, INC. By: /s/ Andrew J. Donohue -------------------------------- Andrew J. Donohue Title: Executive Vice President EX-23 24 CONSENT OF INDEPENDENT AUDITORS Exhibit 23 (j) INDEPENDENT AUDITORS' CONSENT We consent to the use in this Post-Effective Amendment No.34 to Registration Statement No. 2-93177 on Form N-1A of Oppenheimer Variable Account Funds of our report dated January 25,1999, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to us under the headings "Financial Highlights" appearing in the Prospectuses which are also a part of such Registration Statement, and "Independent Auditors" appearing in the Statement of Additional Information. /s/ Deloitte & Touche LLP - -------------------------------- DELOITTE & TOUCHE LLP Denver, Colorado April 28, 1999 EX-27 25 MONEY FUND/VA FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. ARTICLE> 6 752737 OPPENHEIMER MONEY FUND/VA 1 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 151,269,014 151,269,014 1,084,338 5,225 152,071 152,510,648 0 0 711,848 711,848 0 151,805,834 151,805,855 126,798,538 0 11,314 (18,348) 0 0 151,798,800 0 7,738,972 0 688,940 7,050,032 9,101 0 7,059,133 0 7,050,032 0 0 318,160,993 300,162,058 7,008,382 25,016,418 0 (16,135) 0 0 619,030 0 688,940 137,633,000 1.00 0.05 0.00 0.05 0.00 0.00 1.00 0.50 0 0.00
EX-27 26 HIGH INCOME FUND/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER HIGH INCOME FUND/VA 4 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 334,412,099 320,913,385 8,069,464 6,817 1,968,687 330,958,353 0 0 2,395,696 2,395,696 0 323,273,405 29,806,919 25,297,573 0 23,046,774 (4,290,927) 0 (13,466,595) 328,562,657 2,076,307 28,358,859 0 2,505,783 27,929,383 (2,889,367) (24,125,468) 914,548 0 6,694,100 8,113,249 0 15,303,847 12,094,532 1,300,031 37,239,866 0 6,730,159 1,776,867 0 2,383,008 0 2,505,783 322,748,000 11.52 0.95 (0.90) 0.25 0.30 0.00 11.02 0.78 0 0.00
EX-27 27 BOND FUND/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER BOND FUND/VA 2 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 681,813,086 688,013,848 15,388,801 9,388 178,353 703,590,390 47,434,432 0 613,259 48,047,691 0 616,406,705 53,210,003 43,651,270 0 30,079,292 2,718,207 0 6,338,495 655,542,699 284,719 41,073,653 0 4,357,338 37,001,034 5,539,991 (5,203,148) 37,337,877 0 9,009,958 8,154,014 0 24,245,723 16,150,244 1,463,254 135,464,671 0 5,563,419 1,857,027 0 4,218,231 0 4,357,338 586,242,000 11.91 0.72 0.07 0.20 0.18 0.00 12.32 0.74 0 0.00
EX-27 28 STRATEGIC BOND/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER STRATEGIC BOND FUND/VA 8 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 282,454,523 273,522,777 5,301,358 6,534 521,927 279,352,596 0 0 152,200 152,200 0 274,895,218 54,569,819 40,604,565 0 15,570,425 (2,352,642) 0 (8,912,605) 279,200,396 751,928 21,709,341 0 2,009,452 20,451,817 (2,696,918) (11,476,607) 6,278,292 0 3,974,494 2,561,341 0 21,445,910 8,759,684 1,279,028 71,360,992 0 1,088,375 885,276 0 1,860,227 0 2,009,452 250,227,000 5.12 0.39 (0.24) 0.09 0.06 0.00 5.12 0.80 0 0.00
EX-27 29 AGGRESSIVE GROWTH/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA 5 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 729,339,720 1,079,562,636 2,156,819 11,926 96,737 1,081,828,118 0 0 3,867,958 3,867,958 0 797,996,718 24,043,802 21,431,667 0 0 (70,261,463) 0 350,224,905 1,077,960,160 1,800,986 3,823,383 0 6,786,954 (1,162,585) (67,125,014) 183,484,620 115,197,021 0 2,267,793 23,288,487 0 13,376,589 11,344,620 580,166 200,152,687 0 20,119,606 2,236,363 0 6,564,650 0 6,786,954 954,848,000 40.96 (0.05) 5.09 0.10 1.07 0.00 44.83 0.71 0 0.00
