N-30D 1 g5293_oppmainstgrincva.txt Semiannual Report June 30, 2002 Oppenheimer MAIN STREET[REGISTRATION MARK] GROWTH & INCOME FUND/VA A Series of Oppenheimer Variable Account Funds [LOGO OMITTED] OPPENHEIMERFUNDS[REGISTRATION MARK] The Right Way to Invest OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA ================================================================================ OBJECTIVE OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA, a series of Oppenheimer Variable Account Funds, seeks high total return, which includes growth in the value of shares as well as current income from equity and debt securities. ================================================================================ NARRATIVE BY CHARLES ALBERS AND NIKOLAOS MONOYIOS, PORTFOLIO MANAGERS For the six-month period ended June 30, 2002, Oppenheimer Main Street Growth & Income Fund/VA's Non-Service shares provided a cumulative total return of -7.03%.(1) In comparison, the Fund's benchmark, the Standard & Poor's 500 Composite Stock Price Index (S&P 500), provided a -13.15% cumulative total return, and its peer group, the Lipper Large Cap Core/VA category, provided an average total return of -14.33% over the same period.(2) The good news is that the Fund's returns have continued to exceed those of its Lipper peer group and the S&P 500. The bad news is that the large-cap stocks that comprise the S&P 500 generally posted lackluster returns during the first half of 2002. We attribute the market's weakness to anemic corporate earnings among large companies, which have not yet responded to the beginnings of an economic recovery, and to negative investor sentiment, fueled by well-publicized accounting scandals. In addition, some companies have increased their debt loads due to acquisitions and stock buy-backs, while others have diluted the value of their shares by issuing stock to complete mergers or award generous stock options. As is consistent with our disciplined, quantitative investment approach, economic and market factors had little direct influence on how the Fund was managed during the six-month period. Instead, we continued to rely on our statistical models, which take a company-by-company approach, assigning each stock a ranking according to various economic, industry and company-specific criteria. Throughout the period, our "top-down" models, which assess the overall economic environment, suggested that smaller companies were likely to produce higher returns than the largest ones, as they have since mid-2000. Accordingly, companies at the lower end of the large-cap range scored well, and we focused the Fund's investments there. In addition, we invested a portion of the Fund's assets in mid- and small-cap stocks, and we maintained relatively light exposure to the largest "mega-cap" names. The Fund's performance benefited from these decisions. Our "bottom-up" models, which analyze individual securities, suggested that value-oriented stocks might continue to do better than growth-oriented ones, and the Fund's investment portfolio therefore reflected a modest bias toward value. That is, the Fund's holdings featured lower price-to-earnings and price-to-cash- flow ratios than the overall market. Because value stocks produced substantially better performance than growth stocks, this decision also benefited the Fund's relative performance. Late in the period, when our 1. Total returns include changes in net asset value per share but do not include the charges associated with the separate account products which offer this Fund. Such performance would have been lower if such charges were taken into account, and can be provided by the separate account product sponsor. 2. The Fund's performance is compared to the average of the total return of the 1564 funds in the Lipper Large-Cap Core Fund/VA category for the six-month period ended 6/30/02. 2 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA models suggested that the bulk of growth stocks' declines may be behind us, we sold a number of relatively safer, defensive holdings and purchased some cyclical and growth stocks. The result has been a more equitable balance between growth and value. Three particularly important factors to the Fund's performance during the reporting period were the "special effects" created by corporate activities, stock prices considered relative to debt levels and relative strength variations derived by examining the path specific stock prices took from point A to point B. By incorporating these criteria into our statistical models, we were able to avoid those stocks hurt by intensified scrutiny of their accounting practices and companies that became overextended or diluted the value of their shares when financing acquisitions. Instead, these factors helped point our models toward financially sound companies whose earnings consistency led to greater investor interest and more stable stock prices. In this environment, the Fund received particularly strong contributions to performance from its stock picks in the consumer staples group, which generally benefited from surprisingly robust consumer spending patterns and low interest rates. The Fund also benefited from relatively light exposure to the hardest hit industry groups, including information technology and communications services. While the recession and the Federal Reserve Board's aggressive interest-rate reduction campaign appear to be over, the strength and duration of the current economic recovery are uncertain. Nonetheless, buoyed by accumulating evidence of a stronger economy, our models have begun to assign higher rankings to companies that tend to do well during economic rebounds, including cyclical and growth-oriented businesses. As a result, we've changed the way in which the Fund's assets are apportioned among various industry groups to more closely approximate their representation in the S&P 500. As of the period's end, the largest deviation from the averages could be found in the financials sector. Conversely, the Fund's lightest relative exposure was in the information technology group. Looking forward, we remain committed to our disciplined, quantitative style of investing, which has helped us disregard short-term market "noise" in favor of more persistent market trends. After all, finding investment opportunities and managing risk help make Oppenheimer Main Street Growth & Income Fund/VA an important part of THE RIGHT WAY TO INVEST. IN REVIEWING PERFORMANCE, PLEASE REMEMBER THAT PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. BECAUSE OF ONGOING MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO FLUCTUATIONS, AND CURRENT PERFORMANCE MAY BE LESS THAN THE RESULTS SHOWN. The Fund's portfolio is subject to change. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. 3 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS June 30, 2002 / Unaudited MARKET VALUE SHARES SEE NOTE 1 =========================================================================== COMMON STOCKS--94.7% --------------------------------------------------------------------------- CONSUMER DISCRETIONARY--15.3% --------------------------------------------------------------------------- AUTO COMPONENTS--0.2% American Axle & Manufacturing Holdings, Inc.(1) 1,400 $ 41,636 ArvinMeritor, Inc. 4,300 103,200 Borg-Warner Automotive, Inc.(1) 2,900 167,504 Cooper Tire & Rubber Co. 1,400 28,770 Dana Corp. 17,300 320,569 Delphi Corp. 29,500 389,400 Johnson Controls, Inc. 800 65,288 Lear Corp.(1) 24,200 1,119,250 Superior Industries International, Inc. 700 32,375 Tower Automotive, Inc.(1) 1,900 26,505 ----------------- 2,294,497 --------------------------------------------------------------------------- AUTOMOBILES--1.0% Ford Motor Co. 80,515 1,288,240 General Motors Corp. 95,600 5,109,820 Harley-Davidson, Inc. 78,900 4,045,203 ----------------- 10,443,263 --------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--1.2% AFC Enterprises, Inc.(1) 600 18,750 Alliance Gaming Corp.(1) 1,100 13,728 Applebee's International, Inc. 15,300 351,135 Boyd Gaming Corp.(1) 1,800 25,920 Brinker International, Inc.(1) 65,500 2,079,625 CEC Entertainment, Inc.(1) 11,300 466,690 Choice Hotels International, Inc.(1) 3,300 66,033 Darden Restaurants, Inc. 79,650 1,967,355 GTech Holdings Corp.(1) 21,000 536,340 Harrah's Entertainment, Inc.(1) 9,200 408,020 Hilton Hotels Corp. 73,200 1,017,480 Hotels.com, Cl. A(1) 2,100 88,683 Landry's Restaurants, Inc. 1,500 38,265 Mandalay Resort Group(1) 8,600 237,102 Marriott International, Inc., Cl. A 12,200 464,210 McDonald's Corp. 69,400 1,974,430 MGM Mirage, Inc.(1) 17,200 580,500 P.F. Chang's China Bistro, Inc.(1) 14,800 465,016 Panera Bread Co., Cl. A(1) 2,800 96,516 Papa John's International, Inc.(1) 1,200 40,068 Ruby Tuesday, Inc. 41,800 810,920 Ryan's Family Steak Houses, Inc.(1) 12,450 164,465 Sonic Corp. 3,800 119,358 Starbucks Corp.(1) 3,900 96,915 Starwood Hotels & Resorts Worldwide, Inc. 11,800 388,102 MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- Yum! Brands, Inc.(1) 28,800 $ 842,400 ----------------- 13,358,026 --------------------------------------------------------------------------- HOUSEHOLD DURABLES--1.8% American Greetings Corp., Cl. A 5,200 86,632 Beazer Homes USA, Inc.(1) 6,700 536,000 Black & Decker Corp. 6,000 289,200 Centex Corp. 24,800 1,433,192 Cooper Industries Ltd., Cl. A 45,000 1,768,500 Fortune Brands, Inc. 19,000 1,064,000 Hovnanian Enterprises, Inc., Cl. A(1) 1,000 35,880 KB Home 46,400 2,390,064 La-Z-Boy, Inc. 700 17,654 Leggett & Platt, Inc. 1,700 39,780 Lennar Corp. 10,700 654,840 M.D.C. Holdings, Inc. 1,300 67,600 Maytag Corp. 9,300 396,645 Newell Rubbermaid, Inc. 30,100 1,055,306 NVR, Inc.(1) 7,400 2,390,200 Pulte Homes, Inc. 14,644 841,737 Ryland Group, Inc. (The) 51,600 2,567,100 Snap-On, Inc. 700 20,783 Toll Brothers, Inc.(1) 55,000 1,611,500 Whirlpool Corp. 32,300 2,111,128 ----------------- 19,377,741 --------------------------------------------------------------------------- INTERNET & CATALOG RETAIL--0.0% Insight Enterprises, Inc.(1) 1,700 42,823 --------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS--0.4% Acclaim Entertainment, Inc.(1) 10,600 37,418 Action Performance Cos., Inc.(1) 3,500 110,600 Brunswick Corp. 55,100 1,542,800 Eastman Kodak Co. 51,900 1,513,923 Hasbro, Inc. 26,400 357,984 Mattel, Inc. 8,600 181,288 Nautilus Group, Inc. (The)(1) 6,600 201,960 Polaris Industries, Inc. 1,600 104,000 ----------------- 4,049,973 --------------------------------------------------------------------------- MEDIA--0.8% AOL Time Warner, Inc.(1) 153,080 2,251,807 EchoStar Communications Corp., Cl. A(1) 4,400 81,664 Fox Entertainment Group, Inc., A Shares(1) 31,800 691,650 Gannett Co., Inc. 6,200 470,580 Harte-Hanks, Inc. 3,850 79,117 Havas, ADR 4,955 30,181 Knight-Ridder, Inc. 9,000 566,550 Liberty Media Corp., Cl. A(1) 35,100 351,000 McGraw-Hill Cos., Inc. (The) 4,300 256,710 4 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- MEDIA Continued New York Times Co., Cl. A 1,300 $ 66,950 R.H. Donnelley Corp.(1) 9,800 274,106 Tribune Co. 7,700 334,950 Viacom, Inc., Cl. B(1) 60,830 2,699,027 ----------------- 8,154,292 --------------------------------------------------------------------------- MULTILINE RETAIL--4.2% BJ's Wholesale Club, Inc.(1) 19,300 743,050 Costco Wholesale Corp.(1) 117,900 4,553,298 Dillard's, Inc., Cl. A 13,900 365,431 Dollar General Corp. 4,100 78,023 Federated Department Stores, Inc.(1) 33,100 1,314,070 Kohl's Corp.(1) 8,400 588,672 May Department Stores Co. 54,200 1,784,806 Nordstrom, Inc. 6,100 138,165 Penney (J.C.) Co., Inc. (Holding Co.) 48,800 1,074,576 Sears Roebuck & Co. 98,600 5,353,980 Target Corp. 58,900 2,244,090 Wal-Mart Stores, Inc. 493,000 27,119,930 ----------------- 45,358,091 --------------------------------------------------------------------------- SPECIALTY RETAIL--4.8% American Eagle Outfitters, Inc.(1) 21,600 456,624 AnnTaylor Stores Corp.(1) 2,850 72,361 AutoNation, Inc.(1) 43,800 635,100 AutoZone, Inc.(1) 28,400 2,195,320 Bed Bath & Beyond, Inc.(1) 61,900 2,336,106 Blockbuster, Inc., Cl. A 24,000 645,600 Borders Group, Inc.(1) 3,500 64,400 CDW Computer Centers, Inc.(1) 21,600 1,011,096 Chico's FAS, Inc.(1) 27,800 1,009,696 Christopher & Banks Corp.(1) 500 21,150 Circuit City Stores, Inc./ Circuit City Group 28,000 525,000 Deb Shops, Inc. 700 23,645 Electronics Boutique Holdings Corp.(1) 8,800 257,840 Foot Locker, Inc.(1) 36,300 524,535 Gap, Inc. (The) 219,700 3,119,740 Group 1 Automotive, Inc.(1) 3,700 141,155 Home Depot, Inc. 316,800 11,636,064 Hot Topic, Inc.(1) 27,800 742,538 Limited Brands, Inc. 345,500 7,359,150 Lowe's Cos., Inc. 83,400 3,786,360 Michaels Stores, Inc.(1) 16,200 631,800 Office Depot, Inc.(1) 114,900 1,930,320 Pacific Sunwear of California, Inc.(1) 800 17,736 Pep Boys-Manny, Moe & Jack 3,200 53,920 PetsMart, Inc.(1) 5,700 91,428 Pier 1 Imports, Inc. 9,918 208,278 RadioShack Corp. 3,200 96,192 MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- Rent-A-Center, Inc.(1) 500 $ 29,005 Ross Stores, Inc. 50,100 2,041,575 Sherwin-Williams Co. 2,500 74,825 Sonic Automotive, Inc.