EX-27 30 CAPITAL APPRECIATION/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER CAPITAL APPRECIATION FUND/VA 3 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 576,294,542 767,477,940 4,081,390 9,025 119,623 771,687,978 0 0 3,138,282 3,138,282 0 542,115,494 20,956,201 15,223,362 0 2,959,139 32,291,665 0 191,183,398 768,549,696 3,555,637 4,035,121 0 4,554,509 3,036,249 32,507,950 99,933,565 135,477,764 0 3,939,379 47,530,889 0 8,866,513 4,699,071 1,565,397 274,643,722 0 47,279,914 3,896,959 0 4,369,487 0 4,554,509 609,246,000 32.44 0.13 7.28 0.24 2.94 0.00 36.67 0.75 0 0.00
EX-27 31 SMALL CAP GROWTH/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER SMALL CAP GROWTH FUND/VA 10 OPPENHEIMER VARIABLE ACCOUNT FUNDS 8-MOS DEC-31-1998 MAY-01-1998 DEC-31-1998 739,885 844,856 18,996 1,514 129,322 994,688 0 0 384 384 0 934,634 103,531 0 0 0 (45,301) 0 104,971 994,304 173 60 0 2,572 (2,339) (45,301) 104,971 57,331 0 0 0 0 114,434 10,903 0 994,304 0 0 0 0 2,219 0 2,572 441,000 10.00 (0.02) (0.38) 0.00 0.00 0.00 9.60 0.87 0 0.00
EX-27 32 GLOBAL SEC. FUND/VA FINANCIAL DATA SCHEDULE
6 752737 Oppenheimer Global Securities Fund/VA 7 Oppenheimer Variable Account Funds 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 943,081,348 1,146,157,977 1,663,432 12,495 179,560 1,148,013,464 10,966,196 0 2,018,134 12,984,330 0 885,257,467 51,429,193 44,883,946 0 11,592,206 35,108,448 0 203,071,013 1,135,029,134 11,995,300 8,710,561 0 7,818,727 12,887,134 36,962,992 86,460,026 136,310,152 0 21,307,082 80,203,951 0 11,735,029 10,067,775 4,877,993 175,918,914 0 80,213,055 18,148,506 0 7,167,836 0 7,818,727 1,055,123,000 21.37 0.24 2.64 0.46 1.72 0.00 22.07 0.74 0 0.00
EX-27 33 MULTIPLE STRAT FUND/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER MULTIPLE STRATEGIES FUND/VA 6 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 538,342,432 623,885,456 5,190,419 8,967 147,269 629,232,111 362,598 0 6,536,212 6,898,810 0 490,829,556 36,497,549 37,473,072 0 20,748,181 29,244,260 0 81,511,304 622,333,301 4,857,228 25,898,105 0 4,844,238 25,911,095 29,540,227 (15,895,873) 39,555,449 0 5,964,037 34,591,414 0 3,352,415 6,714,957 2,387,019 (15,211,529) 0 33,831,700 1,264,870 0 4,584,184 0 4,844,238 640,131,000 17.01 0.71 0.42 0.16 0.93 0.00 17.05 0.76 0 0.00
EX-27 34 MAIN ST. G&I/VA FINANCIAL DATA SCHEDULE
6 752737 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/R/VA 9 OPPENHEIMER VARIABLE ACCOUNT FUNDS 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 283,373,781 308,317,926 997,520 5,528 218,017 309,538,991 4,100 0 1,181,577 1,185,677 0 284,367,574 15,054,704 7,551,181 0 1,425,924 (2,028,281) 0 24,588,097 308,353,314 2,688,093 913,537 0 1,857,022 1,744,608 (1,957,235) 6,335,797 6,123,170 0 449,201 9,891,403 0 9,181,075 2,145,877 468,325 152,985,564 0 9,820,789 130,085 0 1,742,253 0 1,857,022 234,306,000 20.58 0.13 0.92 0.05 1.10 0.00 20.48 0.79 0 0.00
EX-24 35 POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for his and in his capacity as Treasurer of Oppenheimer Cash Reserves, Oppenheimer Champion Income Fund, Oppenheimer Capital Income Fund, Oppenheimer High Yield Fund, Oppenheimer International Bond Fund, Oppenheimer Integrity Funds, Oppenheimer Limited-Term Government Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer Municipal Fund, Oppenheimer Real Asset Fund, Oppenheimer Strategic Income Fund, Oppenheimer Total Return Fund, Inc., Oppenheimer Variable Account Funds, Panorama Series Fund, Inc., Centennial America Fund, L.P., Centennial California Tax Exempt Trust, Centennial Government Trust, Centennial Money Market Trust, Centennial New York Tax Exempt Trust, Centennial Tax Exempt Trust (the "Funds"), to sign on his behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 27th day of April, 1999. /s/ Brian W. Wixted - ------------------- Brian W. Wixted -----END PRIVACY-ENHANCED MESSAGE-----