(1) 4,500 115,875 Staples, Inc.(1) 25,100 494,470 Talbots, Inc. (The) 20,000 700,000 Tiffany & Co. 7,000 246,400 TJX Cos., Inc. (The) 322,800 6,330,108 Too, Inc.(1) 13,657 420,636 United Auto Group, Inc.(1) 1,100 22,990 Williams-Sonoma, Inc.(1) 59,000 1,808,940 ----------------- 51,877,978 --------------------------------------------------------------------------- TEXTILES & APPAREL--0.9% Coach, Inc.(1) 28,924 1,587,928 Liz Claiborne, Inc. 45,500 1,446,900 Nike, Inc., Cl. B 109,200 5,858,580 Reebok International Ltd.(1) 2,200 64,900 Tommy Hilfiger Corp.(1) 5,900 84,488 VF Corp. 1,500 58,815 ----------------- 9,101,611 --------------------------------------------------------------------------- CONSUMER STAPLES--10.9% --------------------------------------------------------------------------- BEVERAGES--2.3% Adolph Coors Co., Cl. B 13,500 841,050 Anheuser-Busch Cos., Inc. 136,100 6,805,000 Coca-Cola Co. (The) 244,700 13,703,200 Pepsi Bottling Group, Inc. (The) 2,500 77,000 PepsiCo, Inc. 68,450 3,299,290 ----------------- 24,725,540 --------------------------------------------------------------------------- FOOD & DRUG RETAILING--1.8% Albertson's, Inc. 178,000 5,421,880 CVS Corp. 84,500 2,585,700 Kroger Co. (The)(1) 280,400 5,579,960 Safeway, Inc.(1) 83,500 2,437,365 Sysco Corp. 21,400 582,508 Walgreen Co. 70,800 2,735,004 ----------------- 19,342,417 --------------------------------------------------------------------------- FOOD PRODUCTS--3.1% Archer-Daniels-Midland Co. 15,525 198,565 Campbell Soup Co. 74,500 2,060,670 ConAgra Foods, Inc. 103,900 2,872,835 Dole Food Co., Inc. 4,600 132,710 Hershey Foods Corp. 30,300 1,893,750 Interstate Bakeries Corp. 1,800 51,984 Kellogg Co. 165,000 5,916,900 Kraft Foods, Inc., Cl. A 201,500 8,251,425 Sara Lee Corp. 164,238 3,389,872 Smucker Co., J.M. (The) 2,392 81,639 Tyson Foods, Inc., Cl. A 10,700 165,957 5 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- FOOD PRODUCTS Continued Unilever NV, NY Shares 32,900 $ 2,131,920 Wrigley, William Jr. Co. 101,300 5,606,955 ----------------- 32,755,182 --------------------------------------------------------------------------- HOUSEHOLD PRODUCTS--1.7% Clorox Co. (The) 123,400 5,102,590 Colgate-Palmolive Co. 51,100 2,557,555 Dial Corp. (The) 8,700 174,174 Procter & Gamble Corp. (The) 119,600 10,680,280 ----------------- 18,514,599 --------------------------------------------------------------------------- PERSONAL PRODUCTS--0.7% Avon Products, Inc. 89,200 4,659,808 Gillette Co. 99,800 3,380,226 Oakley, Inc.(1) 3,000 52,200 ----------------- 8,092,234 --------------------------------------------------------------------------- TOBACCO--1.3% Philip Morris Cos., Inc. 241,800 10,561,824 R.J. Reynolds Tobacco Holdings, Inc. 55,700 2,993,875 Universal Corp. 4,600 168,820 ----------------- 13,724,519 --------------------------------------------------------------------------- ENERGY--7.8% --------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--0.2% Baker Hughes, Inc. 12,600 419,454 Helmerich & Payne, Inc. 7,600 271,472 Schlumberger Ltd. 20,700 962,550 Stolt Offshore SA, ADR(1) 48,400 300,080 Weatherford International Ltd.(1) 10,700 462,240 ----------------- 2,415,796 --------------------------------------------------------------------------- OIL & GAS--7.6% Amerada Hess Corp. 5,000 412,500 Baytex Energy Ltd.(1) 107,400 508,436 Brown (Tom), Inc.(1) 94,900 2,690,415 Canadian 88 Energy Corp.(1) 445,000 798,770 Canadian Natural Resources Ltd. 129,484 4,386,229 Chesapeake Energy Corp.(1) 1,100 7,920 ChevronTexaco Corp. 93,850 8,305,725 Compton Petroleum Corp.(1) 240,000 623,315 Conoco, Inc. 97,800 2,718,840 Encana Corp. 3,200 98,258 EOG Resources, Inc. 52,100 2,068,370 Exxon Mobil Corp. 698,416 28,579,183 Frontier Oil Corp. 132,000 2,323,200 Marathon Oil Corp. 83,100 2,253,672 Murphy Oil Corp. 11,800 973,500 Occidental Petroleum Corp. 58,900 1,766,411 Ocean Energy, Inc. 600 13,002 Phillips Petroleum Co. 73,180 4,308,838 MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- Rio Alto Exploration Ltd.(1) 57,850 $ 703,679 Royal Dutch Petroleum Co., NY Shares 211,200 11,673,024 Sunoco, Inc. 26,800 954,884 Talisman Energy, Inc. 99,300 4,456,062 Unocal Corp. 21,600 797,904 ----------------- 81,422,137 --------------------------------------------------------------------------- FINANCIALS--21.4% --------------------------------------------------------------------------- BANKS--7.1% AmSouth Bancorp 5,700 127,566 Astoria Financial Corp. 31,900 1,022,395 Bank of America Corp. 203,300 14,304,188 Bank of New York Co., Inc. (The) 40,500 1,366,875 Bank One Corp. 148,000 5,695,040 Banknorth Group, Inc. 7,900 205,558 BB&T Corp. 35,400 1,366,440 Charter One Financial, Inc. 31,270 1,075,063 Comerica, Inc. 87,800 5,390,920 Commerce Bancorp, Inc. 4,500 198,900 Downey Financial Corp. 1,500 70,950 First Tennessee National Corp. 27,600 1,057,080 FleetBoston Financial Corp. 187,700 6,072,095 Golden State Bancorp, Inc. 44,800 1,624,000 Golden West Financial Corp. 89,100 6,128,298 Greenpoint Financial Corp. 37,900 1,860,890 Hibernia Corp., Cl. A 3,000 59,370 Independence Community Bank Corp. 7,100 203,983 KeyCorp 192,900 5,266,170 National City Corp. 123,100 4,093,075 New York Community Bancorp, Inc. 2,900 78,590 North Fork Bancorp, Inc. 19,900 792,219 PNC Financial Services Group 49,500 2,587,860 Prosperity Bancshares, Inc. 112,400 2,047,816 Regions Financial Corp. 2,800 98,420 SunTrust Banks, Inc. 77,100 5,221,212 U.S. Bancorp 41,470 968,324 Wachovia Corp. 103,200 3,940,176 Webster Financial Corp. 1,100 42,064 Wells Fargo Co. 55,900 2,798,354 ----------------- 75,763,891 --------------------------------------------------------------------------- DIVERSIFIED FINANCIALS--6.5% Affiliated Managers Group, Inc.(1) 17,200 1,057,800 American Express Co. 94,000 3,414,080 American Home Mortgage Holdings, Inc. 1,200 14,988 Bear Stearns Cos., Inc. (The) 37,400 2,288,880 Citigroup, Inc. 416,166 16,126,432 Countrywide Credit Industries, Inc. 47,500 2,291,875 6 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Continued Doral Financial Corp. 2,500 $ 83,475 Fannie Mae 109,500 8,075,625 Freddie Mac 89,600 5,483,520 Goldman Sachs Group, Inc. (The) 32,500 2,383,875 Household International, Inc. 93,100 4,627,070 J.P. Morgan Chase & Co. 212,800 7,218,176 Lehman Brothers Holdings, Inc. 45,300 2,832,156 Moody's Corp. 37,700 1,875,575 Morgan Stanley 91,100 3,924,588 Neuberger Berman, Inc. 400 14,640 SEI Investments Co. 14,000 394,380 SLM Corp. 39,600 3,837,240 State Street Corp. 84,900 3,795,030 Waddell & Reed Financial, Inc. 1,000 22,920 ----------------- 69,762,325 --------------------------------------------------------------------------- INSURANCE--7.6% ACE Ltd. 68,500 2,164,600 AFLAC, Inc. 123,300 3,945,600 Allstate Corp. 108,700 4,019,726 American International Group, Inc. 182,240 12,434,235 Brown & Brown, Inc. 700 22,050 Chubb Corp. 76,000 5,380,800 Fidelity National Financial, Inc. 53,038 1,676,001 Hilb, Rogal & Hamilton Co. 10,300 466,075 John Hancock Financial Services, Inc. 149,600 5,265,920 Lincoln National Corp. 71,100 2,986,200 Loews Corp. 67,100 3,555,629 Marsh & McLennan Cos., Inc. 70,000 6,762,000 MBIA, Inc. 38,350 2,167,926 MetLife, Inc. 210,700 6,068,160 Ohio Casualty Corp.(1) 2,700 56,430 PMI Group, Inc. (The) 30,400 1,161,280 Principal Financial Group, Inc. (The)(1) 39,100 1,212,100 Progressive Corp. 112,500 6,508,125 Prudential Financial, Inc.(1) 98,500 3,285,960 Radian Group, Inc. 28,800 1,406,880 RenaissanceRe Holdings Ltd. 10,500 384,300 St. Paul Cos., Inc. 103,450 4,026,274 Travelers Property Casualty Corp., Cl. A(1) 92,500 1,637,250 XL Capital Ltd., Cl. A 52,500 4,446,750 ----------------- 81,040,271 --------------------------------------------------------------------------- REAL ESTATE--0.2% Equity Office Properties Trust 71,700 2,158,170 Equity Residential 3,700 106,375 ----------------- 2,264,545 MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- HEALTH CARE--11.6% --------------------------------------------------------------------------- BIOTECHNOLOGY--0.7% Amgen, Inc.(1) 51,900 $ 2,173,572 Chiron Corp.(1) 40,500 1,431,675 Genentech, Inc.(1) 36,200 1,212,700 Techne Corp.(1) 2,900 81,838 Wyeth 43,400 2,222,080 ----------------- 7,121,865 --------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--1.0% Bard (C.R.), Inc. 5,100 288,558 Baxter International, Inc. 141,500 6,289,675 Becton, Dickinson & Co. 47,300 1,629,485 Cooper Cos., Inc. (The) 2,600 122,460 Diagnostic Products Corp. 1,100 40,700 Hillenbrand Industries, Inc. 2,000 112,300 Medtronic, Inc. 10,900 467,065 Respironics, Inc.(1) 3,000 102,150 Stryker Corp. 33,400 1,787,234 Zimmer Holdings, Inc.(1) 10,010 356,957 ----------------- 11,196,584 --------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--4.2% Aetna, Inc. 65,000 3,118,050 Apria Healthcare Group, Inc.(1) 8,700 194,880 Caremark Rx, Inc.(1) 136,800 2,257,200 Cigna Corp. 55,100 5,367,842 Covance, Inc.(1) 10,600 198,750 DaVita, Inc.(1) 18,700 445,060 Dianon Systems, Inc.(1) 400 21,368 Express Scripts, Inc.(1) 10,800 541,188 First Health Group Corp.(1) 8,900 249,556 HCA, Inc. 107,700 5,115,750 Health Net, Inc.(1) 22,900 613,033 Laboratory Corp. of America Holdings, Inc.(1) 24,500 1,118,425 LifePoint Hospitals, Inc.(1) 12,100 439,351 Manor Care, Inc.(1) 47,600 1,094,800 McKesson Corp. 88,400 2,890,680 Mid Atlantic Medical Services, Inc.(1) 2,900 90,915 Option Care, Inc.(1) 3,625 49,807 Oxford Health Plans, Inc.(1) 82,700 3,842,242 Pediatrix Medical Group, Inc.(1) 9,700 242,500 Pharmaceutical Product Development, Inc.(1) 17,100 450,414 PSS World Medical, Inc.(1) 4,500 36,450 Quest Diagnostics, Inc.(1) 15,200 1,307,960 Tenet Healthcare Corp.(1) 88,700 6,346,485 Trigon Healthcare, Inc.(1) 18,100 1,820,498 UnitedHealth Group, Inc. 38,400 3,515,520 Universal Health Services, Inc., Cl. B(1) 20,000 980,000 7 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES Continued WellPoint Health Networks, Inc.(1) 40,100 $ 3,120,181 ----------------- 45,468,905 --------------------------------------------------------------------------- PHARMACEUTICALS--5.7% Abbott Laboratories 21,400 805,710 Allergan, Inc. 11,200 747,600 Bristol-Myers Squibb Co. 75,200 1,932,640 Forest Laboratories, Inc.(1) 47,500 3,363,000 ICN Pharmaceuticals, Inc. 9,000 217,890 Johnson & Johnson 219,206 11,455,705 Lilly (Eli) & Co. 93,500 5,273,400 Merck & Co., Inc. 284,800 14,422,272 Mylan Laboratories, Inc. 26,100 818,235 Pfizer, Inc. 498,700 17,454,500 Schering-Plough Corp. 155,800 3,832,680 Taro Pharmaceutical Industries Ltd.(1) 21,900 536,988 ----------------- 60,860,620 --------------------------------------------------------------------------- INDUSTRIALS--8.9% --------------------------------------------------------------------------- AEROSPACE & DEFENSE--0.9% FLIR Systems, Inc.(1) 1,900 79,743 General Dynamics Corp. 11,700 1,244,295 Goodrich Corp. 27,400 748,568 Honeywell International, Inc. 18,000 634,140 Lockheed Martin Corp. 63,100 4,385,450 Precision Castparts Corp. 6,500 214,500 Raytheon Co. 28,600 1,165,450 Rockwell Collins, Inc. 42,700 1,170,834 ----------------- 9,642,980 --------------------------------------------------------------------------- AIR FREIGHT & COURIERS--1.4% FedEx Corp. 127,000 6,781,800 United Parcel Service, Inc., Cl. B 125,300 7,737,275 ----------------- 14,519,075 --------------------------------------------------------------------------- AIRLINES--0.2% Southwest Airlines Co. 164,200 2,653,472 --------------------------------------------------------------------------- BUILDING PRODUCTS--0.3% Masco Corp. 132,500 3,592,075 --------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--2.3% Amdocs Ltd.(1) 48,300 364,665 Automatic Data Processing, Inc. 89,400 3,893,370 Avery-Dennison Corp. 12,300 771,825 Certegy, Inc.(1) 800 29,688 ChoicePoint, Inc.(1) 1,066 48,471 Concord EFS, Inc.(1) 10,000 301,400 Corinthian Colleges, Inc.(1) 5,000 169,450 Deluxe Corp. 2,400 93,336 Expedia, Inc., Cl. A(1) 2,300 136,367 First Data Corp. 173,000 6,435,600 MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- Fiserv, Inc.(1) 2,600 $ 95,446 H&R Block, Inc. 68,500 3,161,275 Harland (John H.) Co. 10,400 293,280 Headwaters, Inc.(1) 2,700 42,525 Imagistics International, Inc.(1) 960 20,611 IMS Health, Inc. 91,800 1,647,810 ITT Educational Services, Inc.(1) 9,400 204,920 Moore Corp. Ltd.(1) 2,100 24,108 NDCHealth Corp. 400 11,160 Paychex, Inc. 92,750 2,902,148 Per-Se Technologies, Inc.(1) 10,400 95,670 Pittston Brink's Group 800 19,200 Right Management Consultants, Inc. 1,650 43,393 Sabre Holdings Corp.(1) 13,100 468,980 Viad Corp. 7,700 200,200 Waste Management, Inc. 117,200 3,053,060 ----------------- 24,527,958 --------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING--0.0% EMCOR Group, Inc.(1) 5,500 322,850 --------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.3% Emerson Electric Co. 41,200 2,204,612 Molex, Inc., Cl. A 20,750 569,172 Rockwell Automation, Inc. 22,900 457,542 ----------------- 3,231,326 --------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--2.7% 3M Co. 55,500 6,826,500 General Electric Co.(2) 748,000 21,729,400 ----------------- 28,555,900 --------------------------------------------------------------------------- MACHINERY--0.3% AGCO Corp.(1) 2,200 42,900 Briggs & Stratton Corp. 400 15,336 Cummins, Inc. 1,900 62,890 Deere & Co. 9,200 440,680 Dover Corp. 8,200 287,000 Eaton Corp. 1,300 94,575 EnPro Industries, Inc.(1) 5,480 28,770 Ingersoll-Rand Co., Cl. A 36,700 1,675,722 Paccar, Inc. 1,950 86,561 Pentair, Inc. 2,800 134,624 Timken Co. 1,100 24,563 ----------------- 2,893,621 --------------------------------------------------------------------------- ROAD & RAIL--0.5% Burlington Northern Santa Fe Corp. 70,400 2,112,000 CSX Corp. 3,800 133,190 Hunt (J.B.) Transport Services, Inc.(1) 800 23,616 Norfolk Southern Corp. 4,500 105,210 Ryder Systems, Inc. 1,300 35,217 8 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- ROAD & RAIL Continued Union Pacific Corp. 50,200 $ 3,176,656 ----------------- 5,585,889 --------------------------------------------------------------------------- INFORMATION TECHNOLOGY--8.5% --------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--0.4% Cisco Systems, Inc.(1) 280,500 3,912,975 McData Corp., Cl. A(1) 4,887 43,054 Scientific-Atlanta, Inc. 6,100 100,345 ----------------- 4,056,374 --------------------------------------------------------------------------- COMPUTERS & PERIPHERALS--2.4% Dell Computer Corp.(1) 287,700 7,520,478 Hewlett-Packard Co. 254,724 3,892,183 International Business Machines Corp. 193,100 13,903,200 Seagate Technology International, Inc.(1,3) 31,000 -- Storage Technology Corp.(1) 19,900 317,803 Western Digital Corp.(1) 37,000 120,250 ----------------- 25,753,914 --------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.2% Arrow Electronics, Inc.(1) 1,700 35,275 AVX Corp. 12,500 204,125 Benchmark Electronics, Inc.(1) 14,100 408,900 Millipore Corp. 3,000 95,940 OSI Systems, Inc.(1) 1,100 21,813 Tech Data Corp.(1) 26,400 999,240 ----------------- 1,765,293 --------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--0.0% Websense, Inc.(1) 6,300 161,091 --------------------------------------------------------------------------- IT CONSULTING & SERVICES--0.0% Acxiom Corp.(1) 1,400 24,486 J.D. Edwards & Co.(1) 2,500 30,375 StorageNetworks, Inc.(1) 11,900 23,431 ----------------- 78,292 --------------------------------------------------------------------------- OFFICE ELECTRONICS--0.1% Ikon Office Solutions, Inc. 200 1,880 Xerox Corp. 238,600 1,663,042 ----------------- 1,664,922 --------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--2.1% Analog Devices, Inc.(1) 77,200 2,292,840 Cabot Microelectronics Corp.(1) 23,200 1,001,312 Cymer, Inc.(1) 5,200 182,208 ESS Technology, Inc.(1) 4,500 78,930 Integrated Circuit Systems, Inc.(1) 4,900 98,931 Intel Corp. 747,800 13,662,306 Intersil Corp., Cl. A(1) 6,700 143,246 KLA-Tencor Corp.(1) 81,700 3,593,983 MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- Rambus, Inc.(1) 22,700 $ 92,843 Semtech Corp.(1) 17,700 472,590 Xilinx, Inc.(1) 36,800 825,424 ----------------- 22,444,613 --------------------------------------------------------------------------- SOFTWARE--3.3% Activision, Inc.(1) 35,300 1,025,818 Cadence Design Systems, Inc.(1) 57,600 928,512 Electronic Arts, Inc.(1) 11,100 733,155 Fair, Isaac & Co., Inc. 2,400 78,888 Kronos, Inc.(1) 2,100 64,027 Microsoft Corp.(1) 502,000 27,459,400 Network Associates, Inc.(1) 44,800 863,296 Oracle Corp.(1) 437,000 4,138,390 ----------------- 35,291,486 --------------------------------------------------------------------------- MATERIALS--3.1% --------------------------------------------------------------------------- CHEMICALS--0.9% Air Products & Chemicals, Inc. 43,200 2,180,304 Du Pont (E.I.) de Nemours & Co. 116,100 5,154,840 Georgia Gulf Corp. 900 23,796 IMC Global, Inc. 3,400 42,500 International Flavors & Fragrances, Inc. 13,800 448,362 PPG Industries, Inc. 4,500 278,550 Praxair, Inc. 13,100 746,307 Rohm & Haas Co. 12,400 502,076 ----------------- 9,376,735 --------------------------------------------------------------------------- CONSTRUCTION MATERIALS--0.0% Centex Construction Products, Inc. 1,000 36,400 --------------------------------------------------------------------------- CONTAINERS & PACKAGING--0.3% Ball Corp. 35,000 1,451,800 Crown Cork & Seal Co., Inc.(1) 18,400 126,040 Owens-Illinois, Inc.(1) 20,000 274,800 Pactiv Corp.(1) 53,100 1,263,780 Sealed Air Corp.(1) 6,300 253,701 Temple-Inland, Inc. 1,700 98,362 ----------------- 3,468,483 --------------------------------------------------------------------------- METALS & MINING--1.4% Alcan, Inc. 146,300 5,489,176 Alcoa, Inc. 109,000 3,613,350 Barrick Gold Corp. 151,300 2,873,187 Freeport-McMoRan Copper & Gold, Inc., Cl. B(1) 45,900 819,315 Meridian Gold, Inc. 1,500 24,075 Newmont Mining Corp. (Holding Co.) 60,200 1,585,066 Nucor Corp. 2,500 162,600 Peabody Energy Corp. 6,300 178,290 ----------------- 14,745,059 9 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued MARKET VALUE SHARES SEE NOTE 1 --------------------------------------------------------------------------- PAPER & FOREST PRODUCTS--0.5% Georgia-Pacific Corp. 26,000 $ 639,080 International Paper Co. 59,000 2,571,220 Rayonier, Inc. 6,800 334,084 Weyerhaeuser Co. 28,400 1,813,340 ----------------- 5,357,724 --------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--4.2% --------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--3.6% Alltel Corp. 56,600 2,660,200 BellSouth Corp. 222,200 6,999,300 SBC Communications, Inc. 472,900 14,423,450 Sprint Corp. (Fon Group) 125,100 1,327,311 Verizon Communications, Inc. 322,856 12,962,668 ----------------- 38,372,929 --------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--0.6% AT&T Corp. 578,200 6,186,740 --------------------------------------------------------------------------- UTILITIES--3.0% --------------------------------------------------------------------------- ELECTRIC UTILITIES--2.9% Conectiv, Inc. 11,900 307,139 Consolidated Edison Co. of New York, Inc. 29,000 1,210,750 DTE Energy Co. 15,000 669,600 Duke Energy Corp. 44,496 1,383,826 Entergy Corp. 67,000 2,843,480 Exelon Corp. 139,824 7,312,795 FirstEnergy Corp. 125,400 4,185,852 FPL Group, Inc. 85,500 5,129,145 Paramount Resources Ltd.(1) 147,700 1,456,703 Progress Energy, Inc. 4,100 213,241 Progress Energy, Inc., Contingent Value Obligation(1) 32,000 9,600 Southern Co. 61,100 1,674,140 TXU Corp. 91,500 4,716,825 Xcel Energy, Inc. 1,850 31,025 ----------------- 31,144,121 --------------------------------------------------------------------------- GAS UTILITIES--0.1% El Paso Corp. 52,951 1,091,320 Nicor, Inc. 6,900 315,675 ----------------- 1,406,995 ----------------- Total Common Stocks (Cost $1,020,118,995) 1,015,366,042 =========================================================================== PREFERRED STOCKS--0.0% Wachovia Corp., Dividend Equalization Preferred Shares (Cost $0) 6,000 2,100 MARKET VALUE UNITS SEE NOTE 1 =========================================================================== RIGHTS, WARRANTS AND CERTIFICATES--0.0% Dime Bancorp, Inc. Wts., Exp. 1/2/10(1) (Cost $0) 31,900 $ 3,190 PRINCIPAL AMOUNT =========================================================================== REPURCHASE AGREEMENTS--5.6% Repurchase agreement with PaineWebber, Inc., 1.93%, dated 6/28/02, to be repurchased at $60,375,709 on 7/1/02, collateralized by Federal Home Loan Mortgage Corp., 6%--6.50%, 12/1/27--2/1/32, with a value of $19,621,299 and Federal National Mortgage Assn., 5.50%--6%, 5/1/32, with a value of $42,096,454 (Cost $60,366,000) $60,366,000 60,366,000 --------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $1,080,484,995) 100.3% 1,075,737,332 --------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (0.3) (3,735,502) --------------------------------- NET ASSETS 100.0% $1,072,001,830 ================================= FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Securities with an aggregate market value of $7,262,500 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 5 of Notes to Financial Statements. 3. Identifies issues considered to be illiquid or restricted--See Note 6 of Notes to Financial Statements. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 10 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF ASSETS AND LIABILITIES Unaudited
June 30, 2002 ========================================================================================================================== ASSETS Investments, at value (cost $1,080,484,995) - see accompanying statement $1,075,737,332 -------------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Investments sold 10,564,206 Interest and dividends 1,244,978 Shares of beneficial interest sold 324,074 Daily variation on futures contracts 220,400 Other 5,330 --------------- Total assets 1,088,096,320 ========================================================================================================================== LIABILITIES Bank overdraft 544,475 -------------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 14,691,323 Shares of beneficial interest redeemed 762,750 Shareholder reports 54,719 Distribution and service plan fees 13,433 Transfer and shareholder servicing agent fees 2,124 Trustees' compensation 1,534 Other 24,132 --------------- Total liabilities 16,094,490 ========================================================================================================================== NET ASSETS $1,072,001,830 =============== ========================================================================================================================== COMPOSITION OF NET ASSETS Par value of shares of beneficial interest $ 61,135 -------------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 1,305,126,867 -------------------------------------------------------------------------------------------------------------------------- Undistributed net investment income 3,950,421 -------------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (232,594,222) -------------------------------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (4,542,371) --------------- NET ASSETS $1,072,001,830 =============== ========================================================================================================================== NET ASSET VALUE PER SHARE Non-Service shares: Net asset value, redemption price per share and offering price per share (based on net assets of $1,036,305,025 and 59,093,269 shares of beneficial interest outstanding) $17.54 -------------------------------------------------------------------------------------------------------------------------- Service shares: Net asset value, redemption price per share and offering price per share (based on net assets of $35,696,805 and 2,041,306 shares of beneficial interest outstanding) $17.49
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 11 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF OPERATIONS Unaudited
For the Six Months Ended June 30, 2002 ========================================================================================================================== INVESTMENT INCOME Dividends (net of foreign withholding taxes of $42,722) $ 7,467,113 -------------------------------------------------------------------------------------------------------------------------- Interest 332,045 ------------- Total investment income 7,799,158 ========================================================================================================================== EXPENSES Management fees 3,758,934 -------------------------------------------------------------------------------------------------------------------------- Distribution and service plan fees-Service shares 22,884 -------------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 11,958 -------------------------------------------------------------------------------------------------------------------------- Shareholder reports 10,551 -------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 8,771 -------------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 3,522 -------------------------------------------------------------------------------------------------------------------------- Other 2,231 ------------- Total expenses 3,818,851 Less reduction to custodian expenses (322) ------------- Net expenses 3,818,529 ========================================================================================================================== NET INVESTMENT INCOME 3,980,629 ========================================================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on: Investments (47,679,966) Closing of futures contracts (3,325,410) Foreign currency transactions (53,117) ------------- Net realized loss (51,058,493) -------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (35,148,320) Translation of assets and liabilities denominated in foreign currencies 561,531 ------------- Net change (34,586,789) ------------- Net realized and unrealized loss (85,645,282) ========================================================================================================================== NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(81,664,653) =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 12 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, (UNAUDITED) 2001 =================================================================================================================== OPERATIONS Net investment income $ 3,980,629 $ 7,607,459 ------------------------------------------------------------------------------------------------------------------- Net realized loss (51,058,493) (146,466,223) ------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) (34,586,789) 27,081,515 --------------------------------- Net decrease in net assets resulting from operations (81,664,653) (111,777,249) =================================================================================================================== DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Non-Service shares (7,425,251) (5,518,418) Service shares (162,528) (19,362) =================================================================================================================== BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets resulting from beneficial interest transactions: Non-Service shares 47,927,863 181,776,278 Service shares 16,835,674 20,508,172 =================================================================================================================== NET ASSETS Total increase (decrease) (24,488,895) 84,969,421 ------------------------------------------------------------------------------------------------------------------- Beginning of period 1,096,490,725 1,011,521,304 --------------------------------- End of period (including undistributed net investment income of $3,950,421 and $7,557,571, respectively) $1,072,001,830 $1,096,490,725 =================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 13 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, NON-SERVICE SHARES (UNAUDITED) 2001 2000 1999 1998 1997 ============================================================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $ 18.99 $ 21.26 $ 24.63 $ 20.48 $ 20.58 $ 16.37 ----------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .06 .13 .10 .11 .13 .19 Net realized and unrealized gain (loss) (1.38) (2.29) (2.14) 4.29 .92 4.91 --------------------------------------------------------------------------------- Total from investment operations (1.32) (2.16) (2.04) 4.40 1.05 5.10 ----------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.13) (.11) (.09) (.09) (.05) (.17) Distributions from net realized gain -- -- (1.24) (.16) (1.10) (.72) --------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.13) (.11) (1.33) (.25) (1.15) (.89) ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $17.54 $18.99 $21.26 $24.63 $20.48 $20.58 ================================================================================= ============================================================================================================================= TOTAL RETURN, AT NET ASSET VALUE(1) (7.03)% (10.16)% (8.78)% 21.71% 4.70% 32.48% ============================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,036,305 $1,074,945 $1,009,823 $555,311 $308,353 $155,368 ----------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,094,872 $1,028,913 $ 809,662 $391,063 $234,306 $ 94,906 ----------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 0.72% 0.73% 0.69% 0.63% 0.74% 1.15% Expenses 0.68% 0.73% 0.73% 0.78% 0.79%(3) 0.83%(3) ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 38% 69% 63% 118% 86% 79%
1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 14 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, SERVICE SHARES (UNAUDITED) 2001 2000(1) ============================================================================================================ PER SHARE OPERATING DATA Net asset value, beginning of period $ 18.95 $ 21.24 $ 24.04 ------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .06 .14 .02 Net realized and unrealized loss (1.40) (2.32) (2.82) ------------------------------------ Total investment operations (1.34) (2.18) (2.80) ------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.12) (.11) -- Distributions from net realized gain -- -- -- ------------------------------------ Total dividends and/or distributions to shareholders (.12) (.11) -- ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $17.49 $18.95 $21.24 ==================================== ============================================================================================================ TOTAL RETURN, AT NET ASSET VALUE(2) (7.15)% (10.27)% (11.61)% ============================================================================================================ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $35,697 $21,545 $1,698 ------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $28,362 $10,306 $ 543 ------------------------------------------------------------------------------------------------------------ Ratios to average net assets:(3) Net investment income 0.58% 0.66% 0.50% Expenses 0.84% 0.88% 0.88% ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 38% 69% 63%
1. For the period from July 13, 2000 (inception of offering) to December 31, 2000. 2. Assumes an investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 15 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS Unaudited ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Main Street Growth & Income Fund/VA (the Fund) is a separate series of Oppenheimer Variable Account Funds (the Trust), an open-end management investment company registered under the Investment Company Act of 1940, as amended. 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. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of significant accounting policies consistently followed by the Fund. The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. The following is a summary of significant accounting policies consistently followed by the Fund. -------------------------------------------------------------------------------- SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. The Fund, along with other affiliated entities managed by OFI, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. 16 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. As of June 30, 2002, the Fund had available for federal income tax purposes an estimated unused capital loss carryforward of $225,415,844. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. As of December 31, 2001, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows: EXPIRING -------------------------------- 2008 $ 28,801,633 2009 140,898,750 ------------ Total $169,700,383 ============ -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. -------------------------------------------------------------------------------- CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. 17 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS Unaudited / Continued ================================================================================ 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED JUNE 30, 2002 YEAR ENDED DECEMBER 31, 2001 SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- NON-SERVICE SHARES Sold 5,528,958 $103,796,316 14,383,759 $ 283,714,091 Dividends and/or distributions reinvested 383,139 7,425,250 289,225 5,518,418 Redeemed (3,414,330) (63,293,703) (5,577,498) (107,456,231) ----------------------------------------------------------------- Net increase 2,497,767 $ 47,927,863 9,095,486 $ 181,776,278 ================================================================= -------------------------------------------------------------------------------------------------------------------------- SERVICE SHARES Sold 907,025 $ 16,876,852 1,070,886 $ 20,739,629 Dividends and/or distributions reinvested 8,403 162,528 1,016 19,362 Redeemed (11,202) (203,706) (14,766) (250,819) ----------------------------------------------------------------- Net increase 904,226 $ 16,835,674 1,057,136 $ 20,508,172 =================================================================
================================================================================ 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended June 30, 2002, were $447,534,747 and $409,320,554, respectively. ================================================================================ 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust. The annual fees are 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million and 0.60% of average annual net assets over $800 million. The Fund's management fee for the six months ended June 30, 2002 was an annualized rate of 0.67%. -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $19.75 per account fee. Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $5,000 for assets of less than $10 million and $10,000 for assets of $10 million or more. The Fund is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees up to an annual rate of 0.25% of average net assets of the fund. This undertaking may be amended or withdrawn at any time. -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FOR SERVICE SHARES. The Fund has adopted a Distribution and Service Plan for Service shares to pay OppenheimerFunds Distributor, Inc., the Distributor, for distribution-related services for the Fund's Service shares. Under the Plan, payments are made quarterly at an annual rate of up to 0.25% of the average annual net assets of the Service shares of the Fund. 18 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA ================================================================================ 5. FUTURES CONTRACTS A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date at a negotiated price. Futures contracts are traded on a commodity exchange. The Fund may buy and sell futures contracts that relate to broadly based securities indices "financial futures" or debt securities "interest rate futures" in order to gain exposure to or to seek to protect against changes in market value of stock and bonds or interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts to hedge against increases in interest rates and decreases in market value of portfolio securities. The Fund may also purchase futures contracts to gain exposure to market changes as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Realized gains and losses are reported in the Statement of Operations as closing and expiration of futures contracts. 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 June 30, 2002, the Fund had outstanding futures contracts as follows:
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED CONTRACT DESCRIPTION DATE CONTRACTS JUNE 30, 2002 APPRECIATION ------------------------------------------------------------------------------------------------------------------------ CONTRACTS TO PURCHASE Russell 2000 Index 9/19/02 152 $35,214,600 $205,200
================================================================================ 6. ILLIQUID OR RESTRICTED SECURITIES As of June 30, 2002, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of June 30, 2002 was zero. 19 OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA A Series of Oppenheimer Variable Account Funds ================================================================================ TRUSTEES AND OFFICERS James C. Swain, Trustee, CEO and Chairman of the Board John V. Murphy, President and Trustee William L. Armstrong, Trustee Robert G. Avis, Trustee George C. Bowen, Trustee Edward L. Cameron, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Beverly L. Hamilton, Trustee Robert J. Malone, Trustee F. William Marshall, Jr., Trustee Charles Albers, Vice President Nikolaos Monoyios, Vice President Robert G. Zack, Vice President and Secretary Brian W. Wixted, Treasurer Katherine P. Feld, Assistant Secretary Kathleen T. Ives, Assistant Secretary Denis R. Molleur, Assistant Secretary ================================================================================ INVESTMENT ADVISOR OppenheimerFunds, Inc. ================================================================================ DISTRIBUTOR OppenheimerFunds Distributor, Inc. ================================================================================ TRANSFER AGENT OppenheimerFunds Services ================================================================================ INDEPENDENT AUDITORS Deloitte & Touche LLP ================================================================================ LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C. The financial statements included herein have been taken from the records of the Fund without examination of those records by the independent auditors. For more complete information about Oppenheimer Main Street Growth & Income Fund/VA, please refer to the Prospectus. To obtain a copy or for more information on how to obtain a separate account prospectus, call OppenheimerFunds, Inc. at 1.800.981.2871. [LOGO OMITTED] OPPENHEIMERFUNDS[REGISTRATION MARK] Distributor, Inc. [COPYRIGHT]Copyright 2002 OppenheimerFunds, Inc. All rights reserved.